The PaymentsJournal Podcast

The Benefits of Outsourcing Item Processing Functions


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Many financial institutions are in a time of transition. With the continuous decline in check volume,  it’s important for banks and credit unions to find efficiencies where they can. One area where financial institutions can realize immediate benefits is by outsourcing their item processing function. To learn more, PaymentsJournal sat with Joe Pachunka, CIO of Deposit Solutions at Fiserv, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group, to discuss the many benefits of outsourcing item processing.






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Focus on Core Business



Though check volumes are declining, item processing is still a vital function for banks, Pachunka noted.



“Check processing can be thought of as a legacy business, but it’s still a very valid channel for transactions,” he added. “And it has to be up 24/7.”



By outsourcing such a manual and time-intensive function, banks can focus on their core business and focus on other areas.



Indeed, Grotta observed that by outsourcing this part of the business, banks can focus more on pursuing innovation.



“Many of the financial institutions I talk to don’t necessarily want to focus on item processing and are happy to have someone else oversee that part of business,” she said. Outsourcing to a respected vendor also enables banks to improve their cybersecurity stance and reduce system resiliency risk, added Pachunka, while at the same time receiving new application features on a daily basis.



“We are seeing some cases where in-house hosted systems applications are rarely updated even once annually,” he continued. “In some cases, updates were not applied for over three years.”



Fiserv, he noted, updates its application software three or four times per year.



“When you consider that we are living in a rapidly evolving cyber risk environment, rapid application deployment of resolved cyber risk findings is key to addressing the ever-increasing risks that are around us,” Pachunka said.



Perhaps it is no surprise then that recent statistics indicate that outsourced financial services will rise by 7.5% annually.



Overcoming Talent Retention Issues



Outsourcing can also help during times when it is d...
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The PaymentsJournal PodcastBy The PaymentsJournal Podcast