The outsourcing of banking activities has grown rapidly in recent years, and forecasts suggest that this trend is likely to continue in the near future. As many banks still lack the in-house expertise to develop the software, technologies and networks to offer more advanced digital financial services products, most of these activities are outsourced to specialist third-party service providers. As they become increasingly dependent on external contractors, this practice raises concerns and risks from sharing customer data outside of the bank. This case study highlights issues that arise from the outsourcing of banking activities in the Eastern Europe and Central Asia (EECA) region and outlines their possible solutions.
Impact / Outcome
The prerequisite for effective and smooth outsourcing processes is a well-defined legal framework that provides the supervisory authority with all the required tools for effective supervision and the comprehensive information to be so effective. However, in addition to an effective regulatory framework, there should also be a well-performing, strong supervisory mechanism to address issues and challenges that arise in practice and that require ad-hoc approaches or case by case solutions.
Funding sources
Private
Key Metrics
Regulation of the outsourcing of banking activities
Operating model
Fully privateYear published
27 August 2021 