Application Services Outsourcing in the Banking Industry - Current Strategies and Challenges

Globalization, raising competition, shrinking client loyalty, and recently the impact of the financial crisis have led to an increasing number of regulations and caused a tremendous loss of bank clients and liquidity. The events from the recent past have forced banks' IT organizations to rethink their strategic direction and thus to alter their outsourcing strategy. Only a few scholars have addressed outsourcing specifically in the banking industry, especially application services outsourcing. To better understand applied and intended application services outsourcing strategies in the banking industry, we conducted holistic multiple case study research with five German and Swiss banks. The results reveal that the interviewed banks intend to heavily increase their outsourcing volume. Furthermore, we discovered six categories of different challenges banks currently face.