The BFSI (banking, financial services, and insurance) sector is operating in a regulatory and economic landscape that demands stringent compliance and risk management. As a result, there is an increasing reliance on managed service providers (MSPs) to address these challenges and optimize operations.
In today’s digital age, the BFSI industry cannot afford setbacks and must prioritize its presence in the digital arena. Consequently, significant investments have been made in fintech firms. Both traditional and digital banks are leveraging data analytics, cloud computing, and advanced APIs to stay ahead of other industries and deliver enhanced services to customers.
Managed service providers play a crucial role in this industry shift by providing specialized services tailored to the unique needs of the BFSI sector. They offer expertise in compliance and risk management, helping financial institutions organize and safeguard their operations effectively. MSPs also assist in adopting strategic attributes that enable efficient and secure financial business operations.
By partnering with MSPs, the BFSI sector gains access to a wide range of services and technologies, including secure data management, infrastructure management, cloud migration, cybersecurity, and regulatory compliance. This allows financial institutions to focus on their core competencies and customer-centric initiatives while relying on MSPs to handle critical IT operations.
Why is the rate of adoption of managed services high among financial institutions
Figure 1: Service offerings for managed services in financial services
Image Source: auroradigitalbanking.com
By partnering with MSPs, the BFSI sector can overcome various challenges. These challenges include ensuring regulatory compliance, managing cybersecurity risks, optimizing operational efficiency, leveraging emerging technologies like AI and machine learning, navigating digital transformation, and mitigating the complexity of integrating new innovations.
MSPs bring a wealth of industry-specific knowledge and experience to address these challenges effectively, enabling financial institutions to focus on their core competencies while benefiting from specialized external support.
In summary, MSPs play a crucial role in assisting the BFSI sector in mitigating challenges and capitalizing on opportunities by providing tailored solutions, expert guidance, and future-oriented strategies.
What drives the implementation of managed services in financial services?
Research indicates that the banking and BFSI (banking, financial services, and insurance) sectors have specific challenges that make the implementation of managed services a necessity. Here are the key reasons why these sectors require MSPs:
- Enhanced Security and Compliance: Banks and financial institutions face increasing security threats and stringent regulatory requirements. MSPs offer expertise in cybersecurity and compliance, helping organizations safeguard sensitive data and meet regulatory obligations.
- Scalability and Flexibility: The dynamic nature of the BFSI sector requires scalable and flexible IT infrastructure to support growth and adapt to changing market demands. MSPs provide scalable solutions, allowing banks to easily expand or contract their IT capabilities as needed.
- Cost Optimization: Managing IT operations in-house can be expensive and resource-intensive. MSPs offer cost-effective solutions by leveraging their expertise, economies of scale, and efficient resource allocation. This enables banks to optimize costs and allocate resources more strategically.
- Advanced Technology Adoption: The banking and BFSI sectors heavily rely on technology advancements to deliver innovative products and services. MSPs assist in the adoption of emerging technologies such as cloud computing, AI, and machine learning, enabling banks to enhance operational efficiency, customer experience, and stay competitive in the digital era.
- Focus on Core Business Functions: By outsourcing IT operations to MSPs, banks can focus on their core business functions, such as customer service, product development, and risk management. MSPs take care of IT infrastructure management, allowing organizations to allocate resources and expertise where they matter most.
- 24/7 Monitoring and Support: MSPs provide round-the-clock monitoring, proactive maintenance, and responsive support, ensuring smooth and uninterrupted operations. This reduces downtime, enhances system availability, and improves overall business productivity.
- Expertise and Industry Knowledge: MSPs specializing in the BFSI sector possess deep industry knowledge and expertise. They understand the specific challenges, regulations, and best practices within the industry, enabling them to deliver tailored solutions that address sector-specific needs effectively.
By partnering with MSPs, banks and financial institutions can leverage specialized skills, cutting-edge technologies, and cost-efficient solutions to overcome industry challenges, improve operational efficiency, and stay ahead in the rapidly evolving BFSI landscape.
Managed services for financial services firms have helped the industry thrive with technological advancements. It uses APIs to reduce upgrade and maintenance costs. The agility of the business system increases with continuous monitoring, performance, and capacity management.
So, if you are a financial services firm and are willing to stay ahead of the competition with timely upgrades and innovations, then check out the services of STL Tech to learn more about managed services.
The three Cs of managed services in financial services are:
● Cost: The managed services give rise to an opportunity for businesses to reduce their total overall costs. And they do it by implementing the necessary services only when needed. Moreover, financial firms also tend to avoid expensive downtime while setting up new solutions and running them feasibly.
● Control: Managed services also provide added control to financial firms on their IT operations. The managed service providers make sure to tone down the complexity of the IT environments to allow the internal team of financial services firms to get better visibility for retaining control.
● Consolidation: By partnering with the managed service providers, the banks have the flexibility to consolidate their technology expenses and associated operations. The shift of banking industries to the cloud has helped them adopt modern
technologies and managed services have helped integrate them to attain business profits.
The key pillars of managed services in the financial domain are:
● Migration and complete onboarding support
● Hosting and provisioning of the infrastructure
● Provider infrastructure services
● Application validation
● Application operations.
Some of the benefits of implementing managed services for the banking and finance sectors are:
● Predictable expenditure
● Proactive management
● Enhanced security aspects
● Enhanced focus on the business
● Support for data compliance
● Faster response times.