Tax and Finance Operate

In Financial Services

EY teams help financial services companies reimagine tax and finance operating models to address evolving regulation, technology and talent demands. Our Tax and Finance Operate (TFO) solution can help banks co-source select activities, leveraging our significant investment in technology, people and process.

Case Study
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Case Study

How tax managed services can accelerate banks’ transformation programs

Managed services are an alternative way for a bank’s tax and finance function to meet risk and governance responsibilities effectively.

Case Study
The better the question The better the answer The better the world works
Case Study

How managed services can benefit tax and finance functions

Helping reduce tax and compliance requirements of banks, managed services provide the freedom to focus on priorities.

A bank’s support functions have many similarities, but each is unique in its own important way. Tax, finance, risk and compliance all demand constant rigor, high levels of accuracy, and a winning combination of talent and technology. 

At the same time, banks have to fight to keep pace with increasingly complex regulation and governance requirements, coupled with the acceleration of technology and a highly fluid workforce. Banks’ investment – both in time and money – in acquiring advanced technology and talent to run their support functions efficiently is relentless.

This continuous effort to keep up has led to support functions sitting firmly in the crosshairs of cost management. As a result, banking leaders who are seeking new ways to reduce the cost pressure of their support functions are increasingly turning to external service providers to help carry the load.

Managed services can lift the requirements of non-core but critical activities, such as tax and finance, and is an alternative way for banks to increase operational resilience while curbing costs. Crucially, it gives banks the freedom to grow and perform.

The pace of change affecting tax and finance functions, which has only been increased by the impact of COVID-19, means banks cannot afford to postpone transforming these functions if they want to boost operational resilience and create greater value for their organizations. An EY survey highlighted that 73% of respondents said they are more likely than not to co-source some critical activities in the next 24 months to add value, reduce risk and decrease cost.

Recently, one global bank decided to collaborate with the EY organization to improve the performance of its tax and finance function, to pursue greater value in the bank’s front-end operation.

From the outset, the EY teams understood that for their relationship with the bank to work, it needed to clearly outline how managed services could not only reduce the cost pressure of the tax and finance functions but do so in a way that would improve the bank’s risk profile, transparency and governance model.

Trust between both parties has been fundamental to this ongoing collaboration, especially since the outbreak of COVID-19. The unforeseen impact of the pandemic has accentuated the need for a strong virtual working relationship with the bank, to help enable stable business continuity planning for the months ahead.

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Case Study
The better the question The better the answer The better the world works
Case Study

Create adaptive services to facilitate business continuity by design

EY’s technology-enabled approach to managed services seamlessly adjusted how the bank functions today.

There are two main stages to any managed services operation: transition and transformation. Transition requires a large amount of trust between the client and the managed service provider because it is the stage during which the client gives the provider access to their financial data. According to John Thomopoulos, EY Global Banking & Capital Markets Tax Leader, “If a bank is going to turn around and hand you their most sensitive information, they have to trust you. So, the fundamentals of client services are essential.”

In the case of the EY organization and the bank, the transition phase first involved an assessment of the bank’s existing state of operations – how its tax and finance function operated in-house, and how core elements of the function could feasibly transition across to EY teams as part of a managed service.

Once this stage was complete, the EY teams started to work on transferring the bank’s financial data to EY’s secure, technology-enabled environment. This involved cleaning the data, restructuring it and presenting it in a format whereby the bank could use it many times for a variety of different purposes.

The benefit of leveraging EY technology

The transition to a managed services approaches also opened up the ability to drive ongoing and multidimensional cost savings.

First, the bank benefits from the EY organization’s significant ongoing investment in advanced technology. This not only makes the bank’s data more accessible and enables more opportunities to identify insights and drive value for the bank, but also reduces the need for the bank itself to invest in developing – and maintaining – its own tools. Generally, this type of long-term investment and maintenance of technology is difficult for banks to manage and can be avoided through managed services.

Second, a managed services approach removes the bank’s requirement to offer frequent technology training for its employees in tax and finance functions, which can be costly. Instead, the EY team commits to training and upskilling the bank’s employees in a secure, regulatory-compliant environment during the transformation phase.

Risk dispersal and data protection

Another benefit of managed services lies in how they can improve the risk profile of a bank’s tax and finance function. For banks, the cost of risk failure can be severe – from a reputational hit with customers to financial penalties from a regulator, or even being shut down entirely, depending on the severity of the issue and the legislation of the affected market.

A huge part of this risk profile concerns banks’ data. Although facilitating secure remote access is one way to curb risk exposure, being able to manipulate large data volumes to produce relevant output presents an altogether different type of risk. With many bank employees having to work from home during the COVID-19 pandemic, banks confronted challenges giving people access to the right technology, while maintaining the security of customers’ data when accessed remotely, and bandwidth issues.

One of the most important processes the EY team had in place before its engagement with the bank was a technology-enabled approach to managed services. In the world of COVID-19, this not only provides the bank with greater efficiencies and risk management benefits but enables the creation of a resilient managed services environment to withstand the unanticipated challenges of a sudden move to distance working.

If a bank is going to turn around and hand you their most sensitive information, they have to trust you. So, the fundamentals of client services are essential.
John Thomopoulos
EY Global Financial Services Tax and Finance Operate Leader and Global Banking & Capital Markets Tax Leader
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Case Study
The better the question The better the answer The better the world works
Case Study

From building business continuity to enhancing agility

Managed services can help banks’ tax and finance functions pivot during times of crisis while carrying out essential operations.

Coupled with the bank’s data risk concerns was the worry of concentration risk – meaning too many people in one place. However, based on previous crisis events – particularly in the aftermath of the 11 September attacks where much of New York City physically shut down – the EY organization had already acted to create service delivery teams located across different geographies. “My thinking never went to a worldwide pandemic, but after 9/11 we built a robust business continuity process program so that people could operate in different cities globally,” says Thomopoulos.

This meant the EY organization could quickly offer the bank real-time information about the stress-testing of EY services’ teams in different locations. For example, if issues arise in the India office, the EY organization can rapidly offer the bank the option of dispersing work between teams based in Indiana, South Carolina, Texas and New York.

As a result, EY managed services approach has demonstrated its value via its advanced technology and business continuity readiness, both of which reinforce and enhance the bank’s own continuity processes during this crisis.

Building a more agile, adaptive, resilient bank

The versatility of the EY team’s approach to managed services means that with the transition phase complete, the team and the bank can enter the transformation phase of the work in complete alignment and with greatly enhanced agility.

Overall, COVID-19 is likely to serve as a major tipping point for banks to increasingly adopt managed services – the main reasons being access to talent and technology. Managed services can serve as an important extension of banks’ business continuity plan – and its benefits are not going unnoticed by the banks, their customers, and regulators alike. Managed services have become increasingly significant in enabling companies to maintain their competitive advantage and transform.

In a crisis – as the world found with COVID-19 – maintaining the stability of the banking system is in the interest of all stakeholders. As the pandemic hit, banks were keen to ensure strong business as usual practices, albeit in a virtual environment. Stabilizing their support functions and assessing how their risks have changed because of COVID-19 were urgent priorities for banks’ leaders.

Managed services providers that have the right secure technology platforms, with multi-access pipes pre-built to receive data from different sources from a bank’s wider business ecosystem, can be vital cost-saving and continuity-enabling channels for these banks. But more than just outsourcing and cost-saving, it’s the most effective and value-added way of running an organization, and all it entails.

And, crucially, at the heart of any managed services relationship is a deep sense of trust and collaboration – especially due to the highly sensitive financial data transactions that banks must track for tax reporting and regulation purposes.

In a tough marketplace and increasingly competitive sector, banks can use managed services to build offerings that are truly unique.

My thinking never went to a worldwide pandemic, but after 9/11 we built a robust business continuity process program so that people could operate in different cities globally.
John Thomopoulos
EY Global Financial Services Tax and Finance Operate Leader and Global Banking & Capital Markets Tax Leader
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What EY can do for you

Banks’ tax and finance functions face dynamic pressures staying on top of legislative and regulatory change globally, keeping pace with technology, and attracting and retaining professionals with future-focused skills. These functions face a tall order: do more and contribute more with fewer resources and continuing pressure to reduce costs, in a rapidly changing world of risk and regulation. How can they be equipped with digital capabilities that evolve alongside the market, with human help whose talents also must adapt?

The TFO solution supports banks with a new tax and finance co-sourcing operating model to help manage risk and improve visibility, realize increased value from data, drive innovation and new ideas, and improve efficiencies.

Leveraging EY’s capabilities to help banks

Tax function improvement

Design and help implement future-proof tax and finance functions. Gain efficiencies through the right mix of co-sourcing, technology, and internal capabilities across tax compliance, tax accounting, tax controversy and tax advice.

Customer tax operations and reporting

Meet customer-related regulatory obligations through an integrated suite of Customer Tax Operations and Reporting Services (CTORS), supported by EY teams across the globe and underpinned by leading technology.

People and workforce

Effectively harness the people agenda as part of a cohesive business strategy that includes integrated workforce mobility, powerful workforce analytics and people advisory services.

Tax guidance

Provide tax advice that blends technology and business acumen to focus on consistency, compliance and banks’ strategic objectives.  

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