Thursday, July 30, 2009

Regulations, Outsourcing Top Industry Trends

By Mark Brousseau

As TAWPI prepares to raise the curtain on its annual Forum & Expo in Washington, D.C. next week, payments and document management operations executives are grappling with mounting regulations, industry-wide over capacity, and pressure from senior management to outsource.

"As a result of the industry scandals, bank and broker/dealer failures, and stock market decline, increased financial services regulations are likely," says Edward Kinsella, second vice president, transfer agent, for John Hancock Financial Services ( "Companies will need to find ways to quickly and efficiently adhere to these new requirements," he warns.

Kinsella says the financial services industry also is facing significant over capacity. "This will likely lead to consolidation, and mergers and acquisitions," Kinsella says. "Companies will be challenged to combine their operations to broaden their product offerings, increase profit margins, reduce expenses, and create new efficiencies and economies of scale," Kinsella adds.

Kinsella also sees a greater push towards outsourcing: "As a result of the economic slowdown, companies are focusing on their core competencies and looking to outsource functions and processes that can be handled by third-parties. Companies must steer clear of functions that distract them from their core competency, or can be handled more cost effectively by others."

Mike Reynolds, executive vice president and director of sales and marketing at Cash Management Solutions, Inc. (, sees continued interest in outsourcing across all levels of financial institutions. "This is being driven by economics, cost pressures, footprint considerations, and platform replacement decisions," he says, noting that many banks are struggling with whether they should invest in newer lockbox technology. "Innovative banks are exploring combinations of outsourcing and in-house processing."

John Kincade, vice president of business development for J&B Software, Inc. ( also expects increasing customer interest in "hybrid" outsourcing solutions where the customer keeps some of its more strategic payment vehicles in-house, and outsources the labor-intensive functions. "Vendors will have to provide modular solutions that allow this," Kincade says.

Mark Stevens, president and CEO of Moorestown, NJ-based OPEX Corporation (, expects significant consolidation in the retail lockbox market. "There are fewer and fewer companies doing this kind of work," Stevens says. "I believe that we will see three or four companies as the 'last man standing' in this space."

Kinsella says oversight and risk management is critical to the success of outsourcing.

Reynolds notes that for operations that stay in-house, the focus is on improving efficiency and productivity by taking a hard look at existing workflows, technologies, and analyzing staffing and capacity models.

“Companies are driving the last ounce of expense from the business as they strive to meet Wall Street targets,” agrees Bob Young of Manasquan, NJ ( “The latest round of earnings releases the past few weeks prove this point.” Payments processing executives are challenged with finding ways to use their current technology – software and hardware – to make their operations more efficient, to satisfy upper management, Young added. “I have to think that the purchase of new processing systems is a low priority, given the economy.”

Reynolds adds that everyone -- service providers, technology vendors and end-user customers -- are seemingly squeezing each other on pricing. "I'm seeing renegotiation initiatives on almost every front as organizations try to better align pricing with volume and product deliverables," Reynolds says, adding that he hopes this eases as the economy improves.

As part of the push to reduce costs and gain operations efficiencies, Stevens believes shared services will become a hot topic. "We are seeing several remittance shops with scanners looking to do AP work for their organizations," Stevens said, adding that he expects this trend to continue.

Similarly, Kincade believes the convergence of forms and payments processing will accelerate next year, with customers moving to more sophisticated correspondence management systems. In some applications, payments can accompany correspondence 30 to 50 percent of the time, Kincade notes.

What do you think? Post your comments below.


James said...

Hey you have a wonderful blog and more interesting you have put good content. Outsourcing has become an extensive part of the North American business culture. All the Knowledge Based Functions including the IT and Non-IT, which require some intellectual capital and resources are considered to be ideal candidates for outsourcing.

Outsoucing services said...

Nice article regarding outsourcing services...

Now a days most of the companies adopted this kind of strategy for maximizes profits and minimizes losses.

Another benefit is that outsourcing allows companies to avail high-quality services. So now a days outsourcing services are most important in every business organization.