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 leaded to an increasing number of regulations and causes a tremendous loss in clients and the liquidity of banks. The events from the recent past forces IT organization of banks to rethink their strategic direction and thus to alter their outsourcing strategy. Heretofore, only scant scholars address the specific of outsourcing in the banking industry, especially of the application services outsourcing. In order to better understand applied and intended application services outsourcing strategies in the banking industry, we carried out a holistic multiple case study research with five German and Swiss banks. We furthermore reflect these findings in the lights of the organizational and industry specific circumstances and present the major challenges the observed banks are faced to.