Automation in financial services encapsulates a range of tools and techniques which have the effect of reducing human intervention in business and information technology (IT)
processes.
On the business side are repetitive tasks that hobble workflows. It is 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 at 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 short read explores how financial
institutions can get the most out of automation.
The key areas of automation
Here are some of the most common workflows that are automated by financial institutions today:
1. Customer onboarding and KYC
If conducted manually, customer onboarding can be time-intensive – both for customers and bank staff. Any human errors along the way can send prospective customers straight into the arms of competitors. By digitising the process of sourcing records and tax
documents, all information remains intact, ordered, and secure. Tied to the customer onboarding process is Know-Your-Customer (KYC) checks. Once again, if banks can lean on biometrics and
digital ID verification, the onboarding process is rapid and streamlined.
2. Account servicing and billing
Account servicing – which encapsulates everyday tasks like opening and closing accounts, updating account details, or requesting new cards and pins – can also be supported by automation. To circumvent the need for customers to visit brick-and-mortar branches,
banks may wish to offer self-service portals, virtual assistants, or AI-enabled chatbots – thus expediting up operations, and carrying large volumes of customer queries around-the-clock. According to McKinsey, automating a bank’s back office can generate an
improvement of more than
50% in productivity and customer service.
3. Payment collections and recovery
A typical day for a bank’s collections team might involve creating reminder emails for missed payments, chasing outstanding invoices, manually updating payment activities, or making strings of collections calls. Thanks to integrated automated collection
tools, this no longer needs to be the case; promising to decrease debt recovery time and, in turn, boost team morale. According to a report by EY, automation and AI can reduce the cost of manual data entry by 70%.
4. Loan lending
While today’s lending market is flooded with fintechs that can make loan decisions in nigh-on real-time, much of the incumbent sphere still relies on manual processing. For the traditional banks to compete with this wave of innovation, they must entirely
digitise the loan application process, offer electronic signatures, dissolve silos between customers, databases, and applications, and automate wherever possible.
5. AML and fraud detection
According to a UK Finance report, over
£570 million was stolen in payment fraud in the first half of 2024, alone. By implementing into the core banking platform cutting-edge software and technologies, such as AI, anomalous payment activities can be flagged – sometimes catching cybercrimes before
they have even taken place.
6. Reporting and compliance
Regulation is an ever-present force on the financial services landscape – shaping its evolution, direction, and services. Given the demands of the
Digital Operational Resilience Act (DORA), the incoming
third Payments Services Directive (PSD3), and Swift’s ongoing ISO 20022 migration, institutions are under more pressure than ever to report and comply effectively. From multi-source data collection
and validation, to report generation, delivery, and analysis, each step of the compliance process can be streamlined with robotic process automation (RPA) bots.
Features to look for in automation tools
Every institution will have different reasons for implementing automation tools. Broadly, these fall into a few buckets: customer satisfaction, employee empowerment, and resource rationalisation. To achieve any one of these goals, the automation platform
must be reliable and aligned with the business’ core values. Here are some features to look for:
- Design no-code workflow: Banks may wish to empower non-tech employees by opting for platforms that enable the building of customised workflows, with zero code needed.
- Drag and drop from creation: When it comes to critical processes, such as customer onboarding, online forms should be as simple and visually appealing as possible. As such, automation platforms should allow for the drag-and-drop creation of visual forms.
- Adaptability: The aforementioned features all test the flexibility of a platform. As banks’ needs and values evolve, so too do customers’ service expectations. As such, automation platforms should be able to adapt and scale over time.
- Security: All automation tools should offer extensive data security and control features, in order to avoid the reputational damage associated with incursions or fraud. Access to sensitive information should be closely managed between internal staff as
well as external partners and customers.
- External device compatibility: Of course, the software must also be compatible with mobile and other devices. This frees up bank staff to work when and where they wish.
- Third-party integration: Finally, it is essential that all automation tools and techniques are seamlessly integrated with all systems, third-party applications, and data houses. Indeed, the foundation of effective automation is the platform’s ability to
bring together multiple back-end systems and communicate with them to deliver on tasks.
Financial institutions should think of taking on automation software as onboarding a close partner. The array of resources should be readily available, cost-effective, and user-friendly.
How to implement process automation
With the key areas of automation covered – as well as the best-in-class features to look for – here is a quick five-step guide to implementation:
- Identify business priorities and map which processes require automation. Some processes will offer more ‘bang for your buck’ than others;
- Assess the market’s various automation tools and platforms against these priorities. Consider a composite approach to achieve all aims – employing
multiple integration technologies;
- Produce an IT implementation plan that is incremental, time-bound, goal-specific, and achievable;
- Run tests and score against the project’s key performance indicators (KPIs); and
- Once the scores are satisfactory, roll out the solution.
As always, a detailed plan, and the right insight assessment, are critical to success.
The advantages of automation
In the drive to become fully automated, banks will no doubt encounter challenges – be they operational, budgetary, or infrastructural. If each speed bump is vaulted with tact and discernment, automation platforms have the power to reduce costs, boost efficiency
and productivity, rationalise processes, increase operational accuracy, minimise human errors and fraud rates, and divert human resources to more valuable, client-facing tasks. Perhaps, even, it could even pay for itself.