5 Tips for Mid-Market Financial Firms to Adopt Automation Fabrics

Published : 4 weeks ago, on 11/09/2024

By: Charles Crouchman, Chief Product Officer at Redwood Software

The technological demands of financial clients continue to expand. What might have only been possible with the help of a trained advisor can now be accomplished with a few clicks on your phone. This increased efficiency is great for customers but poses difficulties for financial organizations, particularly small to mid-market firms.

Automation fabrics are critical to managing this influx of data and continued need for digital transformation. These tools enable efficient growth by automating manual processes and expanding the productivity of each team member.

However, only 26% of small and medium enterprise (SME) finance companies have fully automated processes in at least one function, compared to 41% of larger organizations, according to McKinsey & Company.

Putting the challenges that face SME finance companies into context will help them understand and navigate the road to implementing helpful automation. From there, utilizing strategic tips will put them on the fast-track to increased productivity and higher frequency releases.

Why Small to Mid-Sized Financial Firms Are Struggling to Adopt Automation Fabrics

Larger financial firms tend to be on the leading edge of adopting new technology and solutions. They can customize them to fit their exact needs, which affords them cutting-edge capabilities and reduces complexities.

One major challenge for smaller companies is that they’re not able to follow a blueprint when integrating new capabilities because they are playing the role of trailblazer. Any new technology is going to have bugs that are worked out as it’s used. And quite often, financial companies are the first ones figuring out how to solve these problems. This period of alignment can be difficult for smaller companies to absorb.

The needs of SME finance companies are at odds with each other: they need to be able to adopt these new technologies but don’t have the resources for large-scale implementations. This means they often need to utilize products that are ready to use right out of the box.

SME finance companies also don’t have the internal resources to customize new applications. Larger companies will have a staff of developers that can create bespoke solutions. These expansive technology departments enable enterprise companies to be more sophisticated in their approach, which is something SME companies can’t match even though they have the same needs. This contributes to their need to rely on off-the-shelf SaaS solutions.

The overarching theme for these difficulties is that SME companies lack the various resources needed to source automated solutions like their enterprise counterparts. There needs to be an initial investment to see the desired results, and SME finance companies often don’t have the capacity to make that investment.

5 Tips to Fully Embrace Automation Fabrics

Small and medium enterprise finance companies can use automation fabrics to expedite services and propel their organizations forward with the following five tips.

1. Solve for Future Problems as Well as Current Problems

SME finance companies must take a macro view of their automation needs. It can be tempting to solve for immediate pain points, but this will only create more work in the future.

Choose an automation provider that aligns itself with your goals down the road as well as the problems you are currently facing. Failing to account for future needs will lead to buying a new product every time a new challenge arises, which increases adoption time and reduces return on investment (ROI).

2. Understand ROI Comes from Multiple Sources

Assessing the amount of money a new tool will save the company is a major consideration for new, automation fabric tools. The immediate factor that decision-makers will focus on is cost reduction. And while this is a great way to make a business case for a new tool, it is not the only factor in the ROI of automation fabric tools.

Automation fabric tools don’t make mistakes. This is a huge differentiator when compared to addressing a problem manually, which saves a company a significant amount of money. Also, organizations gain a competitive advantage when automation fabric tools expedite their product delivery timelines.

These ROI factors must be communicated to justify the initial investment in automation fabric tools.

3. Be Flexible to Maximize Returns

Processes evolve over time, especially when automation fabric tools are introduced. And while it’s tempting to view this as an opportunity to reduce labor costs, SME finance companies often don’t have expendable team members.

Automation fabric tools enable organizations to repurpose their workers and avoid hiring new individuals to meet goals. Avoiding future increases in headcount enables flexible teams to move people around to more complex tasks within a company.

4. Recognize a Difference in Needs

Time to value differs for large and small companies. Larger companies can absorb lengthy, complex implementations of expansive products, while SME companies require faster returns.

Assess your needs and resources to determine how complex your expected returns from automation actually are. The software you choose should match this level of complexity, which will determine the depth of the onboarding process.

5. Find a Platform to Evolve Along with You

At the end of the day, you can either source automation to address a specific task or you can find a solution that will encompass all of your current and future needs. And while the initial investment can be prohibitive, organizations that are able to handle a longer implementation to source an automation platform will see the greatest benefits down the road.

Choose a platform that evolves with your needs instead of singular products. Your financial organization aims to grow, and it’s important that your tools grow along with you. This will save money over time by avoiding multiple implementation and learning periods while also providing continuous benefits that your team can rely on.

Automation Fabrics are Available for Finance Companies of All Sizes

The first step might be intimidating but the rewards of automation fabric tools greatly outweigh the initial investment. Reduced errors, expedited release schedules, and increased productivity are benefits that provide exponential returns that continue to expand over time.

About the Author

Charles is the Chief Product Officer at Redwood Software, with 25 years of experience as a technology executive. He has held CTO or CPO roles at five software companies, guiding them from startup to global expansion. Specializing in enterprise software sales, infrastructure management, automation, and machine learning, Charles brings a unique perspective to his role. At Redwood, he focuses on creating winning strategies for delivering innovative products and scaling high-performance product management and engineering teams.