Case study: Barclays

The decision to outsource our trade back office processing during 2004 was made to allow us to concentrate on our core competencies of relationship and servicing expertise. We selected ABN AMRO to provide the processing capability to support our customers current and future needs in the changing and competitive trade market place Angela Potter, Head of International Trade and Cash Solutions, Barclays. .
Barclays Bank plc began its outsourcing journey in 2003 when it outsourced a number of nontransactional services to third parties. One of the top 10 global banks by market capitalisation, and with nearly 80,000 employees, Barclays has an open view to outsourcing non-core activities to best of breed suppliers, in order to focus on core competencies. It was now looking to develop an optimal model for its transaction services that would enable it to reduce costs and extend functionality in partnership with a few strategic suppliers. While Barclays Trade Services business is a key element of its overall customer proposition, its challenge was to look at how it could turn what was essentially a static business with fixed high costs into a growing business with a more predictable, variable cost structure. Barclays UK business was distributed over three processing centres, employing 250 staff and processing over 100,000 transactions a year for their UK and European customers on a legacy trade system. Their challenge was particularly great in light of the fact that integration and migration to a new trade system would inevitably be a protracted and expensive project, with high associated business risks, that might not result in reductions in costs in the medium term. Aligning business drivers with strategic options The strategic options examined by Barclays were further direct investment or outsourcing to a partner bank and these were considered in the context of the banks key business drivers. These were: improving their operating model for trade processing; reducing the costs of their trade business in relation to people, infrastructure and services; improving their trade service capabilities and establishing a workable, non-competing, long-term partnership. After considering all of the options, including a Joint Venture partnership, Barclays decided to outsource the processing aspect of its trade services offering to ABN AMRO and to focus on delivering enhanced client service. As John Callender, Managing Director, UK Banking at Barclays, says: Outsourcing is a positive strategy. It will change your cost base and transform your business. However, successful outsourcing depends on choosing the right supplier, one that not only meets your requirements but is also a good cultural fit . ABN AMRO, a market-leading trade services provider for more than 175 years, has completed over 35 successful outsourcing partnerships with major financial institutions worldwide, offering a comprehensive solution addressing key areas such as front and back office technology, core processing capabilities and enhanced customer service. ABN AMRO had transformed its global trade business into a futuristic and seamless global hub and spoke model, with a world class operations hub in Chennai, India, offering best in class global processing standards, a large pool of skilled trade personnel and a stable and secure trade processing infrastructure. ABN AMROs trade outsourcing solution offered the high levels of processing efficiency demanded by Barclays for their trade clients, while eliminating the risk to Barclays of migrating from a legacy system to a new trade platform. ABN AMRO spokesperson, Daniel Cotti, says: As cost pressures intensify, financial institutions are redefining the way in which they provide trade services to their customers. The agreement with Barclays provides them with access to ABN AMROs global scale, expertise and ongoing investment in innovative, world-class transaction banking technologies, while they can focus on retaining and building on their customer franchise . Barclays agreed a phased approach to outsourcing to ABN AMRO, which commenced in January 2004 and moved to full roll-out in August of that year.

Outsourcing is a positive strategy. It will change your cost base and transform your business.

Financial institutions

Trade

Benefits and opportunities Geoff Smith, Overseas Outsourcing Director at Barclays says: Despite the fact that some of our baseline assumptions were flawed, our overall business case has been met and the quality and service we receive is good indeed . Barclays has already achieved significant cost reductions and enhanced service levels, creating a platform from which it can grow its business. It has lessened the risk inherent in its people model and has changed the cost dynamics of the whole of its UK trade business. The partnership arrangement with ABN AMRO continues to allow it to offer new trade products and tools, with a short time to market, and has improved customer retention by focusing on better service quality and delivery.

Making more possible By partnering with ABN AMRO, financial institutions can access a spectrum of award-winning transaction banking capabilities to meet the needs of their clients. They can tap into continually evolving core processing and information technologies, scale efficiencies and innovation to enhance their competitiveness. They can have world-class payments and trade services, extending their reach. A robust network for executing client transactions; complete operational capabilities to support a clients own trade processing; FX and clearing products and comprehensive, end-to-end, private-labelled solutions whatever the need, ABN AMRO can tailor a solution. To find out more, please contact your ABN AMRO adviser. Alternatively, please visit us at www.wholesale.abnamro.com or our Global Trade Portal www.maxtrad.com

As cost pressures intensify, financial institutions are redefining the way in which they provide trade services to their customers.

Highlights of ABN AMROs BPO model for Barclays Barclays retains its own technology ABN AMRO processes on IT suppliers legacy technology in a lower cost location No interfaces required Lift and drop migration reduces transition risk Advantages for Barclays Short implementation time Lower business risks Reduction in FTE costs Move from fixed to variable costs model Benefits for ABN AMRO Established precedent for other banks to follow A close relationship with a strategic and leading bank

No representation, warranty, or assurance of any kind, express or implied, is made as to the accuracy or completeness of the information contained in this document and ABN AMRO Bank N.V. (ABN AMRO) accepts no obligation to any recipient to update or correct any information contained herein. The information in this brochure is published for information purposes only. It does not purport to be all inclusive or constitute any form of recommendation and is not to be taken as a substitute for the recipient exercising his own judgement and seeking his own advice. ABN AMRO accepts no liability or responsibility whatsoever for any loss arising from any use of this document or its contents. This document may not be reproduced, distributed or published for any purpose without the prior written consent of ABN AMRO. Important information for the United Kingdom: in respect of distribution into the United Kingdom, ABN AMRO Bank N.V., London Branch of 250 Bishopsgate, London EC2M 4AA has issued and approved this document solely for the purposes of Section 21 of the Financial Services and Markets Act 2000. ABN AMRO Bank N.V., London Branch, is authorised by the Dutch Central Bank and by the Financial Services Authority, and regulated by the Financial Services Authority for the conduct of UK business. September 2005 ABN AMRO Bank N.V FI525

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