Navigating Outsourcing Challenges: How to Regain Operational Control and Visibility

As modernization and digital transformation push the financial services industry forward, more banks and credit unions are outsourcing their core banking systems than ever before. In fact, over 60% of banks are in the process or planning stages of moving to a new cloud-based core banking system.

Outsourcing core systems can streamline and secure banking operations, enhance regulatory compliance, and enable in-house IT staff to work more efficiently; despite these benefits, outsourced cores come with downsides, too.

The challenges of an outsourced core

Some of the most common challenges financial institutions (FIs) experience after outsourcing their core operations include:

• Inconsistency in processes: Ensuring uniformity and adherence to standard procedures can prove difficult when relying on an outsourced vendor.
• Lack of visibility: With limited insight into the day-to-day operations and processes carried out by an outsourcing partner, many FIs with outsourced cores grapple with uncertainty and inefficiencies, leaving their hands tied when something goes wrong, such as a job failure.
• Risk of errors: The potential for errors or discrepancies increases when processes are executed outside of the institution's direct control.
• Increased workload on staff: Despite outsourcing, internal staff may find themselves burdened with additional tasks related to managing and coordinating outsourced activities. On top of that, FIs with outsourced cores tend to operate with leaner IT teams, meaning in-house employees are left to carry a greater workload.
• Lack of control: With a vendor handling core operations, institutions may feel a loss of control over critical processes and decision-making, impacting their ability to adapt to changing circumstances and address issues. For example, an outsourced FI cannot make changes like job frequency; instead, they have to submit a ticket to the vendor.
• Can’t scale to do more: Limited scalability with outsourcing partners may hinder the institution's ability to reach its full growth potential.

How the challenges of an outsourced core impact financial institutions

While these challenges are issues in and of themselves, they also have a downstream impact on employees. When the pitfalls of an outsourced core go unchecked, they can lead to staff burnout and stress, resource drain, limited focus on important projects, and delayed issue resolution.

Because of these impacts, many organizations’ IT and operations teams are falsely perceived as inefficient and ineffective, leading business stakeholders to lose confidence or place increased pressure on them.

Overcoming outsourcing challenges with workload automation

Financial institutions can overcome many of the hurdles associated with outsourced core operations and regain control and visibility by implementing a workload automation and orchestration (WLA&O) solution. WLA&O offers a comprehensive approach to managing and orchestrating diverse processes, including those outsourced to third-party vendors. As a result, financial institutions can expect benefits like:

• Task scheduling and coordination: Automating the scheduling and coordination of tasks can ensure smooth execution and minimize manual intervention.
• Enhanced security and compliance: WLA solutions can enforce security protocols and ensure compliance with regulatory requirements, mitigating risks associated with outsourced operations.
• Accommodating customer and member demands: By automating repetitive tasks, institutions can allocate more resources toward addressing customer needs and enhancing satisfaction.
• Automating workflows of other business units: WLA solutions can streamline workflows across different departments and even enable business users to initiate automated processes that would otherwise require IT support.
• Streamlining processes: Automation can help standardize and optimize processes, leading to greater consistency and reliability.

While workload automation and orchestration can optimize myriad facets of a financial institution’s operations, some of the most common use cases include:

• Automation of core-dependent processes
• Digital banking synchronization
• Disaster recovery/business continuity
• Data archiving

The real-world impact of workload automation for outsourced institutions

Though some banks and credit unions with outsourced core systems may not realize the value of automation for their organizations, many financial institutions are already reaping the benefits of workload automation and orchestration solutions like OpCon.

Four real-life areas where financial institutions have seen improvements through modern-day WLA are:

File monitoring

“In one month alone, we ran 68,000 jobs with OpCon—7,000 of those were file moves. This has removed the need for constant file monitoring, which saves our employees time and ensures these processes can run automatically throughout the day, even if someone’s on vacation. If an issue pops up at any point, we receive a notification, so we can resolve it quickly.” ​

—Mike Taylor, Bayport Credit Union

Downloading, uploading, parsing, importing, and exporting

"We now save over 2,000 hours per year on document downloads alone with OpCon. We run a script that parses out those documents from MeridianLink into Synergy.” ​

—Jessica Campassi, Commonwealth Credit Union

Delivering automation for everyone

"With an outsourced core and endless automation opportunities with OpCon, we now have time to work with more business units to discover what they’re still doing manually, so we can automate those processes, too, and save even more time across the organization.”​

—Matthew Lewis, Baxter Credit Union

Self-service capabilities

"One area that OpCon has been significantly better than [our prior automation vendor] is the ability to combine self-service workflows to enable our departments to launch complex processes. It’s simple to use, and definitely a great evolution in efficiency over our prior automation system.”​

—Erik Lubbock, Oregon State Credit Union

Automation best practices with outsourced core systems

To ensure you’re maximizing the potential of automation in your financial institution, follow these best practices:

• Practice good data hygiene: Keeping data up to date and standardized across systems is critical for achieving operational excellence.
• Ensure visibility is available: When something goes wrong, you need to have enough visibility to uncover the problem—and enough control to resolve it.
• Look for more ways to automate: When it comes to automation, think beyond your core processes; delivering automation to teams across your organization can prove even more impactful.

The reality is that automation becomes even more critical once you’ve outsourced your core system. Take a close look at the pain points you’re experiencing as a result of outsourcing and consider how workload automation and orchestration may be able to help.

For an in-depth look at how you can overcome the drawbacks of an outsourced core, watch our on-demand webinar on navigating outsourcing challenges.