Deutsche Bank has pulled out of its involvement in back office outsourcing venture SOCX, selling its 50% stake in the company to partner Wall Street Systems and resuming inhouse processing of money markets transactions.
Financial details of the transaction have not been disclosed.
Launched as a joint venture between Wall Street Systems and Deutsche Bank in 2001, SOCX (Settlement & Operations Clearing eXchange) employs 28 staff and provides processing, settlement and clearing services across a broad range of financial products.
When the SOCX concept was first floated, the German bank was looking to outsource a whole swathe of its global market processing. However, the demise of JPMorgan derivatives outsourcer Arcordia and the failure of other similar ventures to get off the ground has forced the bank to rethink its approach to BPO.
"While we believe that the outsourcing market is growing and can only expand in the future, Deutsche Bank has taken a strategic decision to focus our management time and investments on our core competencies," says Will Meldrum, head of global markets e-strategic investments for Deutsche Bank. "The divestiture of our shareholdings in SOCX and other non core competency holdings is consistent with our strategic focus."
Deutsche Bank was SOCX's sole client and the German bank's repatriation of its processing must be viewed as a major blow to the near-term viability of the concept.
Wall Street Systems says it will continue to market SOCX, and maintains that it has a healthy pipleine of interest among tier one and tier two banks.
However, a survey conducted by Finextra of financial technology spending strategies for 2003 found business processing outsourcing way down the list of priorities for capital markets paticipants. While tactical outsourcing of IT operations continues to attract interest because of the potential cost savings, banks appear reluctant to turn over their core business processes to third parties during the current downturn.