In a sector as competitive and dynamic as financial services, firms need to take a serious look at all sides of the business—including the frightening shadow-realm of closed-book accounts. Fortunately, there’s a strategy that will help you slay these monsters. It’s business process outsourcing, or BPO—handing off your closed-block administration to one of the growing number of companies that handle it as a service.

What you need to know about business process outsourcing

Kearney has found that the right business process outsourcing partner for closed-block business can yield as much as a 50 percent reduction in operating costs (see sidebar: Case study: Global life insurance and annuities). What’s more, you can focus more of your resources on future success—and fewer on past offerings.

In addition to these savings, a business process outsourcing provider will likely improve the service that your legacy customers receive. These partners are specialists, well-versed in the particular needs of these accounts, and in the ways that new processes and technologies can make them function more smoothly.

This approach has become increasingly popular in Europe, and it’s time for US companies to catch up. Shifting closed blocks to a BPO partner is a solid decision that every financial services company should consider.

But there’s a right way and a wrong way to deal with these problems, which is where our four-step plan comes in.

Kearney’s four-step plan for business process outsourcing

With years of experience helping companies navigate business process outsourcing, Kearney has developed a four-step plan to help financial services clients achieve success in devolving their closed-block operations (see figure 2).