Outsourcing policy

Outsourcing occurs when a bank uses another party to perform business functions that would traditionally have been undertaken by the bank itself. Common examples of outsourced activities include IT processing, accounting and call centres.

The outsourcing policy requires large banks (locally incorporated registered banks with liabilities, net of amounts owed to related parties of, $10 billion or more) to have the legal and practical ability to control and execute outsourced functions. This is to ensure that any outsourcing arrangement entered into by the bank does not compromise the bank's ability to:

  • be effectively:
    1. i) administered under statutory management; and
    2. ii) operated for the purposes of continuing to provide and circulate liquidity to the financial system and the wider economy; and
  • facilitate the carrying on of basic banking services by any new owner of all or part of the bank;
  • address the impact that the failure of a service of function provider may have on the bank's ability to carry on all or part of the business of the bank.

This is important to ensure that the impact of the failure of a large bank, or a service provider to a large bank, on the wider economy is minimised and to preserve options for the resolution of large bank failures.

Large banks are generally subject to a standard condition of registration relating to outsourcing. This condition requires that, in relation to outsourcing arrangements, the bank is able to meet all of the following outcomes:

  • continue to meet its daily clearing, settlement, and other time-critical obligations, both before the start of the first business day and after the day of failure and thereafter;
  • monitor and manage its financial positions, including credit, liquidity, and market risk positions, both on the start of the first business day and after the day of failure and thereafter;
  • make available the systems and financial data necessary for the statutory manager and Reserve Bank to have available a range of options for managing the failed bank, both before the start of the business day after the day of failure and thereafter; and
  • provide basic banking services to existing customers including, but not limited to, liquidity (both access to deposits and to credit lines as defined in basic banking services) and account activity reporting, both on the start of the first business day and after the day of failure and thereafter.

Some outsourcing arrangements by large banks may still be captured by the January 2006 version of the outsourcing policy. This policy has similar objectives and requirements to the current (April 2020) version of the policy.

The Reserve Bank's current policy on outsourcing can be found at:

Accompanying documents to the Reserve Bank's policy on outsourcing can be found at:

The superseded January 2006 outsourcing policy can be found at: