Outsourcing: Banks Buy Into BPO

Although banks have always outsourced bits and pieces of business line processing, some are taking outsourcing much further. One such bank, Delaware-based Wilmington Savings Fund Society (WSFS), has contracted Alltel Information Services to take over the bank's entire deposit and loan processing operations to reduce administrative costs and increase efficiencies in statement preparation, account research and adjustments to in-house and deposit reconciliations, as well as installment, mortgage and commercial loan processing.

In addition, Little Rock, AK-based Alltel's five-year agreement with WSFS has a built-in incentive that delivers a substantial bonus to Alltel when WSFS improves its efficiency ratio either by reducing expenses or increasing revenues. John Amatangelo, Alltel's vp of business process services, says his company will cut the bank's operating costs "by reducing labor overhead, using new PC-based software to automate document handling and improve work flow." Alltel will also support new product development by delivering account analysis statements on a regular basis.

Business process strategic partnering of banks and consulting firms is growing in popularity, says Barry Cater, a partner in Andersen Consulting's financial services practice. The next step is for banks to use outside professionals to help them with product development.

WSFS may be on that road already. "We have an aggressive 12- to 18- month strategy with Alltel to upgrade our technology with one dozen new technical applications, including product-delivery channels like Internet banking and corporate on-line banking," says WSFS' evp Tom Stevenson.

-peterson tfn.com