German Banks and Vendors Adapt to New Outsourcing Regulations

Despite initial concerns about bureaucratic red tape, a majority of German banks and vendors have accepted the new outsourcing regulations introduced by the European Banking Authority (EBA). The revised guidelines aim to improve quality assurance and transparency in outsourcing arrangements.

Support for the Regulations

A member of the board at a major bank expressed support for the regulations, stating that they are “justified” in the area of outsourcing. A business unit head at a service provider echoed this sentiment, saying that the requirements are “appropriate” given the context of quality assurance and transparency creation.

Mitigating Risks

Many banks perceive the regulations as necessary to mitigate potential risks associated with outsourcing activities. One senior consultant from a management consultancy firm noted that non-financial risk management is now receiving more attention, which is in line with the regulator’s intention.

Challenges Implementing the Regulations

However, some critics argue that the regulations are too theoretical and lack practical examples, making implementation challenging. A head of central outsourcing management at a bank expressed frustration with the lack of clarification on what is expected, saying it increases administrative effort.

Adapting to the New Regulations

Despite these challenges, many banks have taken steps to adapt to the new regulations. In fact, a study found that there has been a significant increase in management attention and awareness of the theme of outsourcing within financial institutions. This raised awareness can be attributed to increased costs and efforts required to implement and monitor the revised legal requirements.

Call for Further Support

Some banks are also calling for further support from regulatory bodies. For example, they would like to see central databases or certification processes for multi-client service providers, which could help reduce administrative effort and ensure that financial institutions can outsource to verified partners.

Conclusion

Overall, while there may be some frustration with the bureaucratic aspects of the regulations, many German banks and vendors have come to accept the new guidelines as necessary steps towards improving quality and transparency in outsourcing arrangements.