The race to scale up automation in financial services

The race to scale up automation in financial services

Terry Walby

Founder and CEO at Blue Prism Cloud

Views 721

The race to scale up automation in financial services

13.03.2020 10:45 am

As financial services organizations look ahead to the new decade, they will be aware the next ten years are set to bring about dramatic changes in how they go to market and their service offerings and how they engage with customers.

Digital transformation and increasing consumer expectations will place heightened pressure on banks and insurance companies to deliver intuitive and personalized customer experience, far beyond what we currently see in the market.

This need for innovation will play out against a backdrop of worsening skills shortages and a fierce war for talent within the financial services sector. Businesses will need to find ways to maximize the productivity of their people and ensure they are deriving maximum value from key talent.

Little wonder then that banks and insurance firms are looking to scale up their automation programs over the next few years. Digital labor will be absolutely critical in delivering improved customer experience and ensuring compliance, whilst freeing up people from the mundane and repetitive to focus their efforts on innovation, strategic relationships and commercial growth.

Our recent research paper, ‘Taking Automation to the Next Level’ revealed the extent to which organizations are looking to accelerate their rate of automation and deploy digital labor in more strategic, business-critical areas.

Whilst just 7% of organizations currently claim to have automated more than 20% of all of their operational processes to date, this number is predicted to rise to 38% within five years, and as high as 50% within the financial services sector.

Interestingly, the drivers for this next wave of automation adoption are very different from the ambitions that organizations had when they first started out.

The quest for productivity

Banks and insurance companies have traditionally been at the forefront of automation adoption, using virtual workers to streamline back-office tasks across the organization, from HR and accounts through to contact centers and field sales.

For their early initiatives in process automation, financial services organizations were very much focused on driving efficiencies. Indeed, cost was cited as the top objective for automation by half (50%) of respondents, followed by increased productivity (25%) and improved business outcomes (17%).

This is re-shaping the way that leaders are now looking to identify the areas of greatest potential benefit for intelligent automation. Only a quarter (25%) are focusing on addressing the most under-performing processes; the vast majority (75%) are instead assessing the potential benefit of Intelligent Automation in terms of how it can provide key employees with tools to experiment. This represents a marked shift in thinking from where the industry was five years ago, or even two years ago.

More recently, however, the focus has shifted away from tactical deployment to more complex and strategic initiatives. Intelligent Automation (IA), which combines traditional Robotic Process Automation (RPA) with Artificial Intelligence (AI) functionality, now allows firms to automate a far wider range of workplace processes, faster, more effectively and securely.

As a result, the drivers for automation have evolved. No longer are banks looking to RPA technology to reduce cost; instead, they are ramping up their use of Intelligent Automation to tackle widespread skills and productivity issues.

We have reached a tipping point where automation is now less about tactical cost-reduction and more about customer experience, strategic growth and speed to market.

Financial services firms are re-defining how ‘work’ is resourced across their operations, based on the relative strengths and capabilities of human and digital labor. For business leaders, it’s a game-changer, providing the agility to respond to market disruption and adapt to regulatory change, and also to pursue new opportunities that would otherwise be impossible with a traditional approach to resourcing.

A third of strategy leaders within financial services believe that this type of Intelligent Automation could transform part of their business, whilst 8% feel that IA could in fact transform the organization as a whole.

Whilst automation strategy leaders within financial services were on the whole satisfied with the results of their automation initiatives to date (90% said their expectations had been met), only 17% felt that their efforts to date had exceeded their expectations.

This was strikingly low compared with industries such as utilities and the public sector, where 58% and 52% respectively felt that their early automation projects had exceeded expectations.

Part of this may be due to the sophistication of technology within financial services and their high expectations when it comes to innovation and digital transformation. Another factor may also be the relatively high level of operational efficiency that has traditionally existed within the industry.

Challenges to scale automation programs

However, another aspect undoubtedly at play here is the fact banks and insurance companies led the first wave of adoption of automation solutions. This meant that there was often little or no precedent to inform leaders as they developed their businesses cases and strategies for RPA adoption. In many cases, there was an element of trial and error and learning through mistakes.

The research reveals that automation leaders are facing a new set of challenges as they look to scale up their automation programs. On the operational side, these include difficulties accessing the technical skills they need and a lack of alignment between the IT department and other business functions. These issues were certainly around at the outset of automation programs but they have become more pronounced.

Evidently then, at a strategic level, the big challenge for automation leaders is how best to roll out digital labor at scale across multiple business units, whilst maintaining the visibility, control and consistency to deliver optimization. It is a question of governance.

Decentralisation of automation

Smaller, discreet automation projects are relatively easy to manage and control – usually with a central team of experts (both internal and external) overseeing and delivering the technology platform, skills and staff training required to introduce digital labour.

However, the research uncovers a widely held view, particularly within financial services, that such a centralized approach simply cannot deliver what is required moving forward.

The feeling is that if digital labour is to move from being deployed for specific use cases within pockets of the organization to more wide scale adoption, then skills, tools and ownership must be spread out throughout the business.

These are hugely exciting times for banks and insurance companies that are looking to scale up their automation programs and transform their operational models. The opportunities to pursue new business initiatives, develop new products and services and drive growth are almost limitless.

Without doubt, it is the ability of banks and insurance firms to build, manage and optimize this blend of human and digital labour that will decide the winners and losers in the 2020s.

Latest blogs

Granville Turner Turner Little

The Lockdown Money Revolution

Many Brits have found that lockdown has been beneficial for their money, having cut back on personal spending and managing to put away some extra cash. According to eToro, Brits with unspent discretionary income are set to accumulate £75.5bn in Read more »

Sandra Higgins Sysnet Global Solutions

Are You ‘Prescribing’ the Right Security Solution to Your Merchants?

When it comes to leading a healthy lifestyle, eating the right food, taking regular exercise, and maintaining a positive mindset are key. However, despite these best intentions and practices, you still might not get all the nutrients your body needs Read more »

Robert Flowers DivideBuy

It Doesn’t Have to Be the End – How Retailers Can Grow in Light of COVID-19

It’s no news that the retail industry has been flipped on its head by the COVID-19 pandemic. Due to the lockdown, most in-store operations have been shut down, and nationwide furloughs, reduced pay and steady streams of income at risk have fuelled a Read more »

n/a n/a

4 Ways to Protect Your Small Business Against Cyber Attacks

Just because you are running a small scale business doesn’t mean you are beyond the reach of hackers and attackers. Many small businesses have this thought, which is why they do not invest in their cybersecurity. Unfortunately, every year small Read more »

Kirston Winters MarkitSERV, IHS Markit

IBOR transition update: €STR grabs a foothold?

In the latest development in the IBOR transition, on the weekend of July 25th, we saw the major CCPs perform the much-anticipated Euro discounting and price alignment transition from using EONIA to EuroSTR (a.k.a. €STR) for all Euro OTC interest Read more »

Related Blogs

Tony Pepper Egress

Keeping data in the vault: insider breach risk in financial services

Financial services organisations are trusted with far more than just money; they are also responsible for keeping customers’ highly sensitive personal and financial data under lock and key. We’re hyper-aware that the growing value of this data means Read more »

David Friend Wasabi

Better data storage can revolutionise fintech: here’s how

New technologies are upending banking and finance, often in unforeseeable ways. Financial institutions now must find better ways to deliver the services their customers expect, whether it’s money management, investing, trading, or making payments. Read more »

Robert Siciliano

What is Synthetic Identity Theft

Identity theft is when a person steals another person’s private and personal information, generally to make money from it. You probably already knew this, but have you heard of synthetic identity theft? This is a bit different. With synthetic Read more »

Chris Holmes KAE

Will Tech Giants Ever Fully Penetrate the Financial Services Space?

While FinTech start-ups have been showcasing their rapid dynamism and proving themselves to represent a real threat to traditional financial institutions, in recent years, and even months, it has become increasingly difficult not to address the Read more »

Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel