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Future lies in product factories, says Capita

The future of financial services is giant product factories white-labelling for the industry, according to back office outsourcer Capita chief executive Paul Pindar.

Speaking after Capita unveiled its preliminary results last Thursday, Pindar claimed that the future of financial services would be big companies manufacturing low-cost products for the rest of the industry to sell on.

In the past 12 months, Capita has signed a 20-year contract with The Children’s Mutual to complete back-office work on a child trust fund. It has also signed up with 28 product providers to provide a similar service for child trust funds.

Pindar believes that intense pressure on pricing of financial products, such as the 1.5 per cent commission cap on CTFs, will mean that outsourcing to a firm that can produce the products en masse is the only option.

In the last year, Capita has signed 12 major contracts with an aggregate value of 1.36bn. The deals include Children’s Mutual, a 10-year contract with Winterthur Life, and a seven-year contract with the Department for Work and Pensions.

The company increased turnover last year to 1.3bn from 1.08bn in 2003. Its bid pipeline for this year is expected to be 3.8bn. Profits rose to 75.4m from 59.4m.

Pindar says: “I see ourselves as a bit like a factory for financial products and I think this is the way that the market is heading. Companies that can administrate products cheaper than companies can do in house will have a growing role in the market.

“One of the big challenges is to get companies thinking about this and showing them the benefits that other firms have seen.”

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