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The Transformative Power of Banking Automation

Financial Services | Customer Experience | Enterprise Automation | IDP | RPA

The Transformative Power of Banking Automation

January 10, 2023
The Transformative Power of Banking Automation
Image credit: vectorjuice on Freepik

McKinsey expects machines to be responsible for up to 10% to 25% of a bank’s functions. The reasons? Banking automation minimizes the need for your team to work on repetitive tasks, allowing them to focus on high-profile and strategic aspects of the business.

Automation also improves accuracy, which can save you a ton of money — a major reason why 80% of finance leaders have implemented or plan to implement Automation (including Robotic Process Automation).

Curious about how banking automation can help? We explain everything you need to know about how automating your banking workflow can help reduce costs and improve efficiency.

What is Banking Automation?

Banking automation involves using software powered by multiple technologies like AI (artificial intelligence) and ML (machine learning) to automate repetitive tasks. Automation has three primary benefits:

  • Frees up your team’s time for more strategic tasks
  • Improves process accuracy
  • Improves the Customer Experience (CX) and the Employee Experience (EX)

For example, you can automate your account opening process. A customer requests a new account via the chatbot on your website. The chatbot provides an application form. The applicant fills out the form, and it’s sent to your RPA robot. The robot performs the basic procedures, including checking the credit score and KYC verification.

Next, the robot scans the applicant’s documents using OCR (optical character recognition) for data extraction. The robot matches the information in the documents and the application form. It flags any details that don’t match and sends them for manual approval.

The robot continues to validate uploaded documents using NLP (natural language processing). It finds key data points in the document’s free text, categorizes them, and uses them in the automated process.

The robot then updates the bank’s backend system to create a new business account, provided the customer’s data meets the bank policy. Once approved, the customer receives an automated welcome email.

Why Banks Need Banking Automation

Banks need automation to compete in the modern banking environment. Now, that’s a broad statement, so here are specific reasons why a modern bank needs automation:

  • Allowing employees to focus on tasks that require a human touch: Most banks were set up long ago. Manual forms and workflows were a foundational pillar for legacy banks, and as a result, employees spend countless hours on things like data entry and account verification. Automation allows employees to “hand over” repetitive tasks to software, freeing up their time for high-profile tasks that require a human touch.
  • Record management: RPA can generate and check expense records for compliance. It auto-logs all transactions and prepares the necessary financial records to get an overview of your business’s financial performance and position.
  • Meeting customer expectations: The need for speed is a key driver of a modern customer’s experience. If you’re taking too long for basic operations like opening a bank account, you’ll lose customers fast. Automation can help speed up your processes and help deliver on your customer’s expectations.
  • Faster customer support: Your customers hate waiting hours to get an answer. Automating your support using RPA helps you respond faster. You can answer customers’ questions at scale using a chatbot. Also, you can use an AI-powered chatbot to answer questions you haven’t added as an FAQ.

These factors make automation more of a necessity than a nice-to-have — you need automation to compete neck-and-neck with other banks.

How Banking Automation Can Transform Your Bank

Transforming your bank’s value network with automation offers many benefits in various business aspects, including finance, legal, and customer experience. Here are the benefits of using RPA in banking:

Banking Automation Leads to Efficiency

You can improve productivity by up to 80%, especially if you identify the most impactful productivity levers. The efficiency improvement is a result of two factors:

  • Low manual effort: Employees have more time available once they hand over repetitive tasks to software. They can do more in the same amount of time, helping you scale your operations.
  • Improved accuracy: Errors are expensive because you spend time and resources on correcting the errors. Fewer errors = improved productivity.

A great example of efficiency is automated document processing. As a banker, you probably spend a good number of hours reading documents and inserting relevant data into your systems, depending on your role at the bank. However, you don’t have to spend all those hours manually entering data if you use intelligent document processing.

Better Customer Experience

An average company takes over 12 hours to respond to customer service requests. That’s a recipe for dissatisfied customers, especially if you’re a financial institution.

Your customers expect their money to be in the hands of a reliable entity, and guess what you communicate when you don’t answer customers for over 12 hours?

Using RPA to automate your customer support helps minimize response times. In most cases, the chatbot can provide real-time answers to the most commonly asked questions.

Speed is also critical for other client-side processes. For example, you want to be as fast as possible in opening accounts, processing personal investment requests, or enabling additional services for an account. Automating these processes (while ensuring accuracy) helps improve customer experience.

Compliance and Risk Reporting

According to Deloitte, the cost of compliance for retail and corporate banks has increased by over 60% since the pre-financial crisis spending levels. Non-compliance is even more expensive, but automation can help lower your spending on compliance.

RPA builds compliance into your processes. Automating compliance ensures you’re always meeting regulatory requirements without requiring teams to spend extra time double-checking for compliance.

Automation also creates an audit trail and automatically generates risk reports that give you added insights. The system can identify and flag suspicious activities so that you can investigate them.

Reduced Costs

It’s easy to see how banking automation using RPA can reduce costs. Reduced administrative load, saving time on repetitive tasks, and speeding up processes all yield dividends.

For example, Radius financial group reduced loan processing costs by 70% by using AI to automate their process.

Banking automation also removes human error, so you’ll spend less on fixing those mistakes.

Without automation, you’d need to invest a large amount of money in building more teams as you scale. However, automation empowers you to scale faster. You can continue investing in training current teams and save on costs you’d incur to accommodate a larger workforce.

Automation and Adaptability

Banking automation helps banks adapt faster to a client’s needs or the business environment.

For example, the increasing popularity of Fintech is one of the most significant concerns for banks. Fintechs are quickly gaining market share at the expense of legacy banks. Customers appreciate how a fintech offers better, faster services.

Fintechs aren’t the only factor banks need to consider, though. Your bank might want to integrate banking solutions with a new partner’s ecosystem to offer additional services like tax consulting. Or your bank needs to process offshore transactions faster, especially when the transaction is subject to jurisdictional restrictions on the amount of transfer allowed.

Adaptability is critical for banks to succeed, and automation can make adapting to changes seamless. Implementing an automation solution will improve your adaptability to changes and allow you to quickly catch up with your modern competitors.

The Bottom Line

Over the past five decades, banking has gone from paper-based to almost entirely digital. Next up? Automation.

Automation makes banking frictionless for both internal and external stakeholders — it’s a win-win. The only problem banks face with automation is the lack of a reliable partner who can guide them through the transformation journey. Book a discovery call with us, and we’ll answer all your banking automation questions.

Transforming a Bank’s Value Network with Automation

Financial Services | Banking Automation | Customer Experience | Enterprise Automation | IDP | Lending Technology

Transforming a Bank’s Value Network with Automation

August 11, 2022
Bank's Value

Michael Porter’s value chain has been one of the top seminal business management ideas that saw business operations with through a new lens. Just like the value chain resulted in concepts like value creation and value pricing leading to phenomenal growth in global business scale and operations in the last 50 years, we are now seeing a similar scenario in the financial services industry with intelligent automation.

At the turn of the century, we saw a new concept emerge that resulted in changing the business dynamics in the Y2K. This new business concept came to be known as value network, a series of interactions between individuals, entities, organizations, departments, and systems that collectively work towards benefitting the entire group or ecosystem. This new concept had an astounding impact on how businesses and markets operated and paved the course of today’s business ecosystem. For instance, the rise of Apple and its ecosystem can be attributed to this shift.

A similar shift is also taking place in the financial services industry, where the digitization, embedment, and now decentralization of the payments ecosystem with the commercialization of blockchain, cryptocurrencies, procure to pay (P2P) lending are being touted as the next big thing.

Given the pervasive technical and innovative initiatives that are emerging at breakneck speed, it is a necessity necessary to keep transforming and innovating. This is especially relevant for the financial services industry which have millennials as customers and will soon begin catering to GenZ.

To digitally transform a bank’s value network let’s start by stating the three core areas of a bank’s value network namely, network promotion & contract management, service provisioning & billing, and platform operations.

With a two-sided value network, the bank fundamentally connects a borrower with a depositor and thus, becomes the enabler of value creation for such a network. In doing so, a bank delivers core banking and back-office operations, payments and lending functions, and risk and treasury management activities.

For each of these areas, hundreds of functions and duties must be seamlessly executed with precision. Today, the increase in business volumes and scale of operations has led to bankers asking, “What if these complex and time-consuming operations can be boosted with robots (bots) assisting humans to accelerate speed, increase productivity, and assure the precision of key banking functions?”

Some of the key operational areas where bots can and, in many cases, are assisting humans to realize the true potential of an enterprise are customer service, compliance accounts payable, credit card processing, mortgage processing, fraud detection, know your customer (KYC) process, general ledger, report automation and account closure process.

By embracing bots, banks can improve the customer experience while reducing costs and improving efficiency. Increased automation combined with more efficient processes makes the day-to-day easier for teams and individual contributors as they will spend less time on tedious manual work, and more time on profitable projects. Let humans contribute to high-value innovation, and robots help in maintaining and running operations to ensure an efficient and effective enterprise. To realize the true value of bots, and for a bank to embark on its digital transformation journey, the right approach, executive sponsor, business alignment, process discovery & design, pilot, roadmap, and a center of excellence (CoE) is essential to succeed. By using tactics such as data alignment, problem framing, road mapping, and piloting new robots, a bank will be well poised to reach its automation goals.

Blanc Labs has deep industry knowledge and proven experience working with leading banks to gain efficiencies through intelligent automation solutions. We take a holistic approach, helping financial services companies build the necessary foundation and setting them up for long-term success.

Book a consultation with Blanc Labs to discover the impact of our Intelligent Automation solution.

Customer Centricity As The Essence Of Digital Transformation

Financial Services | Customer Experience | Digital Transformation

Customer Centricity As The Essence Of Digital Transformation

May 19, 2022
Customer Centricity As The Essence Of Digital Transformation

by Abhijit Chakravarty

Digital Transformation may well be one of the most overused terms among the C-Suite, business consultants, and the industry overall. It is an axiom that increasingly falls in the category of being painfully cliché, but the fact of the matter is that the term isn’t about digital technology. It’s less to do with technology and more about organizational transformation and change management with human capital at its core.

The fourth industrial revolution is all things Meta with its blurring lines between the real and digital worlds. Characterized by augmented reality (AR) and virtual reality (VR), it has created a fundamental shift in the way we will conduct business. The power now is truly in the hands of the new-age customer, who decides when, where, and how they will transact.

While the “customer is king” moniker has always been around, thanks to new research, we are now able to see exactly which factors in a digital transformation correlate with being a financially successful company, and why indeed, companies should care about digital transformation.

Source: Harvard Business Review

A recent study by Deloitte found that more digitally mature companies see higher gains in customer satisfaction, gross margin as well as long-term gains. With customers at the center of the digital transformation, more digital maturity can lead to better net revenue and net profit margin, as seen in the graphic below:

Why is this? The answer is that digitally mature companies can add value for their customers. Deloitte identified seven digital pivots, listed below, which successful organizations made, with customers at their center. As a result, they were more agile when it came to responding to customer demands (products and services), improving customer relations (being culturally relevant and bringing diversity and inclusion), or enhancing customer experience (seamless transition between mobile and in-person experience and 24/7 support). These successful enterprises were also able to adapt their business model and boost innovation.

Pivot 1: Flexible, secure infrastructure

Pivot 2: Data Mastery

Pivot 3: Digitally savvy, open talent networks

Pivot 4: Ecosystem engagement

Pivot 5: Intelligent workflows

Pivot 6: Unified Customer Experience

Pivot 7: Business model adaptability

The business and financial impact of a digital transformation centered around the customer is not lost on the C-suite either. Companies with higher digital maturity see benefits across cost reduction, increased sales, and better customer lifetime value. According to this report by KPMG, as many as 67% of CEOs agree that the agility provided by digital transformation is “the new currency of business; if we’re too slow, we will be bankrupt.”

Digital transformation’s real purpose is about empowering the server (business) and the served (customer). In coming years, we will see businesses re-imagining, growing, and transforming themselves by placing the digitally empowered demi-gods, a.k.a the customer, at the epicenter. The alternative, unfortunately, is worse.

At Blanc Labs, we understand that every organization’s needs are different. This is why we offer advisory and consulting services to understand your unique issues and get you started with your digital transformation journey. Book a discovery call with us to learn more.