Emerging Opportunities in the Indian Banking BPO Industry

Indian banks are currently witnessing robust growth under the influence of a changing regulatory environment, rapid technological advancements, heightened competition and consolidation. This changing landscape in the banking industry is driving banks to explore the outsourcing option to achieve efficiencies.

The banking industry was one of the first to outsource business processes to third party vendors in the Indian market. Banking is also one of the large segments in terms of total outsourcing opportunity in the domestic BPO industry.

The total opportunity for outsourcing in the banking sector is estimated at Rs. 11.2 b for FY08. Our research suggests that little over one-third of this opportunity is currently being met. The majority of revenues are earned from voice-based services in sales and marketing.

Services offshored

Most of the large banks outsource entry level services like data entry, digitization, data preparation and validation etc. These services do not require domain expertise in banking and can be easily outsourced. Also, sales and marketing activities like loyalty programs, outbound sales and inbound customer support are easily outsourceable.

A majority of the vendors primarily provide voice-based CRM services to large banks. These vendors include large international BPOs (like IBM-Daksh, MphasiS, etc.), BPOs with substantial focus on domestic market (like InfoVision, Intelenet, etc.).

Immediate opportunity in value added services

Over the last few years banks have started offering a number of value added services to grow their business. Banks are increasingly outsourcing these value added services in order to quickly bring new products to the market and rapidly scale up across locations.

Typical value added services offered by banks include Bill payments, Mobile banking, Inbound Remittances, Tax Payments, Insurance Payments, D-mat facility, Market updates etc.

Banks and Services Outsourced 

Outsourcing value added services relieves banks of financial and manpower investments in building infrastructure required to offer the service. In fact, several of the private banks are leveraging technology to outsource services, which enable them to ramp up their presence quickly in new markets.

We believe that as the banking industry matures in its outsourcing initiative, the demand for quality value added services is likely to gain prominence in the long term.