Utilities-Based Services

Most financial institutions are still running entire infrastructures of their own to carry out identical processes. These add no special value, create no competitive advantage and absorb ever-increasing amounts of resources. Key drivers include proliferating regulatory demands, with the processes around compliance alone accounting for enormous expenditure.

Capco’s vision is bold. We see a future where much of today’s in-house, back-office and routine processes can be run on a Utilities basis. Gone are inflated prices for transactions carried out across disparate systems. Instead, common platforms deliver predictable costs that actually go down as usage volumes go up.

 

The Utilities Model – From Running The Whole Coffee Shop, To “Pay-Per-Drink”

Today banks work on a model analogous to bearing the costs of running an entire coffee shop, simply to get an Americano to go! This is unsustainable. Our strategists and technology experts have devised solutions that allow financial institutions to ‘pay-per-drink’, i.e. replacing inflated, opaque and unpredictable costs with a clear menu. Just like any other utility – water, power, telephony - they can budget for charges that are directly related to the actual consumption of a service. And they don’t have to sustain the vast technology investment involved in building and operating underlying delivery infrastructure. We call this our Utilities-based approach. It leverages our own broad and deep finance industry expertise, supported by the industrial scale and global delivery capabilities of our parent company, FIS™. To create a fully functional Utility, we concentrate on the following key areas:

  • Logical focus for improvement Know Your Customer (KYC), regulatory reporting, payments, collateral management and post-trade activities are all areas where non-differentiating process proliferates.
  • Key questions to answer Our Utilities-based approach asks – and answers – three key questions about the technology and infrastructure needed for high quality, cost-effective process delivery. 1. What products should you be choosing? 2. What services should you be using? 3. What best represents measurable technology value?
  • Desired outcome To run predictably high-quality processes, at a fixed and clearly understood cost, that can go down as usage rates go up.
  • Highly-structured approach Based on three key stages: mutualization, standardization and utilization.
    • Mutualization focuses on an aspect of the current banking landscape. Regulatory reporting is a prime example. It is non-differentiating. It conveys no specific competitive advantage on any single industry player. It is non-elective. It is complex. It imposes the same (or similar) burdens on all players in a particular market. Clearly, there is a mutual interest in approaching reporting tasks as efficiently as possible.
    • Standardization examines core operational elements: the application landscape, the data set, the current infrastructure and the people involved. The objective is a standardization route that leverages as many common technologies and approaches as possible.
    • Utilization replaces a fragmented landscape with a set of common approaches. It radically reduces the number of variables, enabling fixed or predictable price process operation, at lower rates and directly tied to utilization.

 

Not Invented Here

Total ownership of every platform shouldn’t be sacrosanct. Yet many CIOs face a technology culture where ‘not invented here’ vetoes any viable external initiative. Capco can help counter the objections and show that best practice often comes from outside.

 

It Doesn’t Differentiate? Don’t Do It Yourself!

Positive differentiation is key to competitive advantage in tough markets. But differentiation derives from innovation, enhanced customer experience and sustained customer satisfaction. Any non-differentiating process is a logical Utilities candidate.

 

The Ultimate Non-Compete

Historically, financial institutions have proven reluctant to share platforms, systems and approaches. Fears include loss of security and competitive edge. Yet, for a whole raft of identical processes from bank to bank, competitive advantage will much more likely come from collaboration.

 

The Trust Factor

Handing off any process to a new model. Entrusting delivery to external expertise, and even to a competitor’s platform. They demand complete faith. Capco and FIS™ have the scale, reach and proven experience to provide the trust factor in every Utilities situation.

 

Utilities In Action

The FIS™ derivatives post-trade utility platform, developed in partnership with Credit Agricole Corporate and Investment Bank (CA CIB), offers a standardized platform for global banking firms to share their IT services for cross-asset derivatives, reducing unit cost of execution while increasing efficiency.

 

A Capco Commitment

Capco’s joint utility offering with FIS™ is a core business driver and a key element of our strategy. The importance of developing and running Utilities is underscored by our significant investment in high-caliber talent and leading-edge technology.



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