# Why procurement is rising up the agenda in Financial Services
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-07-27
Category: Uncategorized
Category URL: https://financedigest.com/category/uncategorized
Meta Title: The Evolution of Procurement in Financial Services
Meta Description: Discover how the role of procurement is evolving in financial services, driving transformation, innovation, and business resilience for increased efficiency
URL: https://financedigest.com/why-procurement-is-rising-up-the-agenda-in-financial-serviceshtml

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_By_ **_Richard Evans,_** _Senior Vice President at_ [_Proxima_](https://www.proximagroup.com/)

The role of procurement has long been misunderstood in financial services. Like many industries, those in the front office have thought of procurement as a necessary back-office process; a hoop that they are required to jump through that does not have any bearing on the success of their own role.

![ Richard Evans, Senior Vice President at Proxima](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/richard-450x315-1736838121417-compressed.jpg)

Richard Evans, Senior Vice President at Proxima

But this is misunderstanding is finally changing. The long-ignored benefits and potential of procurement are beginning to be realised, not just in cost-cutting but in driving [transformation and performance across](https://www.financedigest.com/digital-transformation-across-the-banking-industry.html "Digital transformation across the banking industry") the whole organisation.

Our 2021 [Finance Leader’s Outlook report showed a growing awareness of procurement as a tool to drive much more than just recovery, with 38% of US finance leaders saying procurement should be measured on business resilience, while 40% of UK finance leaders said innovation](https://www.financedigest.com/innovations-in-finance.html "Innovations in finance") should be the key metric.

This shift in mentality is now taking hold in [financial services](https://www.financedigest.com/as-hackers-declare-cyberwarfare-financial-services-cannot-afford-to-be-complacent.html "As hackers declare cyberwarfare, financial services cannot afford to be complacent"). [Financial institutions](https://www.financedigest.com/the-future-of-financial-institutions-in-2023.html "The Future of Financial Institutions in 2023") have long been measured by three core indicators: growth, margin and productivity. The power of procurement in contributing to positive movement of these indicators is leading [financial institutions](https://www.financedigest.com/what-the-future-holds-for-financial-institutions-in-2023.html "What the Future Holds For Financial Institutions in 2023") to join a growing movement across sectors to rethink the role of the procurement function.

So as financial institutions look ahead to [post-COVID recovery](https://www.financedigest.com/hotel-group-accor-continues-post-covid-recovery-after-a-gorgeous-summer.html "Hotel group Accor continues post-COVID recovery after a ‘gorgeous’ summer"), how can they begin to unlock procurement’s full potential?

**Procurement’s evolution**

Procurement has long been critiqued for ‘looking backwards’ in [financial services](https://www.financedigest.com/what-can-we-learn-from-financial-services-security.html "What can we Learn from Financial Services Security?") – focusing on how costs could have been optimised and using this as the basis for future planning. This is often linked to procurement’s historic reputation as a function that drives compliance and enforces rigid [business processes, rather than being a business enabler and transformer](https://www.financedigest.com/addressing-the-human-aspects-of-business-transformation.html "Addressing the human aspects of business transformation").

But there is an important transition taking place as [procurement teams begin to look forward and position themselves as the catalyst for transformation](https://www.financedigest.com/six-ways-ai-is-transforming-sourcing-and-procurement.html "Six ways AI is transforming sourcing and procurement").

The mindset of front [office management](https://www.financedigest.com/managing-the-hidden-security-gap-in-financial-services-the-office-printer.html "MANAGING THE HIDDEN SECURITY GAP IN FINANCIAL SERVICES: THE OFFICE PRINTER") teams has changed alongside that of procurement in recent years, and procurement has now become increasingly integral to the success of companies across all sectors. In [financial services](https://www.financedigest.com/how-big-data-is-sending-shockwaves-through-the-financial-services-sector.html "How big data is sending shockwaves through the financial services sector") this has most recently been manifested in front office teams increasingly turning to procurement to ensure the arrangements are in place to support their digitisation, a process that all financial services companies are undergoing in some capacity. Procurement teams are ensuring that the processes, suppliers and correct [data are in place to ensure](https://www.financedigest.com/finance-firms-must-ensure-they-fix-data-fundamentals.html "Finance firms must ensure they fix data fundamentals") that this process can take place smoothly.

**Driving efficiency and alignment**

[Financial services](https://www.financedigest.com/boom-or-bust-how-the-financial-services-sector-is-coping.html " Boom or Bust: how the financial services sector is coping") have long been critiqued for the pace at which they adapt, whether technologically or simply through their reliance on macro metrics such as revenue growth and pre-tax margins. This rigidity often ignores the importance [risk management](https://www.financedigest.com/aon-launches-new-catastrophe-model-to-manage-the-risk-of-icelands-most-disastrous-peril-earthquake.html "Aon launches new catastrophe model to manage the risk of Iceland’s most disastrous peril: Earthquake"), cost-saving and the efficiencies that effective procurement can offer. We are now seeing a [change of mindset](https://www.financedigest.com/dispute-management-mindset-changing-the-disputes-game.html "Dispute Management Mindset: Changing the disputes game") in these areas.

Most recently, institutions have been leaning on procurement to address efficiency challenges in the physical workspace, brought on by COVID. Procurement [teams have been leant on to improve](https://www.financedigest.com/improving-your-it-team-in-four-simple-steps.html "Improving your IT team in four simple steps") resourcing of physical spaces, with many financial institutions reconfiguring their workspaces to facilitate more collaborative and efficient working practices.

Several [financial institutions have taken example from non-FS companies](https://www.financedigest.com/how-financial-services-companies-can-successfully-utilise-low-code-and-no-code-technologies.html "How financial services companies can successfully utilise low-code and no-code technologies") such as Very.co.uk, BP and Dropbox, who have redesigned their physical workspaces in the aftermath of lockdown with the support of procurement teams.

Moreover, procurement can better coordinate efficiencies through better alignment of different areas of the business, which David Sliney, COO of Stifel Bank highlighted at the [Financial Times’ recent webinar on Improving](https://www.financedigest.com/5-ways-to-improve-your-financial-literacy.html "5 Ways to Improve Your Financial Literacy") Operational Efficiency in Corporate and Investment Banking. Alignment is a key instrument of procurement, ensuring short-term and long-term business initiatives, workflow, and expectations are managed and that the right suppliers are in place to contribute to the delivery of [financial institutions’ transformation](https://www.financedigest.com/devops-the-secret-tool-thats-transforming-financial-services.html "DevOps: The Secret Tool that’s Transforming Financial Services").

These areas are where we are seeing the increasing interplay between the traditionally back-office procurement function driving [front office](https://www.financedigest.com/front-office-bpo-services-market-to-exhibit-a-cagr-of-7-4.html "Front Office BPO Services Market to exhibit a CAGR of 7.4%") performance.

**Innovation through procurement**

In the field of [financial services](https://www.financedigest.com/how-green-are-your-investments-why-esg-data-integration-is-key-for-financial-services-firms.html "“How green are your investments?” – Why ESG data integration is key for financial services firms") there has long been a stigma attached to outsourcing due to traditionally being seen as a means of cost-cutting, and shifting of the responsibility elsewhere. However, this notion is being transformed by the use of terminology such as ‘co-source’ and ‘embedded support’, whereby organisations look to their suppliers as a source of true value-add rather than a cost saving measure.

This more collaborative approach to sourcing the right delivery ability is gaining traction and enabling [financial services to use procurement in a way](https://www.financedigest.com/10-ways-to-make-your-financial-model-easier-to-understand.html "10 Ways to Make Your Financial Model Easier to Understand") to make their businesses truly cost-effective, whilst ensuring specific objectives are met. The process ensures institutions can collaborate with suppliers who act as a source of innovation and partnership, rather than simply a cost saving tool.

[**Digital transformation**](https://www.financedigest.com/how-digital-is-transforming-finance-in-2023.html "How Digital Is Transforming Finance in 2023")

[Digital transformation has been a key](https://www.financedigest.com/5-key-takeaways-from-the-finance-sectors-digital-transformation-revolution.html "5 Key Takeaways From the Finance Sector’s Digital Transformation Revolution") theme for a number of years and has accelerated during the past year as many businesses look to adapt to hybrid working, online customer demand and increased digitisation. This is proving to be another process where procurement is [driving performance for financial services](https://www.financedigest.com/how-crowdsourcing-can-help-drive-the-benefits-of-advanced-analytics-in-financial-services.html "HOW CROWDSOURCING CAN HELP DRIVE THE BENEFITS OF ADVANCED ANALYTICS IN FINANCIAL SERVICES").

Whilst many [financial services have looked to coordinate digital](https://www.financedigest.com/the-future-for-financial-services-is-digital-engagement.html "The future for financial services is digital engagement") transformation projects unilaterally, those who have, have found the cost of such projects can rise to astronomical levels. Many institutions are facing these high costs at a tough time for liquidity and the bottom line.

Such transformations present another example of where co-sourcing and procurement practice can aid [financial services](https://www.financedigest.com/4-ways-high-performance-analytics-powers-financial-services.html "4 ways high-performance analytics powers financial services") in implementing projects across the business. Ensuring a more co-ordinated allocation of resources, procurement can help source the right products and [services to ensure smooth and effective delivery of digital](https://www.financedigest.com/matching-digital-adoption-with-cybersecurity-in-the-financial-services-industry.html "Matching digital adoption with cybersecurity in the financial services industry") transformation.

The power of procurement is therefore being realised across a wide array of business areas. Procurement is slowly emerging from the back office and being seen as a function that can support performance of the front office teams.

As [financial institutions](https://www.financedigest.com/a-cloud-migration-guide-for-financial-institutions.html "A Cloud Migration Guide for Financial Institutions") look ahead to recovery this year, we expect procurement to increasingly come to the fore.


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