Employees at financial institutions have a lot to focus on without wasting time on cumbersome processes that innovative technology could complete instantly. Strategically implementing automation can save time and make their lives easier, freeing them to focus on customer relationships and more complex tasks requiring human intervention.
So, whether to accommodate staffing shortages, to serve customers faster or to improve employee satisfaction, bankers increasingly demand a broader use of automation. Fortunately, as technology develops, providers find new ways to deploy automation and make every moment count.
To learn how the right core banking system can help streamline processes, don’t miss our Definitive Guide to a Modern Core Banking Partnership.
The Basics of Banking Automation
We’ve all heard the phrase “time is money.” In banking, it’s no exaggeration—wasted time results in lackluster customer service, strained staff and fewer opportunities for cross-sales. Moreover, IBM found that human error causes the loss of roughly $3.1 trillion annually in U.S. businesses.
With the proper use of automation, customers can get what they need quicker, employees can spend time on more valuable tasks and institutions can mitigate the risk of human error. By automating tedious, repetitive tasks, employees can focus on ones that require complex thought or interpersonal skills.
Rather than replace human staff and lose many institutions’ key differentiator – their relationship-first service – a strategic approach to automation aims to make work for banking staff more meaningful and impactful. Business processes like account closing, dispute tracking and rate changes are vital, but they shouldn’t monopolize internal resources like brain power, time and dollars.
Despite common misconceptions about automation, it can actually result in faster, more impactful service.
For this reason, many bankers already use automation for tasks like account opening, credit decisioning and more. In fact, one of the prerequisites of a comprehensive core banking platform is its ability to eliminate dual data entry.
However, there is a significant opportunity to streamline further. As a result, technology providers have recently heightened their focus on viable solutions. Below we discuss three sometimes interrelated areas of focus: programmatic automation, business process improvement (BPI) and robotic process automation (RPA).
1. Programmatic Automation in Banking
The first approach to making banking technology more efficient is through programmatic automation. Programmatic automation involves rewriting software so that automation is fixed (or programmed) into a technology provider’s system. Examples include improvements to streamline account opening, teller hold or positive pay.
While technology providers can apply programmatic automation from the ground up, they typically do not need to rebuild a product entirely. Instead, they can coordinate with bankers to make positive additions or modifications through incremental updates.
Typically, some form of automation already exists in a platform or solution when a bank adopts it, streamlining processes for the institution on day one. But as technology evolves, programmatic automation helps modernize individual solutions or the core banking platform through periodic enhancements. This ultimately allows banks to get the best bang for their buck by optimizing their existing technologies and eliminating the need to invest in more.
Typically, a vendor will prioritize enhancements based on gaps and pressing or potential customer needs. So, institutions should work closely with their technology vendor and provide feedback on product roadmaps and automation opportunities they would most benefit from.
2. Business Process Improvements in Banking
It’s no secret that prioritizing business process improvement will make day-to-day work faster and more seamless. As a result, an estimated 98% of IT leaders say automating business processes is vital to driving countless benefits to the business.
But to deploy automation programmatically or through new technologies, banks must sincerely evaluate their existing metrics and workflows. Where are the bottlenecks?
Business process improvement (BPI) is the overarching venture of examining existing processes to make them more efficient. It begins with sincerely evaluating business processes, and determining whether they could improve, change or be removed altogether.
BPI seeks to accelerate and streamline existing processes boosting satisfaction and the bottom line.
Business process automation is one possible method to achieve efficiency. Some applied examples include automated employee onboarding, purchase order approvals, workflows and automating data entry to remove specific manual processes altogether.
Many factors come into play when talking about how to improve business processes and what to automate. Institutions should discuss BPI opportunities with internal staff and their core provider to ensure those factors are beneficial.
Technology providers may utilize a wide range of technologies or methodologies to deploy faster solutions, including Agile, cloud transformation, iterative releases and implementation solution assurance.
3. Robotic Process Automation in Banking
Some sources estimate that, on average, workers spend nearly five hours each week performing duplicate tasks that can be automated. For this reason, robotic process automation (RPA), or using bots to perform these recurring tasks, is also gaining steam across the industry.
RPA is typically applied to straightforward, repeatable tasks, helping ensure accuracy, consistency and scalability. It consists of “low code or no code” simplifications that do not require massive programming overhauls.
Eligible candidates for RPA are stable, rules-based processes with known variables, known data and a controllable scope. For instance, account closing, dispute tracking, loan payoffs, rate changes and stop payments could all be considered for RPA.
RPA can also strengthen cybersecurity within the system and more accurately detect financial crimes like fraud and money laundering. Plus, it can reduce the unnecessary risk of human error and enable frontline staff to spend their time strengthening personal relationships with customers. Strategic deployment can boost morale, service and the bottom line.
Gartner reports that 80% of finance leaders have already implemented or plan to implement RPA initiatives. For those already on the journey, here is another opportunity to collaborate with core providers.
The Future of Efficiency in Banking
For the time and cost savings opportunities it poses, automation in banking only stands to increase. McKinsey predicts a second wave of automation and AI emerging in the next few years, as the latter has gained more public attention with the prevalence of generative language models and other decision-making technologies.
Although the AI and ML fields are still young, these two are poised to become more relevant to bankers in the future.
Automation alone does not simulate human intelligence but rather makes basic processes automatic. Sometimes called intelligent automation, artificial intelligence (AI) and machine learning (ML) algorithms imitate how humans learn and enable better decision-making based on data they have taken in. Although the AI and ML fields are still young, these two are poised to become more relevant to bankers in the future.
How will “intelligent automation” change banking? Already, some use AI to bolster their fraud and anti-money laundering (FRAML) efforts. Other potential opportunities may lie in faster decision-making or fostering a more personalized banking and marketing experience. As with automation today, the goal will be to save time and create more satisfied customers.
Your Core Bank System and Efficiency
Every organization strives to maintain efficiency and low operational costs. Gartner reports that organizations across industries aim to lower their operating costs by 30% by 2024 through a synthesis of hyper-automated technologies and redesigned operational processes.
Ultimately, automation should be one piece of your overall toolkit to serve customers. Automation applied in banking through the core banking platform and beyond should primarily augment and support existing employees and workflows. As banking’s ability to automate tasks improves, so will the ability to serve customers and employees.
Acquire additional insight on the collaboration and technology essential for streamlining your banking processes in our Definitive Guide to a Modern Core Banking Partnership.
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Jason Young serves as CSI’s senior director of enterprise banking.