A Framework for Automation in Financial Services

By Mike Heffner, Vice President — Global Industry Leads at Appian

The financial services (FS) sector is currently experiencing one of the most challenging periods in history. The ongoing Covid-19 pandemic, fierce competition amongst fintech challengers and the encroachment of large technology platforms have made it necessary for banks and insurers to react in order to survive.

CIOs at financial institutions are well aware of the challenges and have been acting fast to modernise their infrastructure, automate processes and streamline systems. Technology enablement is at a critical stage, with KPMG marking it as the number one priority for financial services firms looking to recover from Covid-19.

Many FS companies have had success in digitally reorienting their business, and there is strong evidence that when it is done well, traditional market players can reap the benefits from their technology investments to modernise their business.

Unfortunately, there is no magic formula or secret sauce to success. So in this turbulent environment for the financial sector, what else can CIOs do to automate and future-proof their business?

Perhaps unsurprisingly, many successful CIOs have made mistakes on the path to automating their business. This is normal and expected. Any success, big or small, should be celebrated. These small victories, such as automating tasks with low complexity or simple processing paths, may even have only delivered limited business value. Still, they do prove the potential of automation and pave the way for more significant implementations at a larger scale to come.

In the banking sector, for instance, many credit approvals, card management and Anti-Money Laundering (AML) checks have been successfully automated, resulting in reduced manual input and an increase in the speed and efficiency of those tasks. For example, Addiko Bank with banks throughout Central and Eastern Europe, was able to reduce their complex business loan decision time from one week to three working days by automating the loan decision process on a digital platform.

Increasingly there are opportunities to use automation for much more complex tasks and the rewards go far beyond increasing efficiency. These range from improving agility throughout an entire organisation – a necessity during a time where workforces are stretched due to the pandemic – to reducing the total compliance burden.

In insurance and banking, regulatory change has traditionally led to the creation of new processes and manual reporting tasks; though it is possible to automate many tasks. For example, GDPR (General Data Protection Regulation) in the European Union requires companies to have greater oversight of all their customer data. That data may be held in different systems across an organisation and creates a significant manual workload to access, update and maintain customer records in different business units. A leading global commercial property and casualty insurance company, CNA, is using a low-code automation platform to manage their underwriting process end-to-end and improve efficiency across time zones and languages. Furthermore, it is possible to automate the process, using a digital bot to collect the data and present it to employees in compliance to view and act on.

Simplifying the reporting process enables businesses to address new regulations more quickly and ensure they don’t fall foul of the fast-moving regulatory environment. FS companies can also use bots to stay ahead of the curve in identifying new regulations, by searching regulatory bodies and cross-comparing existing requirements with announced changes.

Beyond compliance, there are also opportunities to create tangible value for customers through identifying accounts that are at risk of closure and identifying products which are most suitable for an individual customer’s needs. Piraeus Bank in Greece, for example, has digitised and created innovative applications to gain efficiency with Business Activity Monitoring (BAM) capabilities to track Key Performance Indicators (KPIs). They transformed how they handle customer questions and complaints, comply with customer protection regulations, handle cash transfer and order legal documents. By equipping the bank’s employees with comprehensive access to the data, processes, collaborations, reports and dashboards needed to optimize how work gets done across the organization, Piraeus Bank has gained substantial business value from their digital investments.

You can see how these technology-enabled adaptions can prove immensely useful in this fast-moving Covid-19 era. In the UK, we’ve seen the rapid rollout of the UK Coronavirus Business Interruption Loan Scheme – a much-needed initiative that has seen over £12.6 billion in support given to over 57,000 businesses so far. Since its introduction in March, banks and lenders have faced unprecedented demand in processing these applications. This is another example where automation tools have been rolled out to make this process far more agile. Through a low-code application, banks can automatically check applicants’ eligibility, processing and verifying supporting documents in order to make their lending decisions faster. The technology will prove invaluable as the scheme continues.

From a technology perspective, these developments mean moving beyond simple rules-driven activities and basic automations. This may sound like a daunting prospect, but complementary technologies are already highly accessible. CIOs are now able to build and integrate a portfolio of automation tools comprising best in class Robotic Process Automation (RPA), Machine Learning and Artificial Intelligence (AI). The concept of having a unified full-stack automation platform encompassing these key automation technologies working in harmony is now a reality and necessity. Having connected data anywhere across systems gives CIOs the flexibility to gather business insights, take actions and make changes quickly to result in impactful business results.

It‘s also important to maintain an open dialogue with suppliers and the wider-industry to monitor developments in AI and machine learning to see how vendors are either developing their own tools, acquiring new capabilities or partnering with third-party specialists. Monitor the developments in machine learning and artificial intelligence. In particular, how Business Process Management (BPM) and RPA vendors are looking to incorporate, acquire or partner to develop these capabilities.

Finally, CIOs must prepare the foundations for future intelligent process automation by digitising more complex decision-based tasks, invest in data scientists and machine learning algorithms that determine logic flows and key decision points. Data, analytics and rules will still be critical for providing the guidance and required outcomes for intelligent automation. A low-code platform can provide the necessary speed to deliver automation in a timeframe that can serve business needs, in weeks rather than months or years.

This need for speed has never been more critical than now during a global pandemic and in the face of an economic turndown. CIOs have long known they need to invest in technologies, address the siloes and legacy systems that sit within their business. Those systems that have been a significant cause of inefficiency and wasted time. Now, CIOs must get ahead. Build a portfolio of automation tools. Deploy them with precision throughout the organisation. Taking these steps now will reap dividends when it comes to managing this period and flourishing in the future.