But, what long-term benefits did these initiatives really deliver? Did they really improve processing efficiency and contribute anything to sustainable operational cost reduction? Market professionals widely agree that while there were some process efficiency gains, these were not as significant as expected and sustainable operational cost reduction was neither achieved nor properly considered. There is general consensus that these initiatives were predominantly efficiency games and that they only helped operations departments process the rise in business volumes, which were peaking at the time.
The largest initiatives that actually delivered cost reduction probably focussed on using lower-cost locations, with a ‘follow-the-sun operating model’ or simply a nearshore or offshore strategy. The majority of key players in the financial services market have enjoyed good achievements in this way and as a result many succeeded in significantly reducing long-term operational costs.