The concept of centralized technology procurement in financial services industry began to fly by 2011. In the earlier days, the procurement functions were performed mostly by respective departments and teams themselves which included business development, technology, administration and others. The scope of technology procurement in financial services is far more diverse than the general impression. Understanding business requirements, shortlisting vendors, negotiating prices and concluding legal contracts are rather complex processes nowadays which fall under the umbrella of a procurement division. Not only confined to this, supporting organizational objectives and goals while working closely with other functional teams in a company nowadays define what an effective procurement department can achieve. Keeping all these factors in consideration, it can be safely said that the strength of a procurement department directly relates to the overall performance of a company.
Compared to traditional banks, procurement departments in telecommunication companies are way ahead in the race. They are more rigid and compliant when policies are concerned and are vividly able to grasp power and authority from within the company to execute procurement business. A substantial percentage of banks is still in the process of progression towards centralizing the procurement. Some banks have already sowed the seeds of a strong procurement department while others are striving to make their way. The banks where procurement divisions have already been empowered, may often come on strong in terms of price negotiations and contract dialogue, while the rest of the banks would rather be settling for routine clerical work. Witnessing this, the future of procurement in the banking industry can be foreseen as promising and growing.
Alongside procurement, a new term called vendor management is emerging in the arena. The functionalities of procurement and vendor management overlap at times in different companies while clear segregation can be spotted in few organizations. However, it should be noted that banks have started to take the procurement division very seriously over the course of time and many banks are progressing towards a centralized approach for procurement. The need for centralization is very high and budgets are accordingly being allotted to procurement departments along with proper yearly targets to be achieved.
Besides creating value for their customers, the main objective of any bank or telecommunication company for purchasing financial technology constantly revolves around sustaining and increasing profit in the face of growing competition. The developing synergy that can be seen between banks and telcos pinpoints toward branchless banking, which is one of the most promising technologies to promote financial inclusion in South Asia and Africa.
Fortunately, TPS is blessed to have had the foresight to start developing such technologies at an early stage. Now as the banks and telecoms collaborate through creative business products, they are each empowered by seasoned and mature software developed by TPS for their specific needs.
Many banks are still using the old school methodology when it comes to serving their customers. This can be considered as a great opportunity for Fintechs, not only in terms of benefiting themselves from this relatively untapped market, but also benefiting the consumers with more varied, powerful and simple to use financial services.
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