Financial Services Industry Overview
Businesses across the financial services industry are seeking ways to manage costs in the way that they do not creep back into the system. External spend is one such category of spend that constitutes approximately 30 percent of its cost base. To this end, companies are improving the strategic sourcing approach – an approach successfully used in different sectors.
Strategic sourcing envisions innovative ways to optimize the long-term value contribution from suppliers and procurement functions while inculcating traditional techniques. When implemented effectively, strategic sourcing can deliver sustained incremental savings of total external spend, with better saving opportunities in individual spend categories.
Companies in the financial services industry can achieve sustained cost savings through strategic sourcing. Request a free proposal to financial services industry analysis and gain customized market intelligence solutions.
Role of Strategic Sourcing in the Financial Services Industry
Better cost savings
The financial services industry has witnessed a strong and benign credit environment growth over the last few years. However, economic pressure is forcing businesses to take cost management initiatives. The reason being – companies do not address the underlying cost drivers. The “shell game” that firms play ostensibly cut spending ends up being detrimental in the medium- to long-term, as these costs inevitably reappear over time. Although short-term reduction of external costs is demanded each year and should be delivered but companies must take proactive approach in identifying how they can cut costs in a more sustained way. Having a top-down approach can help organizations reap the benefits of sourcing functions within the firm.
Wondering how companies operating in the financial services industry can devise cost management strategies? Get in touch with our experts for more insights on our solutions.
Our experience with the clients indicates that organizations can achieve substantial savings even across expense categories that are already considered “managed”. There exist significant reductions in opportunities in the areas that traditionally do not fall under the procurement management umbrella. It includes spend categories such as legal expenses and temporary staffing, as well as sourcing of functions such as payments, mortgage servicing, and loan processing. However, capturing such savings is an arduous task. It requires a radical remake of the procurement function, developing a comprehensive, center-led set of competencies and capabilities.
The incapability to capture savings for the future can impact the market position of companies. Stay a step ahead by requesting free platform access from our procurement experts to gain detailed market insights.
Maximizing strategic sourcing potential
Taking a series of pragmatic steps can help companies to realize the benefits of strategic sourcing. A comprehensive overview of the external spend categories and spend drivers rather than simply analyzing traditional procurement categories and relating them to an appropriate level of procurement sophistication can help companies unlock significant cost savings. Also, mapping out a comprehensive strategy to gain more value from suppliers and effectively managing spend drivers can help achieve a sustained lower spend base.
To gain detailed insights into the factors impacting the financial services industry growth rate and the role of strategic sourcing, request more information from our analysts.