The relevance and impact of regulatory requirements on German financial institutions’ outsourcing activities

Hasan, Riffat (2021) The relevance and impact of regulatory requirements on German financial institutions’ outsourcing activities. DBA thesis, University of Gloucestershire. doi:10.46289/M3U9AD42

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German financial institutions have increased their outsourcing activities and business processes in recent years to achieve cost advantages and to improve their flexibility. However, intensified regulatory requirements related to outsourcing and especially the new 2019 EBA Guidelines on outsourcing arrangements in combination with the revised 2017 German Minimum Requirements on Risk Management (MaRisk) have negatively influenced financial institutions’ outsourcing activities. German financial institutions in this respect have to realign their outsourcing management and readjust their outsourcing activities to comply with the outsourcing regulations and to keep their outsourcing activities profitable. Existing literature into the impact and relevance of outsourcing regulations is limited. With most being qualitative-based, these studies do not have rich and critical insight into understanding the complexities surrounding the theme of outsourcing regulations in the banking environment. Existing literature is more focused on an investigation of the decisions and outcomes of outsourcing, such as the risks and benefits of outsourcing. Reflecting this gap, the aim of this study is to investigate the real impact, meaning and relevance of legal requirements in the outsourcing environment of German financial institutions. This study, following a constructionist methodology, using semi-structured interviews, investigated the perspectives of twelve outsourcing experts from eight banks, two vendors and one management consultancy into the perceived impact and meaning of outsourcing regulations. The interviews were analysed by applying a content analysis framework, before the data was then interpreted and presented. The first key finding of this study is that the new and revised legal requirements have a significant and potentially negative impact on the efficiency of German financial institutions’ outsourcing activities and further lead to the need for German financial institutions to realign their outsourcing management and activities. The second key finding of this study is that the new and revised outsourcing regulations have a significant relevance related to the outsourcing activities of German financial institutions and that attention to the theme of outsourcing management increased in financial institutions due to the intensified legal requirements. The third key finding of this study relates to the practical realigned methods financial institutions executed to meet the legal requirements, including the realignment of their outsourcing management, adjustment of their outsourcing portfolios and perceived future challenges. In conclusion, this study provides new and first-hand qualitative insights and knowledge to practitioners and researchers on how legal requirements influence the outsourcing activities and management of financial institutions, and how financial institutions can realign their outsourcing activities to best comply with the intensified regulations.

Item Type: Thesis (DBA)
Thesis Advisors:
Thesis AdvisorEmailURL
Uncontrolled Keywords: Outsourcing in financial institutions; Outsourcing regulations; EBA Guidelines on outsourcing arrangements; Minimum Requirements on Risk Management (MaRisk); Outsourcing decisions
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management > HD61 Risk in industry. Risk management
H Social Sciences > HG Finance > HG4001 Finance management. Business finance
Divisions: Schools and Research Institutes > School of Business, Computing and Social Sciences
Depositing User: Susan Turner
Date Deposited: 01 Jul 2022 15:45
Last Modified: 25 Jan 2024 09:16

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