Boosting Banking Through Digitally Enabled Operations

The volatile macroeconomic environment and rising interest rates have put pressure on banks, impacting their liquidity and raising the cost of funding. Rising competition due to neobanks and fintechs that offer personalized products and add-on services have upended customer expectations. Stringent regulatory requirements are driving banks to revamp their processes and operations. Banks seek support from service providers to transform their operations, drive higher margins and process efficiency, and enhance customer experience. This has led to a 23% growth in banking process transformation revenue for service providers in the past 12 months.

Both demand-side and supply-side trends are covered in our Banking Process Transformation 2023 Market Insights™ and Banking Process Transformation 2023 RadarView™, respectively.

These reports are a comprehensive study of banking process transformation service providers and closely examine leaders, innovators, disruptors, and challengers in this space. They also provide a view into important market trends and developments impacting banking operations and processes.

Avasant evaluated 35 service providers across three dimensions: practice maturity, domain ecosystem, and investments and innovation. Of the 35 providers, we recognized 23 that brought the most value to the market during the past 12 months.

The RadarView recognizes service providers in four categories:

• • Leaders: Accenture, Cognizant, Genpact, HCLTech, Infosys, TCS, and Wipro
  • Innovators: Capgemini, EXL, FIS Global, Firstsource, IBM, and Sutherland
  • Disruptors: Conduent, DXC, Mphasis, Tech Mahindra, Teleperformance, and WNS
  • Challengers: Coforge, Concentrix, Datamatics, and Exela Technologies

Figure 1 below from the full report illustrates these categories:

“Regulatory pressures, cybersecurity threats, and economic uncertainty pose significant headwinds for banks,” said Srinivas Krishna, partner at Avasant. “Modernizing legacy infrastructure, BPaaS models, and digital technologies will help banks move with agility while developing and delivering a nuanced understanding of the customer.”

The reports provide several findings, including the following:

• • Banks’ focus on expanding higher-margin services, improving customer experience, and driving process efficiencies resulted in about 23% growth in the banking process transformation revenue for service providers in 2022.
  • Regulatory requirements are driving banks to revamp their processes. They are taking service providers’ help in risk assessment and managing anti-money laundering and know your customer processes. As a result, risk and compliance services revenue grew 2% for service providers in 2022.
  • Digital technologies such as automation and BPaaS/platform-based services are becoming crucial to drive process efficiency and improve margins in banking process transformation engagements.
  • Investments in R&D and practice growth are consistent with providers scaling their banking process service offerings. Service providers are developing AI/ML-based data extraction solutions and as-a-service models, upskilling resources through domain-specific trainings, and investing in CoEs to build specialized capabilities in fraud management, mortgage, and payments.

“Banks are facing operating margin pressure due to a multitude of factors, including rising interest rates and increasing competition,” said Shwetank Saini, associate research director with Avasant. “They must pivot toward digital operations and leverage data-driven solutions to transform complex processes.”

The RadarView also features detailed profiles of 23 service providers, along with their solutions, offerings, and experience in assisting enterprises in their banking process transformation journeys.

This Research Byte is a brief overview of the Banking Process Transformation 2023 Market Insights™ and Banking Process Transformation 2023 RadarView^™. (click for pricing).