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Is it time to revaluate your service provider? What are the main drivers for change?
Research shows that 67% of fund managers would benefit from a single-source provider that can deliver all your financial service needs.
Switching financial service providers can be a daunting decision, especially when considering an outsourced or co-sourced operating model. Based on a recent LinkedIn survey*, we can gain valuable insights into the factors influencing this decision and the challenges faced by those who have already made the switch.
Let’s delve into the survey results and explore what they mean for you:
Why outsource?
Outsourcing is a strategic decision influenced by several key factors that can significantly benefit a business. Access to talent and capabilities is the foremost reason, with 32% of respondents highlighting its importance. By outsourcing, companies can leverage expert knowledge that may not be available in-house.
Cost efficiency is another critical consideration, cited by 31% of respondents. Outsourcing often allows businesses to reduce operational costs while maintaining or even enhancing service quality.
Scalability and flexibility (22%) are also vital benefits, as outsourcing provides the agility to adapt to changing market demands and growth opportunities. Additionally, time-saving advantages (14%) are significant, with outsourcing enabling organizations to focus on core competencies while streamlining processes. These factors collectively demonstrate why outsourcing is a valuable strategy for businesses seeking to enhance efficiency and drive growth.
What holds you back from outsourcing
When it comes to switching to an outsourced or co-sourced operating model, the survey revealed that loss of direct control is the top concern when considering switching service provider, with 34% of respondents citing it as a major deterrent. This is closely followed by privacy and data security concerns at 32%. It’s understandable; handing over sensitive financial data to a third party requires a significant level of trust.
However, it’s worth noting that 13% of respondents are open to the idea, stating that nothing would stop them from switching. This indicates a growing acceptance and confidence in outsourced models.
Key differentiators between providers
When selecting an outsourced or co-sourced service provider, several differentiators stand out. Depth of experience is the most important factor, with 29% of respondents valuing it. This is followed by improved client support at 26%, highlighting the need for reliable and responsive service.
Better global coverage and the use of leading technology are also significant, with 25% and 19% of respondents respectively considering these factors crucial. These insights suggest that while experience and support are paramount, the ability to leverage advanced technology and provide comprehensive coverage are also key considerations.
Challenges faced when switching providers
Switching providers is not without its challenges. A significant 56% of respondents reported experiencing a decline in quality of service after making the switch. This underscores the importance of thoroughly vetting potential providers to ensure they can maintain or exceed your current service levels.
Other challenges include data security issues (15%) and poor transition processes (14%). Interestingly, 15% of respondents reported no challenges, indicating that with the right provider, the transition can be smooth and trouble-free.
Future considerations
Looking ahead, 47% of respondents are definitely considering outsourcing or co-sourcing their fund administration within the next two years. Another 17% are exploring their options. This shows a clear trend towards outsourcing, driven by the need for specific skills, cost savings, and operational efficiency.
How can we help?
Switching financial service providers, particularly to an outsourced or co-sourced model, involves weighing various factors to carefully choose a provider that meets your specific requirements and ensures a smooth, successful transition.
For over two decades Apex Group has continually disrupted the financial services industry through its investment in innovation and talent. Today, the Group sets the pace in fund and asset servicing and stands out for its unique single-source solution and unified cross asset-class platform which supports the entire value chain, harnesses leading innovative technology, and benefits from cross-jurisdictional expertise delivered by a long-standing management team and over 13,000 integrated professionals.
A thriving global business requires an asset servicing partner with both global knowledge and local insights. As technology and scalability become core priorities, many managers are turning to providers who can deliver multi-faceted solutions.
Are you ready to make the switch? Find out more.
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