Banking and automation: how catastrophe led to innovation?

Harri Lauslahti, Head of Banking and Insurance, Digital Workforce explains why UK financial services are surging ahead with automation while their global counterparts lag behind.

Memories of the 2008 financial crash remain fresh for those still in the industry. We’re all familiar with the cause; an overheated housing market stoked by unscrupulous lending to borrowers who couldn’t afford to borrow and the re-selling of these loans through obscure financial instruments that burrowed their way through the global financial system.

Harri Lauslahti
Harri Lauslahti

Thankfully global catastrophe was averted, just. Perhaps what we’re not so familiar with is how the crash paved the way for a technological revolution in the banking and finance sector, with the industry embracing innovative solutions, such as Robotic Process Automation (RPA) to keep costs down and increase business efficiency. This was driven by the wave of legislation that swept through financial institutions as governments sought the bolster the shaky global banking system. Many banks decried the legislation saying it tied their operational hands with unnecessary paperwork which would impact on customers.

In some cases legislation was watered down but forward looking organisations began to cast around for solutions and RPA was one of them. It addressed a lot of concerns by automating critical business processes with the use of software ‘robots’ or as some like to say Artificial Intelligence (AI) workers. Some financial companies were quick to catch on realising that at its simplest software robots learning from prior decisions and data patterns to make informed decisions was the ideal tool for automating costly and time consuming manual processes.

UK leading the charge

Since the post-crash days RPA adoption has been steadily gaining ground to the point where one in four UK organisations have adopted it with more planning to follow suit. And somewhat surprisingly it’s the UK that is leading the way. A recent PwC survey,‘PwC Global Fintech Report 2019: UK financial services firms trailblazing on automation efforts’, revealed that 37 per cent of UK respondents have implemented RPA compared to 28 per cent globally. The rationale is straightforward; harnessing the technological advancements of RPA gives firms greater leverage to retain existing customers, poach new ones and steal a march on rivals.

Banking and financial institutions deal with millions of customer documents and information collected from multiple sources. In just one simple example a credit card company validating customer information for a credit card needs to verify multiple documents. When carried out manually, this process can take days. It’s not only labour intensive but costly and can also have a negative impact on the customer experience. Financial organisations have a plethora of these manual, repetitive processes across many functions ranging from customer service to mortgage processing, deposits, fraud detection and many more.

And many of these processes are ripe for robot automation. For instance RPA can be introduced into the fields of risk and compliance, financial administration, sales, mutual funds and life insurance and contact centres.  For instance if we look at risk and compliance the most valuable automations include Anti-Money Laundering screening, Know your Customer functions, authorities’ inquiries,  payment transaction monitoring, the audit trail and compliance.

Winning customers

The sales process in branch operations is also another area ripe for RPA, especially on mobile devices. This is a winning move with customers. For instance, software robots can enable a faster response to customer requests, process online loan applications, complete pre-handling of mortgage applications and deliver fast credit applications. This can also include loan certificates, overdraft notifications, rescheduling of loan payments and month-end closing procedures.

Faced with this welter of manual processes and more effective technology options it’s hardly surprising that UK financial services in general is adopting RPA at a pace. For instance, increasing numbers of insurers use RPA in claims processing to speed things up and deliver greater customer satisfaction. In fact, in the insurance sector RPA is rapidly becoming the established modus operandi for claims processing.

Other firms in financial services are turning to RPA to reduce costs, provide better customer service and even make complex regulatory implementations work more efficiently. For instance there is certainly a gathering groundswell among shared services, finance, and operations teams at banking and capital markets.

Improving one-to-one customer interactions

One of the ‘hidden’ benefits of RPA that isn’t widely known is that it doesn’t require heavy lifting from IT teams, that is,traditional systems integration isn’t usually required.  The software can simply be installed on an end user’s laptop, obviating the need for developer configuration, and it can be managed from a central server.

However, the larger question is with UK organisations leading the charge towards RPA adoption why aren’t their global counterparts following suit? The PwC survey provides a strong hint. It reveals that UK financial services rank personal one-to-one contact with customers highly as an objective to be achieved while personal digital contacts is the least important of their objectives.

This strongly suggests that RPA usage is designed to improve back-office processes in order to provide a better personal customer experience at the front office. In contrast their counterparts abroad rank personal human contact as 10 out of 11. In turn, this strongly indicates that they are yet to realise the true value of using RPA as an important technology that can galvanise and grow their customer base. They are truly missing out.