The bank and the financial crisis has created an ideal opportunity for community banks, trust companies and similar organizations to re-evaluate the way they offer trust services and asset management. Gone are the days when the Board of Directors has turned a blind eye to poor performance of trust departments. In a new era of greater oversight and accountability, the regulators of banks and senior management will be more vigilant than ever to make sure that the trust departments are well managed and profitable.
Despite a high cost, low-margin profile, providing trust and related wealth management services is essential for most of the banks because of its relation appeal. Given a choice, for example, most of the customers of the banks would prefer to have all their banking needs handled by a single bank, rather than having their current account, mortgages and commercial loans with a bank and their funds and other financial assets managed from another.
One way banks, trust companies and similar organizations can maximize the value of the supply relationship of trust services and asset management, while minimizing costs is to strategic outsourcing various components of providing those services. Depending on the size of the department and the complexity of the services provided, it is not unusual to reduce the basic costs of providing trust services and relating to the wealth management 50%, or more, for administration strategically outsourcing trust and operations.
The rise of the Strategic Business process controls results
The fear of "losing control "it is one of the most common arguments against outsourcing used by the bank in charge of trust department. However, the results of a survey conducted by Accenture revealed that a surprising 86% of respondents have concluded that outsourcing gave their organization "... greater control over strategic business results in a variety of critical areas, such as the shareholder value and revenue, "of no less.
cost savings can strengthen growth efforts
Not surprisingly, the Accenture survey also found that "... 73% of the companies redistribute the benefits outsourcing to an economic bottom line or growth efforts. "not all the cost savings should necessarily go to the bottom line. In some cases, it may be more prudent to reinvest some or all of these savings in new business development and front-line positions that have a major impact on the ability of a trust department to attract and retain high net worth clients.
A greater strategic focus on building a strong Business and Brand Model
The Accenture survey results also showed that 55% of executives surveyed indicated that outsourcing "... allows the effective implementation of ideas, strategies, and change at a faster pace and more controlled." Administration strategically outsourcing trust department and operations allows trust department managers to take a more holistic approach to the management of their business models, which translates into a greater overall success for the trust and for the bank department. It 'also a great way for managers of trust department to slip out from under the heavy burden of daily micromanaging a business to become the visionary leader that is so important to the success of this activity.
Summary and Conclusions
The advantages of a well-designed, the strategic outsourcing partnership for the departments of trust banks and asset management organizations like are well documented and not It may be underestimated. Besides realizing the benefits of load reduction, outsourcing administration and trust operations it offers great trust managers the opportunity to examine the business practices and methods that could simultaneously reveal significant opportunities for improvement in revenues.
A real outsourcing strategic partnership must also include a Service Level Agreement that guarantees responsible for trust department that will receive high quality services on the basis shared economic interests, rather than relying on traditional customer / supplier relationships.
departments Fiduciary Trust Bank and similar organizations should not settle for an outsourcing relationship that is based on cost reduction alone. To be most effective, it must be based on a strategic partnership that includes much broader analysis of business goals and overall objectives, accompanied by a practice management program written establishing benchmarks and charts a course for success.
Upcoming articles will examine the benefits and structure of an effective Service Level Agreement and expose the advantages of setting up a practice management program that focuses on the goals, objectives and responsibilities.
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