Automation and the future of banking operations

Resilience and adaptability are key to delivery of excellent service levels in operations, as these features can make or break the delivery of new products and services. When it comes to building resilience, modern agile software that harnesses automation is key, as it gives banks real-time visibility into important processes and allows them to be more efficient, especially during periods of change.

Our recent research found 49% of senior industry leaders believe it is important to future-proof resilience models to ensure they are fit-for-purpose. But banks are facing numerous challenges right now – how to adjust to the increasing digital skills gap, how to provide adequate solutions and channels based on customer/client-specific needs, and how to navigate within the industry during changing regulation, particularly in the current climate with the growing list of sanctions on Russia.

As a result, many banks are facing operational issues delivering standard services such as approving loan applications or making sure payment exceptions are properly processed.  

In order to successfully overcome this, banks need a cost-effective, agile servicing backbone, one that has automation built-in, to design systems that place customers at the centre of their operations. This can be accentuated by building lean, industrialised processes from modular, universal components, and by having high-performing operational teams with strong leadership.

Digital transformation isn’t a walk in the park – many of the big high street banks have to contend with their business developments being built on outdated legacy systems, and undergoing total digital transformation may seem like biting off more than you can chew. However, automation is the future as long as it is well balanced against where personal help or advice is needed, and banks who aren’t willing to invest risk falling behind the competition.

Automation: the way forward

According to research, 71 percent of industry leaders believe that the optimisation of workflow through AI and automation and the automation of routine admin and IT tasks will have a big transformational impact on the way operations function in three to five -year’s time. This can already be seen in practice by HSBC, as they streamlined their payments investigations operations to help solve all payment inquiries quickly and effectively.

Another benefit of automation is how it helps banks innovate, for example by taking advantage of Open Banking. An example of this is how Danske Bank became the first bank in the UK to establish a digital solution which allows business customers to view their payments and all of their accounts across many different banks all in the same place. When taken to the next level of automation beyond aggregation, then this can lead to enabling payments to be made from other accounts from within the same app.

A key advantage of automating operations is eliminating tedious time-consuming tasks that hinder processes and deliverables. For example, the manual job of reviewing loan applications. In these scenarios, banks collect the forms, review them, and then decide whether or not to approve the loan requests. Some elements of manual credit assessment are desired. For example, where affordability is tight or there is poor credit history, but there is a sweet spot of the optimal level of automation and straight through processing, alongside selective oversight and review. Getting the right balance between what is automated and what needs review is critical to getting the right loan decisions and the right outcomes for customers.

Clearly operational resilience is vital – companies that want to be successful in the future are those that proactively prepare for unexpected challenges. They are ready to adapt to change quickly. Automation is an important element to help cope and respond. It can be applied to not only simple repetitive tasks but complex ones where elements of machine learning and predictive modelling can be applied. If we continue with the lending example, then being able to apply predictive models to credit assessment, combining risk with approval/declinal data to decide how to route and deal with different customer scenarios. It’s about so much more than just being able to adjust staffing levels, overtime or service levels. Taking advantage of all the elements of automation available can lead to an ability to be able to flex operations to be far more adaptable than it has ever been.