The main objective of ALS is to define and explain performance expectations and establish accountability. It is therefore essential to balance the need for specific measurement standards with appropriate adaptive capacity. A typical trap is inadequate monitoring or “micromanagement” of the service provider, which can make it more difficult for bank staff to monitor the service provider relationship and monitor ALS. Service Level Agreements (SLAs) are contractual terms that document the service standard agreed between the bank and the service provider and the quality of service. SLA is an important element in the implementation of a strong outsourcing contract. The ALS ensures that the institution receives the required benefits at the required price and standard. ALS is an essential part of managing the financial and operational risk associated with outsourcing contracts. It can also be one way to help reduce risk. Defining the unit of measurement and service space for the chosen level reduces the risk of service, as it becomes a priority area and is assigned as the service provider manager. A well-designed ALS will identify and reward good service, or at least recognize it. In addition, the measurement structure — or performance metric — is displayed to detect bad services and initiate revision or retraction rules as approved. In today`s outsourcing environment, incentives or penalties within the ALA can be an effective tool for service management. If the services received do not meet the requirement, direct results, such as .
B reduced remuneration or credit on future services, would be tracked.