Service Level Agreements (SLAs) – Financial Firms and Banks
Service Level Agreements (SLAs) are legally enforceable terms that outline the performance criteria and level of service that the bank and service provider have agreed upon. SLA is a crucial component of a solid outsourcing contract. The SLA makes sure that the institution gets the services it needs at the set standards cost and level. A key component in controlling the financial and operational risk connected to outsourcing contracts is the SLA. It may also be a means of assisting in risk reduction. The danger of subpar service may be decreased by specifying the measurement unit and service range for the selected level since it becomes a point of emphasis and is defined as the service provider’s responsibility.
Establishing accountability and defining and explaining performance expectations are the main objectives of SLA. Therefore, it’s vital to strike a balance between the necessity for precise measuring standards and enough adaptability. A common issue is excessive scrutiny or “micro-management” of the service provider, which can be challenging for the bank personnel in charge of managing the service provider relationship and keeping an eye on SLAs.
A well-crafted SLA will recognise and reward good service, or at the very least, it will do so. The measuring framework, or performance metre, will also be presented in order to identify subpar service and start the adjustment or revocation of permitted provisions. Incentives or penalties included in the SLA might be a useful tool for service management in the current outsourcing scenario. Direct consequences, such as lower levels of pay or a credit on future services, would occur if the services provided fall short of the requirement.
What ought to be covered by SLAs?
The Shared Service and Outsourcing Network (SSON) suggests that the SLA process contain the following components.
- The required processes as well as the resulting goods and services
- A list of the processes to manage customer expectations that are now out of scope
- Terms of service accessibility – days of operation and hours of operation
- Service standards – To manage expectations and be clear about operations closing for bank holidays or weekends, times for service delivery should be recorded in number of working days (rather than, example, 24 or 48 hours).
- A R-A-C-I matrix is used to demonstrate who is responsible, accountable, and needs to be informed about the phases in the process. As a result, roles are clear and duties are completed.
- To control expectations regarding “workarounds” or “just a favour” requests, consider cost against service trade-offs.
- The correct person, in the right capacity, at the right time can be able to resolve a problem when anything goes wrong thanks to clear escalation procedures and timetables.