Outsourcing life cycle model for financial services in the fintech era

Abstract

In today’s financial services landscape, staying ahead of the innovation curve and being disciplined at enhancing core service offerings entail careful resource planning. A well-structured outsourcing arrangement can go a long way towards enhancing long term organizational strategic growth. In the post-2014 FinTech era, (i) strategic management with an innovation focus and (ii) financial technology-associated risks, have brought about changes to outsourcing in the financial services industry. Presently, most outsourcing life cycle models in existing literature seek to provide comprehensive, yet industry-neutral guidelines lacking industry context and depth of coverage. A newly licensed financial institution deciding to embark on outsourcing but is uncertain about how to thread the increasingly complex FinTech and financial regulatory landscape, will likely find domain-specific outsourcing life cycle models useful. A more targeted financial services outsourcing life cycle approach, with a focus on strategy and risk management in today’s context, can contribute more effectively to the application and review of outsourcing implementation. This research contributes to present literature by proposing a new Strategy-Risk outsourcing life cycle model. This is an elegant and simple-to-use end-to-end framework which can be utilized by the financial services industry to guide outsourcing decisions. The paper also recommends areas for future research.