The back office not a differentiator but a business enabler

17 September 2013

Equiniti, launched its research into the changing face of UK wealth management.

Equiniti leads debate on the commoditisation of the back office.

DUBAI, 17 September, 2013

Equiniti, the UK’s leading share registrar and financial services outsourcing specialist, today launched its research into the changing face of UK wealth management. Equiniti is at the forefront of the debate over the value of outsourcing the middle and back office functions.

This research recently commissioned by Equiniti amongst senior executives of UK wealth management firms, found that seventy per cent of wealth managers believe that within five years all firms will be looking to outsource some or all of their processing requirements.

Against the backdrop of increasing regulatory burdens, technological change and global competition, brokers and wealth managers are having to face up to new challenges on a number of fronts to embrace this change. Findings show that sixty per cent of wealth managers fear loss of control through the outsourcing of their back and middle office functions, and not surprisingly sixty six per cent saw cost savings as a reason for outsourcing.

  • 70% of wealth managers believe all firms within 5 years will be looking to outsource some or all of their processing requirements
  • 38% of wealth managers have changed their view on outsourcing as a result of regulation
  • A fifth of wealth managers blame a lack of outsourcing solutions as an argument for not outsourcing 
  • Outsourcing enables firms to invest in customer relationships and business growth

It was also interesting that seventy eight per cent of firms that have made the choice to outsource are totally satisfied, and not surprisingly people are happy to outsource but less so the client facing activities. Only 22% and 26% of firms outsource or would consider outsourcing Dealing and CRM respectively, whereas around fifty per cent of custody is already outsourced and a further 12% of firms would consider it in future.

Mark Taylor, Managing Director of Equiniti Investment Services, commented: “Cost reduction may be the initial trigger for firms to look at the business case for outsourcing their middle and back office functions, but outsourcing is no longer just about cost saving. It is a way to gain strategic advantage.

Better results will be achieved when business strategy and IT strategy are aligned. It is now time to recognise the back office as a commoditised process which can enable companies to improve their service offer and focus on a clear customer proposition underpinned by a strong brand. Whilst many companies seem to be agnostic about outsourcing they do realise its importance.”

Equiniti in response to market demand is developing and establishing ‘Equiniti Wealth Solutions’, a centralised pooling of custody and business processes as well as a customer interface. This new service will enable firms to derive strategic advantage through delivering greater cost efficiency, high service quality and risk mitigation.

Visit Equiniti at Sibos at stand D96