In today’s fast-paced world, Information Technology has become a central element to the smooth running of any business operation. The banking sector, a pivotal industry in Lebanon’s economy boasting $85 billion in assets, is no stranger to the trend. Banks are increasingly allocating larger parts of their budget to IT departments. This has prompted some companies such as Capital Outsourcing to offer financial institutions tailor-made IT services.
“Outsourcing has been proven to help businesses reduce their costs, maximize their resources, and operate more efficiently, thus allowing them to focus on their core competencies,” underlined Charbel Bouhabib, deputy general manager at Capital Outsourcing. The company offers to financial institutions flexible propositions, allowing them to choose from a number of services and solutions, while adapting them to the specific needs of each bank.
Range of services
According to Bouhabib, there are different types of IT outsourcing that can be provided to financial institutions. “The formula is very flexible and can involve a range of products and services,” he said. Among the IT services that can be outsourced are IT consulting, messaging, hosting, and collocation. “IT support can be either provided on site or remotely and our company can either complement an organization’s existing IT team or replace it completely,” he pointed out. The company is also beefed up by its own team that is responsible for designing and implementing IT projects.
Hosted messaging using HMC technology reduces reliance on internal IT resources and provides a sophisticated messaging and collaboration solution for companies. This allows for instant access to email, calendar appointments and task notifications, while incorporating new mobile security features, such as wiping data from lost and stolen devices.
Collocation allows banks to liberalize their resources while significantly allowing for time and cost reductions by using a data platform that is shared with other Capital Outsourcing clients. “This technology is based on a concept of economies of scale as each server and service is shared by various institutions,” he said. The manager emphasized that the shared data infrastructure also provides the security of offsite data back-up.
Hosting services are another service that can be outsourced by banks. This type of service varies in frequency and complexity while delivering secure space and reliable connectivity for the most complex operations such as dedicated hosting services for high traffic volume.
“The IT activity in Lebanese banks evolves within the regulatory framework defined by the Central Bank with the oversight of the Banking Control Commission,” Bouhabib said.
Many banks in Lebanon have turned from internally developed solutions to international software packages and solutions. Capital Outsourcing offers multiple banking solutions such as Capital Global Banking for corporate and retail banks and Capital Private Banking for private banks, which are used by more than 110 banks in Europe, Middle East and Africa.
“Our software programs encompass all types of banking activities, satisfying all sorts of needs. They also allow banks to stay in line with new Basel II requirements, and offer flexibility in report issuance,” explained Bouhabib. Such software is built around parameters that can be adapted to each financial institution.
Tailoring services to demand
“As an example, commission calculation varies from one bank to the other. Our programs, which include different parameters and various methods of calculations and take into consideration time periods, currencies involved and different values, can be tailored to each institution’s individual needs,” the manager said.
Capital Outsourcing IT management also provides expert advice to banks when its comes doing performance audits, make a new purchase or lease our servers.
For outsourcing companies the IT business can be a very profitable one. IT budgets vary traditionally within a bracket of $1-4 million yearly, depending on the bank’s size. This figure includes maintenance of the system, security running and telecommunication fees. However, the last figure varies greatly, depending on the number of branches the financial institution has. Prices for relatively small software can go from $1 million to $3 million, including implementation and training sessions, which can cost as much as the actual licensing.
In most Lebanese banks IT systems are usually centralized. The approach differs, however, as some banks have installed servers in each branch synchronizing with the headquarters, while other are directly linked with to the main server. While costs of the project increase when each branch is equipped with an independent server, it offers reliability incase of communication failure. Branches connected with headquarters traditionally rely on two links, dial-up and microwave.
The Capital Outsourcing manager pointed out that, besides the obvious advantages, such as improving efficiency, outsourcing has allowed institutions to dramatically cut IT costs within the span of only a few years.
