Banks Still Have Vast Needs and Some BPOs are Seizing the Moment

As automation hollows out BPO revenues, banks and financial firms are offering a much-needed lifeline — drawing outsourcers into even core banking activities.

Growing regulatory demands are pushing banks to outsource even front-office tasks like customer onboarding and KYC checks.

European banks now delegate 40-50% of transaction monitoring task to BPO firms, according to a study by Pmarket Research earlier this year.

As of 2023, midsize banks spent $50-75 million a year on compliance workflows. Sixty-eight percent of that was poured into KYC and anti-money laundering operations.

A new survey by the Financial Education & Research Foundation shows the shift is widespread. “Outsourcing has become common,” the report says, with over 51% of financial executives handing off major functions to external partners.

Sixty percent of large firms and 51% of smaller banks expect to increase outsourcing in the next three to five years.

“We are seeing BFSIs push more critical processes to BPOs — from fraud detection to KYC compliance and digital onboarding,” said Katia Acciarresi, SVP Sales at IBEX, a nearshore BPO firm.

Ironically, the same Agentic AI that threatened BPO jobs is now pulling in more banking clients.

Acciarresi calls it a “quantum leap forward” for financial institutions. AI tools in digital onboarding can spot fake applications in real time, filtering out fraudulent accounts before they enter the system.

BPOs equipped with automated KYC verification and AI-driven credit scoring are seeing revenues surge.

“We’re supporting engagements that involve hundreds of agents augmented with agentic AI to ensure accuracy, transparency, and compliance at scale,” Acciarresi added.

One UK-based BPO recently claimed that it helped a bank cut customer dropout rates from 34% to 11%. Per-account setup costs fell by £18.50 (US$23) after biometric verification replaced manual checks.

The surge in banking-focused BPO services was evident in the recent quarterly results of Firstsource, where the BFSI vertical accounted for 33% of total revenue. In the first three months of 2025, the BFSI segment contributed 60% of the company’s incremental revenue, adding over US$7 million to the topline.

Other outsourcing majors, including HGS and EXL, also reported strong growth in their BFSI businesses. However, IBEX saw a mild slowdown.

The fintech vertical contributed 12.4% of IBEX’s revenue in Q1 FY25, down from 14.8% in Q1 FY24, marking a decline of 2.4 percentage points

The inevitability to Outsource

Big banks may build their own tech, but for most, outsourcing is the cheaper route. With technology advancing fast, global financial firms now spend $14 billion annually just on maintaining legacy systems.

“Bank examiners have become increasingly critical of homegrown solutions, particularly when it comes to risk management,” said Mike Welsh, Chief Storyteller at Bridgenext, a Florida-based IT consultant serving multiple BFSI clients.

“Regulators are also urging banks to focus on their core activities while leveraging external providers for digital banking, lending, and related services,” Welsh added.

He points out that legacy Durbin rule balance sheets now face tougher scrutiny, especially after recent bank failures. “Sanctioned banks must prove compliance, and outsourcing offers independent validation while sharing risk with specialists.”

Meanwhile, Banking-as-a-Service is taking off. This modular, plug-and-play model lets banks outsource individual services — payments, lending, even core banking modules — as building blocks for a custom digital ecosystem.

Genpact has jumped on this opportunity. It rolled out RPA across 15,000 processes, claiming a 40% drop in manual tasks and US$50 million in savings.

Banks are no longer outsourcing just to save money. They are treating BPOs as strategic partners — sometimes even as captives.

Late last year, UAE-based RAK Bank teamed up with Wipro to launch an innovation center. Wipro runs the center independently, delivering quality assurance, testing services, and supporting the bank in rolling out next-gen banking solutions.