European banks outsource more to cut costs

Signals such as decelerating loan growth, deterioration of credit quality and weakening fund flows will lead to diminishing revenue growth for Europe’s retail banks, resulting in them outsourcing more of their IT operations, according to Datamonitor research. The European banks’ most important short-term priority is to control costs and gain rapid return on investment, so cost control is becoming the key driver for IT outsourcing in the retail banking space, notes the report. Other major factors include a focus on core competencies, organizational changes, quality of service, rapid access to technology and key IT skills.