Automation in Banking

When we think about digital technology in banking, we generally think about customer side technology like mobile banking applications or websites. The usage for these can range from improving customer experience to enable new business models. But, what if we look the other way?

We can also look at the internal banking processes and try to use the new revolutionary technologies to reduce the manpower and time to process as well as to create new automated & streamlined business processes altogether. Technologies like OCR/ICR can eliminate the need to manually read and segregate, extract data, categorize or document the incoming documents. While tech like RPA can be used to automate the basic level manual efforts related to customer data, documentation, processing, etc. It is a big opportunity to become AI enabled and to use AI in not just a few, but almost all banking processes.

As per a FICCI (Federation of Indian Chambers of Commerce & Industry) Survey (Feb 2022) on AI in Financial Services including top executives from the industry:

• 57% agreed that AI provides them a competitive edge
• 82% selected ‘chat automation’ as the top use case
• 61% selected ‘privacy and data protection’ as top regulatory concern
• 52% selected ‘data availability’ as the top hurdle
• 65% agreed the investment in AI is less than 10% of IT costs

When implementing automation and new processes, companies mostly start from the customers side then struggle a lot when linking it to the back-end processes and systems. Instead a better way can be to first build the automation backbone of the organization in form of automated systems and AI driven processes. Once, organizations are performing the back end processes using AI capabilities, then they can expand those capabilities to the front end and the entire process will be automated in much smoother manner.

Automation Process

A successful automation journey should include, but not limited to, the following fundamental steps:

1. Selection of automation areas: Identification and selection of areas/ processes which have the potential to be automated. This can be decided on following parameters:
2. Complexity of the process: Does it require an individual to make complex judgements?
3. Repetitive nature of the process: There is no benefit in automation of process of process that are not regular. It will be difficult to justify the RoI in that case
4. Rule based: The processes must be driven by rules. Otherwise, it will be extremely difficult to automate processes which require human level decision making
5. Constant format: The procedure, documentation & methods should be constant with no changes in th input & output fields
6. Selection of area/process to run a pilot test: Depending on simplicity and usefulness to become a baseline for other processes
7. Selection of vendor: An automation partner must be selected who can bring in the technical expertise as well as a history of successful implementations for similar customers
8. Identify the challenges and learn from your mistakes during the pilot
9. Pilot presentation and management buy-in: Based on success of the pilot process, develop a business case for the management to extend the automation to wider processes
10. Extend the automation to other processes
11. Generate value: Compare the manual processes with now automated processes and exhibit the generated value

Benefits of Process Automation

Apart from saving employee efforts on manual repetitive processes, these are the additional benefits:

Challenges

Automation has a lot of advantages, but it comes with its set of challenges as well.

These can be divided into implementation and post implementation challenges. During implementation the major challenges are the decision making regarding the selection of suitable processes for pilot as well as the wider test run. Selecting unsuitable process can hamper the entire progress of the transformation. If the selected process have very high variability of usage with high and low volumes, then the automation will not be very effective. Similarly, we also need to ensure that the automated process is able to integrate well with the old legacy systems still in existence and it is not obstructing the business-as-usual activities of the entity.

Post implementation the major challenges faced include security and privacy concerns, rigidity, as switching automation systems has its own efforts and the decision once taken is irreversible in short run and conflict of opinions between people who prefer manual processes and people who prefer different kinds of automations.

Use case

Many customer onboarding processes require customers to fill an electronic form by entering their details and many companies are trying to automate this using browser data, customer account data and other methods. But one method can come up automatically during implementation of OCR/ICR tech in backend that will solve this in much better way. Many times this process is linked with uploading of customer identification documents and these can be used in conjunction with OCR/ICR technologies to auto-fetch and automate the process. This results in saving customer time & efforts. This also helps in reducing any mismatches between the identification document and form data, thus adding additional credibility to the process.

However, it must be noted that this should be implemented contextually as asking for identification document to supplement filling forms may be suitable for banking & insurance customers. But asking for such details from casual customers in other industries may act as a deterrent.

Other Use cases for BFSI

• Account opening
• Customer servicing including Statement generation, Q&A, information presentation and timely communication
• Compliance tracking
• Sales funnel management including application tracking

We can conclude with certainty that automation is the future. Many banks have already implemented it in many areas and others are in process. The benefits are evident and more players will join the fray soon. But it has inherent risks like security issues and affecting the business-as-usual. Hence, we should focus on automation but we must be judicious and careful while automating the processes.