2020 Foresight Report: Best Practices in Card Outsourcing

2020 Foresight Report: Best Practices in Card Outsourcing

$3,800.00

Publication ID
TMC0513269
Publication Date
May 24, 2013
Pages
74
Regions Covered
Publisher
Cards make up one of the most outsourced business operations in the financial services sector. Indeed, a large numbers of banks and card issuers have either outsourced specific functions or their entire their card operations. The primary factors driving such practice have been largely similar to those recorded in the outsourcing sector in general, and include cost reduction, gaining a comparative advantage, access to cheap/skilled labor, a lack of in-house expertise and risk management advantages. Card outsourcing is fast-moving towards the adoption of cloud technology and onshore and nearshore models, driven primarily by cost advantage and government initiatives such as tax benefits. In addition, there is an increased focus on value added services such as behavior analysis and fraud prevention schemes.
 
This report provides detailed insights into the following topics:
  • Card outsourcing models
  • Key offshore outsourcing locations 
  • Emerging trends
  • Best practices in vendor management
  • Best practices in outsourcing of key business operations related to the card industry
 

Scope

  • This report provides a comprehensive analysis of the key outsourcing activities in the card industry across the globe
  • It provides insights on various outsourcing models used by card issuers and their risk exposures
  • It provides analysis on the attractiveness and level of various card outsourcing activities in key offshore locations
  • It outlines the emerging trends in card outsourcing
  • It details the key best practices in vendor management with case examples
  • It explains the potential scope of outsourcing of key business operations associated with cards along with best practice case examples
 

Reasons To Buy

  • Make card outsourcing work for you  
  • Learn from best practice and read case studies 
  • Find out the key risks and challenges beforehand and select a model to minimize them
  • Gain insight into the current developments in card outsourcing 
  • Gain insight into key drivers of card outsourcing to check if your organization fits in the picture 
 

Key Highlights

  • Cards make up one of the most outsourced business operations in the financial services sector. A large numbers of banks and card issuers have either outsourced specific functions or their entire their card operations. 
  • The primary factors driving card outsourcing have been largely similar to those recorded in the outsourcing sector in general, and include cost reduction, gaining a comparative advantage, access to cheap/skilled labor, a lack of in-house expertise and risk management advantages.
  • Card outsourcing is fast-moving towards the adoption of cloud technology and onshore and nearshore models, driven primarily by cost advantage and government initiatives such as tax benefits respectively. In addition, there is an increased focus on value added services such as behavior analysis and fraud prevention schemes.
  • Card issuers remain responsible for their business actions, even though the vendor is given the authority to act on their behalf. Outsourced operations must be monitored closely to ensure adherence to a contractual agreement.
  • One of the best ways of judging the perceived quality of performance is communicating with those firms already doing business with the vendor. Card issuers can also engage in market research and take advice from professional advisors.

1 Executive Summary

2 Strategic Insight into Card Outsourcing

2.1 Outsourcing Models
2.1.1 Models based on the involvement of card issuers and third-parties
2.1.2 Models based on ownership
2.1.3 Models based on location
2.2 Offshore and Nearshore Hotspots for Card Outsourcing
2.2.1 Comparative attractiveness of outsourcing destinations
2.2.2 Outsourcing activities in key countries
2.3 Emerging Trends and Drivers
2.3.1 Recent trends
2.3.2 Key drivers of card outsourcing
2.4 Risks and Challenges
2.4.1 Vendor management
2.4.2 Risk level of various outsourcing models
2.4.3 Risks in typical outsourced business processes

3 Best Practices in Vendor Management

3.1 Client Position in an Outsourcing Relationship
3.2 Vendor Selection
3.2.1 Identification of needs and objectives
3.2.2 References, market review and consultations
3.2.3 Pricing
3.2.4 Request for proposal (RFP)
3.3 Vendor Agreement
3.3.1 Establishing standards of performance
3.3.2 Standard violations, issue resolution and penalties
3.3.3 Pricing options
3.3.4 Contract period
3.3.5 Exit policy and bringing operations in-house

4 Best Practice in Outsourcing Business Operations

4.1 Technology
4.1.1 Dimensions of potential outsourcing
4.1.2 Case study – Swisscard AECS AG’s migration to EMV credit cards
4.2 Customer Service
4.2.1 Dimension of potential outsourcing
4.2.2 Case study – Barclaycard outsources customer service for UK cardholders to Firstsource
4.3 Risk Management and Collections
4.3.1 Dimensions of potential outsourcing
4.3.2 Case study – Santander Cards outsources its risk management to CallCredit
4.3.3 Case study – HEW Federal Credit Union’s collections increased with the help of PSCU
4.4 Operations
4.4.1 Dimension of potential outsourcing
4.4.2 Case study – Krung Thai Card (KTC) outsources payment processing to FIS
4.4.3 Case study – Cold Stone Creamery, Inc. uses First Data to produce its gift card
4.5 Sales and Marketing and Loyalty Programs
4.5.1 Dimension of potential outsourcing
4.5.2 Case Study – American State Bank (ASB) improves its loyalty program through First Data
4.5.3 Case study – Golden Plains Credit Union (GPCU) adopts Vantiv’s marketing strategies

5 Appendix

5.1 Methodology
5.2 Background
5.3 Contact Us
5.4 About Timetric
5.5 Disclaimer
 

List of Tables

Table 1: Top-10 Outsourcing Advisors, 2012
Table 2: Banks and Card Outsourcing
Table 3: Responsibility Failures and Consequences
Table 4: Needs and Objectives Examples
Table 5: Vendor Pricing Mechanism
Table 6: Best Practice in Defining Measurements and Review Period
Table 7: Technology Outsourcing in Card Business
Table 8: ASTREX Simulation Platform
Table 9: Card Fraud in Developed Economies (US$ Million), 2008–2012
Table 10: Card Fraud in Developing Economies (US$ Million), 2008–2012
Table 11: Card Operation Outsourcing Examples
Table 12: Sales and Marketing and Loyalty Program Examples
 

List of Figures

Figure 1: Card Outsourcing Framework
Figure 2: Card Outsourcing Models Based on Issuer and Third-Party Involvement
Figure 3: Card Outsourcing Models Based on Ownership
Figure 4: Card Outsourcing Models Based on Location
Figure 5: Card Outsourcing Hotspots
Figure 6: Comparative Attractiveness of  Key Outsourcing Destinations
Figure 7: Services Activity in Key Outsourcing Destinations
Figure 8: Cloud Models
Figure 9: Value Added Services, The New Trend
Figure 10: Key Drivers Of Card Outsourcing
Figure 11: Risks and Challenges in Vendor Management
Figure 12: Levels of Risk
Figure 13: Risks and Challenges Across Various Business Process
Figure 14: Vendor Management Framework
Figure 15: Client Position in an Outsourcing Relationship
Figure 16: Key Elements of Vendor Selection
Figure 17: Falcon Fraud Manager
Figure 18: The Case of Intesa Sanpaolo Card And MasterCard Advisors
Figure 19: The Case of Reliance Bank’s Selection of ACCEL/Exchange Network
Figure 20: The Case of BOI
Figure 21: Key Elements of Vendor Agreement
Figure 22: Outsourcing Card Business Operations
Figure 23: Rising IT Expenditure to Support Card Outsourcing
Figure 24: The Case of Swisscard AECS AG’s Migration to EMV Technology
Figure 25: Outsourcing in Customer Service
Figure 26: The Case of Barclaycard Outsourcing Customer Service to Firstsource
Figure 27: Card Fraud in Developed Economies (US$ Million), 2008–2012
Figure 28: Card Fraud in Developing Economies (US$ Million), 2008–2012
Figure 29: Outsourcing in Card Risk Management
Figure 30: Key Advantages of CallMonitor and The Affordability Suite
Figure 31: The Case of Santander Cards Using CallCredit to Manage Risk
Figure 32: Key Features and Benefits of CUCollect Credit Card Collections Solution
Figure 33: The Case of HEWFCU Using PSCU to Increase Collections
Figure 34: Key Outsourced Operations
Figure 35: The Case of KTC Outsourcing Payment Processing to FIS
Figure 36: The Case of CSC Using First Data for Card Production
Figure 37: Key Outsourced Activities
Figure 38: The Case of ASB Using Fist Data to Improve its Loyalty Program
Figure 39: The Case of GPCU Using Vantiv For Effective Marketing Strategy
  1. Citibank
  2. Barclays
  3. Bank of America
  4. Chase Bank
  5. Genpact
  6. TCS
  7. Cognizant
  8. Infosys
  9. WNS
  10. Vantiv
  11. CyberSource
  12. Wells Fargo
  13. Intesa Sanpaolo Card
  14. Capital One
  15. American Express
  16. HDFC
  17. ICICI
  18. HEW Federal Credit Union
  19. Reliance Bank
  20. Fiserv
  21. Bank of India
  22. Swisscard AECS AG
  23. Acquirer Systems
  24. Firstsource
  25. Banco Santander
  26. CallCredit
  27. Public Service Credit Union
  28. TSYS
  29. First Data
  30. FIS
  31. Krung Thai Card
  32. Cold Stone Creamery
  33. American State Bank
  34. Golden Plains Credit Union
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