By Li Jinnan and Jiang Hualiang, King & Wood’s Banking & Finance Practice
With the recent development of the service outsourcing industry, an increasing number of financial institutions (including banks, securities companies, insurance companies and fund management companies) use financial service outsourcing to reduce costs, enhance core competitiveness, and accomplish strategic goals. Financial institutions are able to benefit significantly from IT outsourcing, which is an important part of financial service outsourcing. At the same time, they must also confront the managing risks that are associated with IT outsourcing. Based on our past experience with counseling on IT outsourcing to financial institutions, the followings are the primary legal issues relating to the terms in and execution of IT outsourcing agreements, using banking institutions ("banks") as examples. The discussion will focus on how banks should manage potential risks from negotiating such an agreement.
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