Christina Bowe, Regional Director UKI from Perceptive Software
Over recent years a number of financial businesses have experienced technological issues that have not only impacted them financially but also damaged the public’s perception of them. In the UK alone we have seen reports of potential fraud, price fixing and large banks ‘losing’ important transactional data. The inherent high value of financial transactions, along with the increased visibility of such challenges, means it is becoming ever more important to ensure that financial document management processes are under control and fully transparent.
With an increasing amount of information and processes, it’s difficult to maintain a 360-degree view of your organisation. When basing business critical decisions on the information stored within your organisation’s system of record, it’s imperative that the processes generating this data are sound and accurate.
One of the simplest but most costly problems is simple human error, such as mistyped data entry. Invoices may be returned due to mismatched information and order or delivery issues can arise from incorrectly processed delivery notes. However the mistakes occur, the common theme throughout is inaccurate information at the first point in the process.
Many institutions make substantial investments in enterprise software applications for their core business requirements but overlook the processes that provide the vital data to these applications. By utilising complementary solutions that provide true process automation these organisations can improve financial performance, ensure data quality and effectively manage all the data necessary to run a thriving business.
While serving the critical role of being your system of record, big enterprise software can be limited by inflexibility and the inability to accommodate all the facets of how you do business, limiting the value that can be returned to your business.
Today, virtually inaccessible unstructured content provides organisations with a major headache. When combined with restrictive processes, it can prevent your organisation from effectively managing potential risk. Furthermore both electronic and paper-based files are increasingly stored across multiple physical and virtual environments, meaning simple processes become labour-intensive challenges. Email trails, returned invoices and stacks of paper shuffled between offices essentially become a pile of missed opportunities and blind spots. This is all created by your enterprise applications’ inability to quickly and cost-effectively adapt to processes and cases that don’t always follow the rules, waves of new content created by a mobile workforce and changing regulation and compliance.
Addressing these issues requires an effective process and content management solution.
Tactically speaking, content management technology allows users to retrieve the documents and information they need, while protecting critical information from unauthorised access. From a broader perspective, it lets you manage the life cycle of enterprise information by applying records and retention policies, ensuring faster response to audits and enhancing compliance. Because enterprise content can be integrated with applications throughout an organisation, it also fosters better communication and collaboration amongst departments.
Business process management deals with the people aspect of tasks as well as more system-centric activities that need little or no action from knowledge workers. Robust solutions allow process analysis and mining for ongoing improvement, using data from your system of record to analyse current practices and then model and test alternative methods for completing key business tasks.
But the most important benefits are realised when process and content management are integrated into one solution. When used in conjunction with enterprise applications, this allows your organisation to:
- Automate standard tasks to achieve‘straight-through processing’ or ‘touchless pass’
- Make information and documents readily available to handle exceptions or tasks that knowledge workers are required to complete
- Gain the insights needed to identify bottlenecks and remedy them before becoming major issues
- Ensure more complete compliance with business rules and regulations.
One such company that has embraced this financial document management process is Ageas Insurance Limited. Insuring approximately seven million customers in the UK, they are the country’s third largest private car insurer. With more than 5,000 weekly pieces of incoming mail and 450 employees handling over 60,000 claims, the claims department was inundated with inefficient paper processes. Implementing document management, imaging and workflow technology resulted in:
- More efficient secure automatic claims handling process
- Improved customer service due to faster document retrieval
- Growth in staff’s multi-dimensional skills
- Advanced ability of management to monitor staff work rate
- Regained office space previously used for paper storage
- 20 percent reduction in claims admin head count
- Enhanced compliance with the regulations set by UK regulator FSA; for example enabling swift adaption to revised regulations like Solvency II, which aims to establish a set of capital requirements and risk management standards across Europe.
Many organisations choose accounting and finance for their initial efforts to improve process and content management. Perhaps that’s because manual data entry is still common for accounts payable and receivable. Even occasional errors can take hours of valuable time to rectify. Also, this area’s workflow can be complex, involving diverse departments and adherence to strict business approval rules. The combination of these two factors can mean a quick return on investment (ROI) for deploying new technology based on improved cash management alone, not to mention faster response to audits and enhanced compliance with both business rules and governmental regulations.
But a bolder step that’ll deliver longer sustainable gains is to embrace a strong intelligent straight-through document capture solution as an integral element of a shared services strategy. Centralising financial document and critical information capture can be a tool to eliminate error and protect sensitive data.
The choice of capture technology is key because error rates can be seriously exposed when capturing so much information from documents. If you rely on technology that can only offer a 50 to 60 percent capture rate, the results for the rest of your initiative could become compromised by errors due to the significant amount of manual intervention still required. Automated intelligent capture systems help eliminate errors occurring from manual data entry as well as speeding cycle time, offering much-needed scalability and visibility and improving access to information. These systems work by learning from a small sample set, which then allows a hugely diverse range of document layouts to be processed, comparable to a human learning approach. What’s more, centralising data capture across departments allows for a consistent and coherent approach across an organisation as a whole.
Finally, don’t feel you must scope your project to include every problem in your organisation – or even your department. Taking a phased approached to adopting process and content management technologies has been very successful, achieving substantial, albeit incremental, ROI. In fact, when you’ve demonstrated the values and benefits in one area, you may find that it quickly leads to demand for additional implementations. In this way, enterprise-wide improvements may occur more quickly; as additional deployments are smoother than if you’d broadened your initial project’s scope.
For more information visit www.perceptivesoftware.co.uk
Embracing digital automation without compromising on customer experience
By Mang-Git NG, CEO & Founder of Anvil
Community banks have always prided themselves on their ability to serve their local community with an unmatched level of customer service. My family has experienced this first hand when my parents immigrated to the United States as graduate students with no credit history and very little income. When no national bank would open an account for them, the local community bank provided the banking services my parents needed to help them find their feet.
You can expect to be anonymous at a large bank but as a community bank customer, you expect a more personal connection with your banker—after all, you live in the same community.
While the ability to nurture personal relationships remains a critical differentiator, community banks face a number of ever-evolving external pressures, from the scale of large incumbents to evolving customer expectations, threatening the ability to grow their customer base and even retain existing ones. It can be especially frustrating as a long-standing customer to be asked for your basic personal information over and over again on bank forms when your relationship goes far deeper than that.
Automation and customer experience are no longer a trade-off
Small business owners are increasingly willing to pay more for products and services that make their lives easier. This trend favoring convenience is likely to accelerate with the rise of Gen Z given their preference for mobile-first instant messaging apps. With this in mind, the need to transform products and services with digital technology adoption is a top priority for many banks. In a recent KPMG survey, 72% of bank CEOs said they were prioritizing investment in new technology, and 58% even said they have begun using artificial intelligence (AI).
However, community bank leaders have faced a dilemma in the past. The adoption of automation technology often meant compromising on customer experience. We’ve all dealt with frustratingly unhelpful chatbots that are ill-equipped to handle complex queries or advice that often come up in financial services.
Fortunately, automation technology has progressed beyond simple chatbots and now offers smarter ways to authenticate users without adding more friction, predictive analytics are helping bank employees make more strategic product recommendations that match a customer’s needs, and workflow automation is enabling banks to improve customers’ account opening process while also dramatically reducing the overhead of processing applications.
Combining these digital tools with a human touch to create personalized automation, and applying each in the right way, will help community banks stand apart from large banks, keep existing customers happy, and attract new ones.
Automation and profitability go hand in hand
In 2018, fraud against bank deposit accounts amounted to $25.1 billion, including $2.8 billion in losses. Intelligent fraud detection can help minimize such losses, thus impacting the bottom line. Banks that embrace security and fraud detection technologies have a significant advantage over their peers.
Similarly, automation to help streamline existing processes can prove invaluable. Every year, paper and PDF-based processes cost banks billions of dollars. Adopting paperwork automation technology leads to faster processing times for routine, repetitive processes like account openings and loan applications, resulting in greater efficiency and reduced costs. The use of dynamic forms with built-in validation also eliminates human error and the need for manual checks.
As an added benefit, automating away mundane processes like data entry allows community banks to invest time and human capital in what they do best: getting to know their customers and developing personal relationships.
Finally, process automation can enable banks to unlock growth. As an example, Minnesota’s Sunrise Banks adopted paperwork automation technology earlier this year to increase their ability to process Paycheck Protection Program loans from 85 to almost 500 per day, thereby allowing them to extend their lending capabilities beyond their existing customer base.
Thoughtful automation is crucial for survival
Embracing new automation technologies that allow community banks to match customer expectations while improving profitability is the key to long-term sustainable growth and success. A majority of bank CEOs recognize this and believe that, without agility, they would likely face bankruptcy.
While poorly applied automation technology can be an expensive way to create a bad customer experience, it is undeniable that meeting evolving customer expectations demands thoughtful application of such technologies. To avoid automation for the sake of automation, community banks should evaluate solutions based on their ability to improve the customer experience and the bank’s bottom line.
Ultimately, bank leaders should think about their top challenges and how automation can be a part of the solution, consider if the organization is ready for an investment in both time and money, and if they have the infrastructure in place to support thoughtful automation.
Financial transformation is the new digital transformation
By Luke Fossett, ANZ Head of Sales for global recurring payments platform, GoCardless
The term ‘digital transformation’ has become somewhat synonymous with COVID-19. As teams and operations became decentralised, companies looked to quickly build their remote tech stacks, striving for ‘business as usual’ despite the circumstances.
But in the background of COVID’s chaos, different regions and industries experienced major changes, sparking a different breed of transformation beyond the digital spectrum.
Take Australia as an example. In July, the market saw the local arrival of Open Banking, as well as further detail into the regulated and planned transition away from the existing Direct Debit system to the central-backed New Payments Platform (NPP) and it’s Mandated Payment Service. With these changes comes the impetus for a wave of ‘financial transformation’; a term that describes the process of making financial operations, processes and outputs more efficient.
Despite its potential for broad interpretation, financial transformation has the potential to produce use-cases that drive value for the customer; from things like seamless payment experiences, to data-rich APIs and integrations, to managing real-time bank to bank payment and the automation of everything from customer acquisition to using data to retry a failed transaction on the date that gets the best success. These innovations are well within reach for enterprise organisations, however, to extract real value, business leaders need to plan their financial infrastructure in parallel with making digital investments.
With the right deployments, financial transformation can reap significant rewards from a customer and internal operations perspective – so here’s why business leaders should be paying attention:
Value speaks volumes to the C-suite
Financial transformation benefits enterprise organisations as well as small and medium-sized businesses (SMEs) that need to create efficiencies as they scale, but translating its value is not always easy.
Payments are a complex part of any business, impacting many different consumer-facing and internal functions. Yet the role of ‘payments specialist’ is a rarity in most organisations.
Responsibility for financial transformation often falls – and gets lost – somewhere between the Chiefs of Technology, Information and Finance. That’s why leaning on platform providers and payments experts as early as possible, is key to understanding your customers and capabilities, before you implement and invest.
Outsourcing financial transformation initiatives is a much easier sell to enterprise decision-makers than redirecting IT resources to new DevOps projects. Credible payment providers, and the specialised knowledge that comes with good ones, are in most cases a more cost-effective solution than employing a full-time expert. Translating the value of financial transformation to achieve buy-in from the C-level boils down to maximising efficiency and return on investment (ROI).
A simple solution is using automation for tasks like streamlining processes, such as collecting payments on time without human contact. Find the sweet spot between how you want your customers to pay, and how they prefer to pay; then offer those options, while making sure they can be done with little to no touch internally.
‘Best-in-class’ platform providers typically describe innovative fintech companies, who, as opposed to generalist banks, are deemed specialists in niche elements of financial services.
Again, using the example of Australasia, there are nearly 5,000 active fintechs, and it’s a market that legacy-laden big banks are tapping into. For example, Australia’s largest bank, the Commonwealth Bank of Australia, recently partnered with venture capital firm Square Peg, and AI-focused capital fund Zetta Ventures Partner; pouring $AUD28 million into new financial technology that delivers better digital banking services to its customers.
Fintech-led transformation doesn’t only have to benefit the customer; it can offer significant value for financial teams too.
In an enterprise environment, choosing the right technology allows for slick front end payments, but the true value comes in optimising financial management behind the scenes.
Take the rising consumer demand for subscription services as a use-case. According to Zuora’s Subscription Impact Report, 50 per cent of all subscription companies are growing just as fast as they were before the pandemic, while 18 per cent are actually seeing subscriber growth rates accelerate. With this trend comes a rise in companies looking to invest in recurring billing platforms that make it easy to accept regular payments, however, finding a low-touch platform that offers the financial infrastructure to support subscription-based payments will generate much greater ROI. There is no point blowing budgets on a ‘rip and replace’ billing platform if internally, finance teams still have to revert to a manual process of uploading payment files in a spreadsheet.
The future is financially transformed
The Reserve Bank of Australia’s latest Consumer Payment Behaviour survey shows that in 2007, cash was used for 69 per cent of all transactions, while last year it accounted for just 27 per cent. Additionally, over 50 per cent of Australian businesses prefer bank-to-bank payments, known as Direct Debit, over credit cards as a way to collect payments.
Payment preferences are rapidly evolving, and keeping up with consumer payment trends is key to staying competitive. To be effective, however, you need to have the infrastructure to support and accept diverse payment methods.
‘Payments as a Service’ (PaaS) is a phrase used to describe platform providers that connect multiple payment systems, enabling companies to offer several payment options while replacing outdated practices like paper-based Direct Debit.
In 2020, the most successful enterprises are utilising PaaS providers, built for self-serve and high rates of conversion. Take Bulb, for example; the UK-based energy company allows users to sign-up, switch energy providers and lock-in their payment preferences, all in under two minutes. Better yet, the process requires almost no people management.
Taking a visionary lens on financial transformation means building greater payment efficiencies for both the customer and the enterprise. Additionally, the specialist and agile nature of fintech platforms puts the organisations who use them on the cutting-edge of innovation, future-proofing operations in a fast-moving market without significant investments in research and development.
Best-in-class platform providers are driving financial transformation change; helping business navigate and plan so they are prepared for today, and for what’s coming.
RegTech 2020: Exploring financial crime and the emergence of RegTech in the USA
with host, Alex Ford, VP Product and Marketing, Encompass, and guests, Dr Henry Balani, Head of Delivery, Encompass; Pawneet Abramowski, Chief Compliance Officer
Today, financial institutions deal with increasingly complex transactions and regulations that are continually changing. For the financial services industry, the cost of regulatory obligations has dramatically increased in recent years and, as a result, there has been a strong demand for more efficient reporting and compliance systems to better control risks and reduce compliance costs.
The complexity of regulation has made it more difficult for compliance and legal teams to manage risk. Also, the rise in large monetary fines, the impact of reputational damage, personal liability and even prison sentences have all played a factor. However, it remains essential that RegTech and AI is not seen as the only answer to addressing all financial crime risk, but rather a tool that, if used properly, can create more efficiency in the management of money laundering, bribery, corruption and fraud.
This month’s insightful and thought-provoking RegTech 20:20 podcast, from Encompass Corporation, delves into these topics from a US perspective, as guests, Dr Henry Balani, Head of Delivery, Encompass, and Pawneet Abramowski, Chief Compliance Officer. Pawneet has more than 17 years of combined experience in both public and private sectors with a focus on compliance and Henry has experience supporting innovative technology solutions that address issues of financial crime and money laundering. He advises technology firms as a Non-Executive/Board Director.
Encompass Corporation aims to demystify RegTech for listeners and understand what practitioners and experts are doing to overcome organisational challenges. This time,
Pawneet discusses how the US is at the forefront of the utilisation of technology, while also reflecting on the long history of money laundering and financial crime there, saying that “the birth of RegTech in the last 5-7 years has been really prominent in the United States”.
Henry, having had more than 25 years’ of financial services industry experience, speaks about how so many transactions worldwide are cleared in a US bank and how the US dollar is a powerful weapon, especially when money laundering comes into play.
When asked about her thoughts on technology assistance, Pawneet suggests that organisations are having to continuously evolve their programme and controls, telling the audience: “I think that’s where this desire for having technology assist in making things more efficient and operationally effective”.
Henry gives listeners an insight into regulatory penalties being a driver in changing behaviour, suggesting that this type of enforcement is a successful method.
“…as we see the increasing use of these penalties, organisations are noticing the reputational damage as embarrassing. We have seen a lot of these companies coming to RegTech firms asking for solutions to help them identify these potential challenges and issues”
Later on in the podcast, he goes on to speak about the challenges for regulated banks in the US. Breaking down the latest data and survey figures, Henry insists that the US has huge workforces in this organisation of growth. “To be a compliance professional, you are certainly in huge demand.”
Technology advancement is increasing at a rapid rate in the US. Regulated firms have a challenge not only to stay ahead of criminals, but there is often a rush to introduce new technology and continue to improve the experience of customers. Regulated bodies in the US, especially banks, have long been reinventing and adapting their compliance programmes to meet both their legal and community obligations and, as Pawneet explains, “it feels like a constant regulatory revolving door as a compliance professional”.
More expert commentary, RegTech conversation and industry insight can be found in the full episode of RegTech 20:20. You can listen here https://www.encompasscorporation.com/regtech2020-podcast/, and across all major podcast players
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