Guidehouse Survey Explores How Financial Institutions are Doing “More with Less” by Outsourcing

WASHINGTON, July 25, 2023 — Financial institutions are under constant pressure to reduce the cost of financial crime compliance functions and balance the need to meet evolving regulatory obligations. A new survey released today by Guidehouse, in cooperation with Compliance Week, explores how financial institutions are turning to outsource providers to handle these surges in activity. It analyzes the maturity of the compliance outsourcing market, challenges in working with a managed service provider, and how financial institutions are measuring value of their outsourcing partners.

As indicated by the survey, financial institutions that are outsourcing compliance functions are realizing its value. An overwhelming 92% of financial institutions that are currently outsourcing report they have either seen improvement in effectiveness and efficiency with their program or no change to business as usual. As to the reasons why they choose to outsource the compliance function, 58% of respondents say they are looking to free up internal resources to focus on high-level initiatives. 

“Tighter regulations and staffing constraints are a constant concern within any compliance function’s ability to control costs while trying to maintain effectiveness in complying with regulatory requirements,” says Ali Bokhari, Global Managed Services leader at Guidehouse. “Outsourcing components of a compliance function can allow businesses the ability to maintain their competitive footing while also remaining current with evolving regulatory demands.” 

“Outsourcing can provide compliance relief without disrupting business as usual,” says Eli Morillo, a partner at Guidehouse. “Financial institutions, both large and small, are seeing success in outsourcing components of their financial crime compliance function. Whether an organization is trying to handle activity surges, enhance existing programs, or replace existing staff, outsourcing provides a viable alternative.”

Other key findings include:

• Smaller institutions ($60 billion or less in assets) are more likely to outsource compliance functions (75%) than larger institutions (25%)
• When evaluating potential outsourcing providers, “superior industry knowledge and capabilities” was most important for both small and large financial institutions
• Those considering outsourcing compliance functions evaluate providers primarily for language capabilities and geographies where services are provided
  
  

Survey respondents who haven’t considered outsourcing their compliance programs cited potential regulatory concerns, challenges with data security, costs and resources, and perceived loss of control over compliance functions, as possible reasons.
 
“Compliance functions are being forced to do more with less,” added Morillo. “Tighter regulations and fewer staff puts compliance functions in an impossible situation. Outsourcing components of a compliance function can give breathing room without disrupting business as usual.”

For more information, and to download a full copy of the survey, please click here.

About Guidehouse 

Guidehouse is a leading global provider of consulting services to the public sector and commercial markets, with broad capabilities in management, technology, and risk consulting. By combining our public and private sector expertise, we help clients address their most complex challenges and navigate significant regulatory pressures, focusing on transformational change, business resiliency, and technology-driven innovation. Across a range of advisory, consulting, outsourcing, and digital services, we create scalable, innovative solutions that help our clients outwit complexity and position them for future growth and success. The company has more than 16,500 professionals in over 55 locations globally. Guidehouse is a Veritas Capital portfolio company, led by seasoned professionals with proven and diverse expertise in traditional and emerging technologies, markets, and agenda-setting issues driving national and global economies. For more information, please visit www.guidehouse.com.

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