Advantage ASPs in technology game
The growing use of the internet in financial services provides a new challenge to banks' already stretched in-house technology teams. They must build new systems quickly at a time of rapid and fundamental developments in software and financial operations. The risk is that banks may spend heavily to develop proprietary systems that are already out of date by the time they are up and running. Application service providers may offer the answer, if banks can bring themselves to trust them.
If someone were to offer to take the time, expense and hassle out of your business's bothersome but essential technical and systems operations, leaving you free to concentrate a greater proportion of your resources on revenue-generating activities, such as customer service and sales, you'd jump at the chance, wouldn't you?
This is precisely what the new generation of application service providers (ASPs) claim they offer to the banking industry and to new alternative trading systems as they struggle to build out their internet infrastructure. The ASPs reckon they can design and implement new systems for banks more cheaply, quickly and efficiently than the banks could alone, while also promising greater security and a higher level of straight-through processing. They make money while the banks save money. Everyone's a winner, the ASPs would claim.
But the path to the brave new world of fully outsourced back-office systems has many obstacles.