Financial institutions have been increasingly interested in
outsourcing business activities in order to reduce costs and
improve their flexibility and efficiency. In the context of
digitalisation and the increasing importance of new financial
technology (fintech) providers, financial institutions are adapting
their business models to embrace such technologies. Outsourcing is
also relevant in the context of gaining or maintaining access to
the EU's financial market.
Institutions should be able to effectively control and challenge
the quality and performance of outsourced functions and be able to
carry out their own risk assessment and ongoing monitoring. On the
other hand, Competent authorities are required to effectively
supervise financial institutions' outsourcing arrangements,
including identifying and monitoring risk concentrations at
individual service providers and assessing whether or not such
concentrations could pose a risk to the stability of the
