Financial services outsourcing

Material outsourcing arrangements are rapidly evolving to keep pace with technology and regulatory changes. AI, in particular, offers some interesting opportunities for deployment in financial services businesses operations, including streamlining internal processes relating to appointment of, and oversight over, third parties, and for third parties themselves to use AI to improve service delivery. With these opportunities comes a number of challenges, particularly from a regulatory perspective, that will need to be considered by firms and regulators alike.

The upcoming critical third parties regime will bring third parties into the regulatory perimeter for the first time. We will be closely watching the impact of this regime on third party service provision and how contractual terms evolve to reflect this new regulatory status. We expect that this regime will support regulated firms in both their due diligence over critical third parties and their negotiation of certain terms of the outsourcing agreement.