© 2013 First Data Corporation.

Five Back Office Processes FIs Should Outsource Now

2

© 2013 First Data Corporation.

Why Outsource Back Office Processes?In the midst of continuing adverse economic conditions and

increasingly restrictive regulatory constraints, most financial

institutions are finding revenue growth to be elusive. Faced with

flat revenues, many FIs are seeking to cut costs in order to maintain

the returns expected by their stakeholders.

Back office outsourcing has emerged as a popular and effective

way to transfer labor-intensive processes to a third-party while

maintaining the reliability and integrity of daily operations. And

in many cases, an experienced outsourcing partner can even

improve the customer satisfaction and business results related to

an outsourced function.

This eBook examines five potentially costly and inefficient

back office processes that present financial institutions with

opportunities to reduce expenses and streamline their operations.

3

© 2013 First Data Corporation. 3

Outsourcing Opportunity #1:Dispute ManagementThe outsourcing partner manages the cardholder dispute process from inquiry through chargeback and resolution. The partner is responsible for all customer communication and dispute documentation, including compliance with legal regulations and card association rules.

Reporting and analysis is typically provided so the FI can adjust decisioning policies if necessary. An outsourcing partner’s flexible capacity enables it to handle even unexpectedly high volumes of customer disputes in a timely and efficient manner.

© 2013 First Data Corporation. 4

4

Outsourcing Opportunity #2:Fraud Research & InvestigationsThe outsourcing partner researches and investigates claims of fraud by initiating communication with cardholders and performing chargeback activities on fraudulent transactions. Subsequently, the partner executes merchant re-presentments for items that are charged back, reviews re-presentment documentation, and determines if further chargeback rights exist.

The partner also provides the FI with detailed account reporting on provisional credits and reversals, as well as fraud trend reporting.

5

© 2013 First Data Corporation. 5

Outsourcing Opportunity #3:Card RedeliveryThis function involves tracking, researching, re-mailing and destroying cards and PIN mailers returned by the Postal Service. The outsourcing partner stores returned plastics in an area that is compliant with card association rules, and performs daily checks for address changes or status changes to optimize the redelivery success rate.

6

© 2013 First Data Corporation.

Outsourcing Opportunity #4:Customer Correspondence

This function comprises account research, statement requests, and account maintenance related to

customers’ written correspondence. An outsourcing partner’s economies

of scale enable it to deliver this service—which includes both labor-intensive communication processes and printing/mailing—much more

efficiently than most institutions can perform internally.

7

© 2013 First Data Corporation.

Outsourcing Opportunity #5:SettlementThe outsourcing partner handles the institution’s daily settlement activities, including management of suspense and exception items requiring research or correction before they can be cleared. This service usually also comprises typical control and audit functions such as general ledger, reconciliation, rejects and returns.

© 2013 First Data Corporation. 8

Considerations for Choosing a PartnerThe key to successfully deploying back office outsourcing to streamline operations, reduce costs, free up internal staff, and improve service delivery is to choose the right partner. As you evaluate potential service providers, be sure to consider these four essential attributes:

1. Operational Excellence – a core competency in the services it delivers, and a commitment to quality and continuous improvement.

2. Compliance Expertise – a deep understanding and demonstrated record of financial industry regulatory compliance and risk mitigation.

3. Technological Innovation – a technology infrastructure that supports continuous process improvement and enables reliable and error-free operation capabilities.

4. Staffing Superiority – a pool of highly-trained, experienced managers and practitioners with a record of delivering service that exceeds even the financial institution’s high standards.

For information on how First Data can help you reduce the cost of your back office operations, please contact your account manager or visit firstdata.com.

9

6579