Scotland Vying for European Financial Services Outsourcing Supremacy

By Tim Clark, Wall Street & Technology

I was recently invited to attend a three-day tour of the financial services community in key areas of Scotland. Intrigued by the prospect to speak face-to-face with executives from the likes of Morgan Stanley, Standard Life Investments, RBS, Franklin Templeton and Citigroup about offshoring different aspects of their operations, this was an offer I couldn't refuse.The first leg of the trip took place in Glasgow, a city that is rapidly transforming into a fast-paced, cosmopolitan, financial-services hub. JPMorgan's European tech center for instance, was created in Glasgow in 1999, whicht speaks volumes about the city's ability to attract and retain the best and brightest. Unfortunately, executives from JPMorgan were not available during this tour.

Like many geographic regions - such as the nearby popular offshore locations of Ireland and even Northern Ireland - interested in wooing big financial firms for offshoring outsourcing deals, Scotland also has an organization dedicated to luring potential clients to its soil. Scottish Development International is charged with bringing financial services companies into Scotland, says Mark McMullen, senior executive, financial services team, trade and investment for SDI. In the interests of full disclosure, SDI sponsored and funded the tour.

To date, SDI has been very successful in attracting financial firms, according to McMullen. Financial services is the fastest growing sector of the Scottish economy, growing 39 percent in the past five years. And out of 113,000 financial services jobs in Scotland, 8.3 percent are in asset management while banking makes up 60 percent. Lastly, the financial services sector contributes nearly 6.4 percent to the Scottish GDP. However, McMullen adds that he's still concerned about growing regulatory burdens, outsourcing and increased globalization issues, not unlike firms on the other side of the Atlantic.

Jonathan Polin, sales and marketing director for Resolution Asset Management, said his firm uses a good mix of both proprietary and off-the-shelf applications to run its business. Polin said Resolution is hungry to buy other firms in the U.K. market to further grow its life insurance and asset management businesses.

Located on a beautiful campus on the outskirts of Glasgow is Morgan Stanley's Consumer Banking Group International (CBGI), a part of the Discover (credit card) family. The light, cheery mood inside the sprawling complex belies the stress of what's really happening as the company handles 7,000 to 8,000 customer service calls per day, according to Colin Rutherford, head of operations, Morgan Stanley. A seasoned exec, Colin said outsourcing the CGBI call center is not an option for Morgan Stanley because it would compromise customer service, but they do outsource data entry to ACS Utah.

Keep an eye out for my blog report from part 2 of the tour, when I visit with Standard Life Investments, The Royal Bank of Scotland, Citigroup and Tom McCabe, the Scottish Executive Finance Minister in the beautiful city of Edinburgh. Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio