IMpower FundForum, the wealth and asset management event, takes place in Monaco this week. Among the many events taking place over the course of the three-days is a panel on outsourcing. Here panellist Gary Paulin of Northern Trust shares some thoughts on the challenges of balancing costs and service quality.
Cost management and service quality need no longer be considered mutually exclusive. Yes, moving a firm’s fixed-cost infrastructure onto a variable cost model through outsourcing brings the ability to manipulate its cost base. And yes, this ‘capital-lite’ model is a significant solution for helping address the increasing costs and complexity of doing business.
But the power and capabilities brought by technological advancement mean the proposition is no longer about outsourcing service solely to reduce cost.
It’s about providing ‘Infrastructure as a Service’ – an operating model that’s more future-fit and resilient for managers and a platform they can run their businesses on regardless of size. With the freedom to invest to service clients, meet regulatory requirements, gather flows and improve performance – including, where appropriate, through selected trading and investment capabilities.
This model also offers broader benefits by allowing firms to compete on alpha and service rather than predominantly on price. Freed from having to manage unnecessary fixed-costs with improved resiliency and agility, its adoption will encourage competition, innovation and focus on service quality while increasing choice for investors – all of which can only be good for our industry.
Gary Paulin is head of international enterprise client solutions at US-based custody bank Northern Trust
