Automation in financial services encapsulates a range of tools and techniques that reduce human intervention in business and information technology (IT) processes. On the business side, repetitive tasks can severely hinder workflows, and it’s estimated that companies lose 20-30% of their revenue to such inefficiencies every year. Automation promises to streamline a range of tasks across content management, document processing, decision management, process mapping, and more. On the IT side, automation can support every stage of the operational cycle or expedite the deployment of infrastructure and applications. Whether it’s smart automation for artificial intelligence (AI)-powered enterprise resource planning (ERP) tagging systems, generative AI (GenAI) automation for risk detection, or Buy Now, Pay Later (BNPL) services, this read explores how financial institutions can get the most out of automation.
Determine Business Priorities and Outline Which Processes Need Automation
Before diving into automation, banks must first determine their business priorities and identify which processes need automation. Some processes will provide more value than others, so it’s crucial to map out which areas will benefit the most. Customer onboarding, for instance, is often a time-intensive process if conducted manually, and any errors can drive prospective customers to competitors. By digitizing the process of sourcing records and tax documents, all information remains intact, ordered, and secure. Similarly, Know-Your-Customer (KYC) checks can be streamlined using biometrics and digital ID verification, making the onboarding process faster and more efficient.
Account servicing is another essential area where automation can bring substantial value. Everyday tasks like opening and closing accounts, updating account details, or requesting new cards and pins can all be supported by automation. By offering self-service portals, virtual assistants, or AI-enabled chatbots, banks can expedite operations and handle large volumes of customer queries around the clock. Automating a bank’s back office can generate an improvement of more than 50% in productivity and customer service, according to McKinsey.
Evaluate the Market’s Various Automation Tools and Platforms against These Priorities
Once the key processes for automation have been identified, the next step is to evaluate the market’s various automation tools and platforms against these priorities. Consider a combined approach to achieve all goals, using multiple integration technologies if necessary. For example, automated collection tools can greatly benefit a bank’s collections team by decreasing debt recovery time and boosting team morale. Integrated automated collection tools promise to take the burden off human workers by creating reminder emails for missed payments, chasing outstanding invoices, manually updating payment activities, or making collections calls.
In addition to collections, loan lending is another area ripe for automation. Traditional banks often rely on manual processing, which cannot compete with fintechs making loan decisions in real-time. To meet this wave of innovation, banks must digitize the loan application process entirely, offer electronic signatures, dissolve silos between customers, databases, and applications, and automate wherever possible. By integrating sophisticated software technologies such as AI, banks can also improve their AML and fraud detection capabilities. Cutting-edge software can flag anomalous payment activities and sometimes catch cybercrimes before they even occur.
Develop an IT Implementation Plan that is Gradual, Time-Specific, Goal-Oriented, and Feasible
With priorities and tools identified, banks must now develop an IT implementation plan that is gradual, time-specific, goal-oriented, and feasible. This starts with producing a plan that maps out the incremental steps required for successful automation. Each step should be time-bound and have specific, achievable goals. This approach ensures that the implementation process is manageable and allows for adjustments along the way.
The best results come from rigorous planning and clear communication between all stakeholders. In addition, it’s essential to keep employees in the loop, as their buy-in will be crucial to the project’s success. Ensuring that staff members are adequately trained on the new systems will help smooth the transition. A phased rollout can also minimize operational disruptions and allow the organization to address any issues that arise promptly.
Conduct Tests and Measure against the Project’s Key Performance Indicators (KPIs)
After developing a thorough IT implementation plan, the next critical step is conducting tests to measure performance against the project’s key performance indicators (KPIs). Rigorous testing is imperative to identify any potential issues and ensure that the automated systems operate as expected. Banks should conduct various tests, including stress tests, functional tests, and security assessments, to evaluate the system’s robustness and reliability. By comparing test results against predefined KPIs, banks can gauge whether the project is on track to meet its goals.
Testing also provides valuable insights into areas that may require additional fine-tuning or adjustments. For example, if the automated customer onboarding system shows a high error rate during testing, further modifications may be necessary to enhance its accuracy and efficiency. Continuous monitoring and testing should be performed even after the initial rollout to ensure the system remains effective and to make any necessary improvements over time.
Once the Results are Satisfactory, Deploy the Solution
Once the results are satisfactory, the final step involves deploying the solution. After identifying which key processes to automate, the next step involves evaluating various market automation tools and platforms based on these priorities. Consider utilizing a combination of integration technologies to achieve all objectives. For instance, automated collection tools can significantly aid a bank’s collections team by reducing debt recovery time and enhancing team morale. These integrated tools alleviate human burden by creating reminder emails for missed payments, chasing overdue invoices, updating payment activities manually, or making collections calls.
Another promising area for automation within banks is loan processing. Traditional banks, often relying on manual processes, struggle to match fintech companies that make real-time loan decisions. To keep pace, banks must digitize the entire loan application process, offer electronic signatures, break down silos between customers, databases, and applications, and automate as much as possible. By integrating advanced software technologies like AI, banks can also enhance their anti-money laundering (AML) and fraud detection capabilities. Sophisticated software can identify unusual payment activities and sometimes prevent cybercrimes before they happen.