Offshoring of Business Processes by Banks from Switzerland

Diploma Thesis from the year 2008 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1.0, Swiss Finance Institute (Bankmanagement), course: Executive Program, language: English, abstract: The global banking sector is currently undergoing fundamental changes. Banks face new challenges created by socio-economic and political developments and the potential of new information and communication technologies. Competition has risen to formerly unknown levels and active management of costs has become an ongoing tasks.

Unlike the manufacturing industries most banks still cover large parts of their value chain by themselves. Lead by Anglo-Saxon institutes global banks have started in recent years to use the advantages of globalization by splitting up their value chains and by offshoring selected functions to countries offering wage differentials. According to experts banks have just started to create their global sourcing model, so that the offshoring volume is projected to increase further.

While most banks have started their offshoring initiatives with IT functions, business process offshoring and even knowledge process offshoring have now become the main drivers of the move to the key offshoring locations like India, China and Eastern Europe.

Banks from Switzerland have been spectators to the global move towards a global delivery model for many years. Only its two large global banks - UBS and Credit Suisse - have started offshoring initiatives yet trying to catch up with their global competitors. They face challenges especially from the legal and regulatory side, which are specific to offshoring from Switzerland, and have to balance cost discipline with keeping the high standards in quality, security and confidentiality, which are the base for the high reputation of the Swiss banking market.

The primary objective of this paper is to give an overview on the current status as well as on trends in business process offshoring by banks in general and on offshoring from the Swiss banking market specifically. As Swiss institutes lag the global offshoring trend, the specific conditions for offshoring from Switzerland will get analyzed.

Secondary objective of this paper is to give a high-level introduction to the key issues in business process offshoring:

• What are the organizational options in offshoring?
• Which banking processes are suitable for offshoring and what are the criteria for identifying them?
• What are the main offshoring locations and criteria in the site selection?
• What are the drivers, but also risks and benefits of offshoring?