7 Key Insights into Banking Automation

Larissa Lewis February 22, 2021 Banking

automation-in-banking

Automation is a topic gaining fierce traction in the banking industry. While larger financial conglomerates are investing big bucks in strategic automation initiatives, many smaller banks are still at the beginning of their digital transformation journey. How can community bankers gain a foothold when it seems like the competition is already well into the race? These seven insights will reveal the fundamental trends influencing banking automation decision makers.

Not all banks are at an advanced stage of digitization: beginners are commonplace

While less than half of smaller banks are currently investing resources in intelligent process automation, 72% of decision makers rank it as one of the biggest areas for growth opportunity. Many are in the very early phases of digitization—they’ve launched functionalities that address very basic customer needs, but still have yet to pursue the greater benefits they can reap from automation. Being in this phase is not out of the ordinary, so don’t let it deter you from embarking on your journey towards automation. 

The most important stage? Beginning with an in-depth analysis of your current systems

To understand the best way to streamline a given process, banks need to commit themselves to a period of detailed introspection to learn how their organization operates. Many professionals turn to methods like Six Sigma. First introduced by Motorola over 30 years ago, businesses use this data-driven approach to find flaws in their internal processes. With the end goal of delivering a “perfect” final product, organizations can identify wasteful tasks, find momentum bottlenecks, and eliminate busywork that does not contribute to customer value. 

Effective process design also involves tight collaboration between all stakeholders. From C-Suite executives to your customer service force, process designers must learn and observe how teams complete each of their daily tasks. Only by understanding each and every step involved in a particular process, can you then create an accurate automation plan.

Most banks turn to automation to save money but discover even more valuable opportunities along the way

Cost reduction benefits are the initial draw of automation for most banks. After all, banks that make their digital transformation a priority can reduce costs anywhere between 30%–50%. Minimizing paperwork and automating toilsome manual to-dos can reduce headcount and eliminate wasteful, productivity-draining processes. Eventually, banks realize that there are far more benefits to automation than shoring up internal productivity—it can help grow your customer base. 

Your bank’s digital transformation puts you in the position to take advantage of even more exciting trends that can boost your bottom line. While saving money is often the rationale behind digitizing, many banks find that they can also make more money in the process. Namely, you’ll be in a position to serve the types of attractive online experiences that expand your customer base. Seamless self-service tools for opening accounts online and the ability for users to share transaction data with third-party apps are just some of the benefits made possible by the automation revolution. What starts as a cost-saving measure explodes into a new buffet of growth opportunities for innovative bankers. 

Banishing paper-based processes boosts productivity and mitigates regulatory risks

After cost-saving measures, document processing stands as automation’s second most attractive lure. Misinterpretations of handwritten information, incomplete paper forms, and manually compiled spreadsheets are the leading factors contributing to regulatory missteps. A perilous bellwether of manual procedures: 90% of spreadsheets contain errors. Banks simply can’t afford the high risk of maintaining a non-digital playbook.

To combat this treacherous practice, banks are turning towards intelligent process automation technologies like robotic process automation (RPA). RPA removes the manual middleman from paperwork handling. Every form is digitized, and every form field is treated by a virtual team of robots. RPA can self-extract data from a form, pass information between two different applications, and autonomously perform repeatable tasks like copy-and-pasting customer details between systems. By shifting the responsibility of these mundane tasks over to a machine, you can speed up processing times of notoriously protracted functions like mortgage and credit card applications. 

The speed at which you serve customers can increase exponentially

Financial institutions can no longer risk a leisurely approach to introducing new technology to their customers. The speed at which they’re able to introduce innovative apps and features dictates their ultimate success. Consumers reject businesses slow on the digital uptake—57% say they will not even consider one that does not prioritize innovation. 

When you need to deliver digital experiences at lightning-quick speeds, you no longer have the luxury of relying on a small, select team of experts. So, banks are adopting an “all-hands-on-deck” approach known as citizen development. Low-code platforms, the toolset of a citizen developer, alchemize complicated programming languages into more accessible and user-friendly visual tools. Visual drag-and-drop interfaces recplace lines of pedantic JavaScript. Whiteboard-like canvases supplant highly technical development environments. This strategy democratizes development of smaller, simpler development tasks, and empowers everyone—from analysts to middle management—to contribute to the cause. 

To meet the speed demands of modern consumers, tech-savvy banks are also bucking the proprietary software model. They’re unmooring themselves from the anchor of their own complicated infrastructure, a stalwart 90% of bankers view as their greatest obstacle to digital transformation. Instead of spending months building unique systems, banks are now shopping from catalogs of third-party cloud-based solutions.  

Gone are the days of coding your own Know-Your-Customer check. A bank can now select from cream-of-the-crop providers and deploy within days. Instead of investing in the lengthy development of a virtual assistant platform, they can “plug in” to an existing offering and serve their customers with this game-changing feature in a snap. Cloud-based services free your financial institution from the proprietary model and allow you to integrate ready-to-go innovations from third-party vendors. 

Automation and humans work best hand-in-hand

Automation does not mean the absence of human participation. In fact, the cornerstone of a successful digital transformation is your team of living, breathing personnel. Automation strives to reduce the time these subject matter experts waste on mundane, repetitive functions so they can contribute to your bank’s success in more valuable ways. For example, chatbots can aid your support desk by answering low-level, easy questions, so your staff can spend more time focused on the more complex questions that command a human touch. 

This strategy ultimately pleases and delights customers: support staff no longer has to rush off the phone to handle a lost password request, but can deliver a more thoughtful and engaged solution for customers in distress. It’s a win-win for you and your customer base—when it comes to the most sensitive issues, 77% of clients still prefer to interact with a human being. While some banks have gone so far as charging steep fees for branch visits to encourage digital adoption, those leading the charge are those that bring together the best of both worlds. 

Transformative tech is not a threat to system security

Mention trends like “citizen development” to data governance professionals, and you might be met with a round of guffaws. The sensitive nature of data handled by the financial industry warrants their criticism. In fact, banking professionals are 10% more anxious about cyber threats than any other sector. However, next-gen trends like citizen development, low-code tools, and cloud-based solutions are hurtling to the top of the list of must-haves. Gartner already estimates that citizen developers handle the creation of nearly 60% of basic apps. Is your bank still shying away from these indispensable technologies?

Your security team should not view citizen developers as a threat—but as a complement to your existing IT team. Contrary to critics, citizen development does not transform your system stronghold into the virtual Wild West. This team of development deputies work within a set of vetted and sanctioned IT tools. As these programs scale, however, governance of these new initiatives becomes more crucial. Keep these considerations in mind: 

  • Start with a solid strategy outlining the precise roles of citizen developers. You do not want this helpful group overstepping any boundaries, so it’s important to set expectations at the start. Identify what projects they will be responsible for, and exactly what tools and platforms they’re welcome to use. 
  • Limit involvement to a core group of tech-savvy enthusiasts or highly engaged top performers. By only including those who are most enthusiastic about the program, you’re far less likely to fall victim to careless errors. 
  • Waypoints serve as a checks-and-balances system for citizen developers. Few things “go live” without review, and systems catalog and monitor all activity to prevent “shadow ops” behavior. 

By working hand-in-hand with your IT team, your squadron of citizen developers can quickly boost your ability to meet the pressing demand for top-notch digital experiences, while safeguarding your system against security risks. 

Banking is changing, yet many community banks are still relying on “the old way” of doing things. Analysts estimate a $447 billion cost savings by 2023 for financial institutions that successfully integrate intelligent process automation into their ecosystem of technologies. Plus, automation initiatives are the foremost way to position your bank for the future of finance. Are you prepared to take advantage of this momentous opportunity?

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