Automation in Banking: What? Why? And How?

He is passionate about sharing his knowledge with others to help them benefit. Robotic Process Automation solutions usually cost ⅓ of the amount spent on an offshore employee and ⅕ of an in-house employee. Another AI-driven solution, Virtual Assistant in banking, is also gaining traction.

For the bank to be ubiquitous in customers’ lives, solving latent and emerging needs while delivering intuitive omnichannel experiences, banks will need to reimagine how they engage with customers and undertake several key shifts. Among the financial institutions we studied, four organizational archetypes have emerged, each with its own potential benefits and challenges (exhibit). QuantumBlack, McKinsey’s AI arm, helps companies transform using the power of technology, technical expertise, and industry experts.

Banks that embrace this transformative technology have a significant opportunity to gain a competitive edge while providing their customers with streamlined processes and personalized experiences. The key lies in leveraging AI as a tool to augment human capabilities, enabling financial institutions to deliver exceptional service while continuing to foster trust and build long-lasting customer relationships. AI-driven automation is pivotal for banking’s fraud detection and prevention. Tools like Numurus LLC and Ocean Aero provide solutions for efficient data analytics and resource utilization.

Leading applications include full automation of the mortgage payments process and of the semi-annual audit report, with data pulled from over a dozen systems. Barclays introduced RPA across a range of processes, such as accounts receivable and fraudulent account closure, reducing its bad-debt provisions by approximately $225 million per annum and saving over 120 FTEs. Automation is the focus of intense interest in the global banking industry.

All of this aims to provide a granular understanding of journeys and enable continuous improvement.10Jennifer Kilian, Hugo Sarrazin, and Hyo Yeon, “Building a design-driven culture,” September 2015, McKinsey.com. Imagine a scenario where a customer walks into a bank branch seeking assistance with opening a new account. Instead of having to wait in line and go through manual paperwork, AI-powered chatbots can greet the customer and guide them seamlessly through the account opening process. These chatbots can verify identification documents, provide product recommendations based on customer preferences and financial goals, and complete the necessary documentation quickly and accurately.

• In return, human employees can focus on more complex and strategic responsibilities.
• Timesheets, vacation requests, training, new employee onboarding, and many HR processes are now commonly automated with banking scripts, algorithms, and applications.
• Today, many bank processes are anchored to how banks have always done business—and often serve the needs of the bank more than the customer.
• By automating this process, banks can make faster and more reliable lending decisions.
• By automating the handling of routine inquiries or requests for basic information, banks can free up their human agents’ time to focus on more complex issues that require human intervention.
• You must manage KYC documents for a long time to comply with regulatory requirements.

They can focus on these tasks once you automate processes like preparing quotes and sales reports. Automation can help improve employee satisfaction levels by allowing them to focus on their core duties. The cost of paper used for these statements can translate to a significant amount.

Revolutionizing Branch Operations: The Impact of Integrated Cash Recyclers

Successful large-scale automation programs need much more than a few successful pilots. They require a deep understanding of where value originates when processes are IT enabled; careful design of the high-level target operating model and IT architecture; and a concrete plan of attack, supported by a business case for investment. To overcome these obstacles, banks must design and orchestrate automation-transformation programs that prioritize and sequence initiatives for maximum impact on business and operations.

Many banks are rushing to deploy the latest automation technologies in the hope of delivering the next wave of productivity, cost savings, and improvement in customer experiences. While the results have been mixed thus far, McKinsey expects that early growing pains will ultimately give way to a transformation of banking, with outsized gains for the institutions that master the new capabilities. Financial institutions need to do big picture, board-level thinking about how to prepare for the revolutionary impact digital technology will have on banking operations.

Imagine a scenario where a bank needs to assess a loan applicant’s creditworthiness. AI algorithms can prioritize relevant factors and evaluate the applicant’s financial history, credit score, income, and other relevant data with incredible speed and precision. By automating this process, banks can make faster and more reliable lending decisions. In the dynamic and complex landscape of banking, making informed decisions is crucial for success.

In the fast-paced world of banking, where time is money, manual tasks can be a significant drain on efficiency and resources in lieu of continuous transactional processes. That’s where AI-driven automation steps in, revolutionizing banking operations by replacing these manual tasks with streamlined and accelerated processes. With the power of AI, routine and repetitive tasks such as data entry, document processing, and transaction reconciliations can now be automated, freeing up valuable human resources to focus on more complex and strategic activities. Banking automation has become one of the most accessible and affordable ways to simplify backend processes such as document processing. These automation solutions streamline time-consuming tasks and integrate with downstream IT systems to maximize operational efficiency.

RPA Brochure

The survey found that cyber controls are the top priority for boosting operation resilience according to 65% of Chief Risk Officers (CROs) who responded to the survey. RPA does it more accurately and tirelessly—software robots don’t need eight hours of sleep or coffee breaks. The report highlights how RPA can lower your costs considerably in various ways. For example, RPA costs roughly a third of an offshore employee and a fifth of an onshore employee.

What is more, several trends in digital engagement have accelerated during the COVID-19 pandemic, and big-tech companies are looking to enter financial services as the next adjacency. To compete successfully and thrive, incumbent banks must become “AI-first” institutions, adopting AI technologies as the foundation for new value propositions and automation in banking operations distinctive customer experiences. In conclusion, the integration of AI-driven automation in banking represents a transformative leap into the future of financial services. With a focus on accessibility, customization, and scalability, institutions can harness the power of technology to optimize operations and enhance customer experiences.

By lowering process time, errors and expenses, automation eases loan modification for banks. Hyperautomation is a digital transformation strategy that involves automating as many business processes as possible while digitally augmenting the processes that require human input. Hyperautomation is inevitable and is quickly becoming a matter of survival rather than an option for businesses, according to Gartner. A power-boosting transformation strategy that injects intelligence and digital capabilities into their operations, across technology, processes and people, is essential for banks to stay competitive. This was another benefit of automation for Bancolombia, as automating repetitive and manual data-based tasks reduced operational risk by 28%. Banking organizations are constantly competing not just for customers but for highly skilled individuals to fill their job vacancies.

For example, you might need to generate a report to show quarterly performance or transaction reports for a major client. Most banks perform KYC (Know Your Customer) by manually verifying customer details. Now that we understand the role of AI in decision making within the banking sector, let’s explore how it contributes to data analysis and insights. It can be difficult to implement uses of gen AI across various business units, and different units can have varying levels of functional development on gen AI. It can slow execution of the gen AI team’s use of the technology because input and sign-off from the business units is required before going ahead.

Automation enables banks to complete KYC in a comparably shorter period with fewer errors and resources. Automation has made customers’ information gathering and validation seamless. In fact, over the last eight years, these banks have managed to reduce their costs more than those that have been slower to embark on their journey to a digital operating model. Customers expect fast, personalized experiences from onboarding to any future interactions they have with the bank. Having access to customer information at the right point in an interaction allows employees to better serve customers by providing a positive experience and promoting loyalty, ultimately giving them a competitive edge.

In return, human employees can focus on more complex and strategic responsibilities. These bots are developed through a blend of machine learning and artificial intelligence, a process that involves AI and ML development alongside software programming. Software Bots in RPA are designed to mimic human actions, interacting with various digital systems, applications, and data sources. Automating these and other processes will reduce human bias in decision-making and lower errors to almost zero.

As computers improve, they may be able to perform these more abstract tasks as well. Ultimately, we will likely reach that reality someday, but it will likely be a while ahead yet. But with further product innovations and changes to the competitive market structure, human expertise may be required for new and more complex tasks.

QuantumBlack Labs is our center of technology development and client innovation, which has been driving cutting-edge advancements and developments in AI through locations across the globe. As technology advances and banks continue to embrace automation, RPA will provide an invaluable tool for driving operational excellence and meeting the evolving needs of the modern banking environment. You can foun additiona information about ai customer service and artificial intelligence and NLP. By carefully addressing these challenges and considerations, banks can successfully implement RPA and harness its benefits while ensuring a smooth and efficient transformation of their operations.

Banks find it difficult to manually verify transactions in order to detect fraud. Automation strategies such as electronic routing and digital forms speed up the entire process. In this article, we’ll explore why the banking industry needs hyperautomation, its use cases, and how banks can get started with their hyperautomation journey. A global bank reinvented its auto loans process–boosting car loan sales by 50% and cutting total costs.

This level of engagement enhances customer satisfaction and fosters loyalty. Whether your bank experiences surges in workload during peak periods or needs to streamline operations during quieter times, RPA can adapt to the changing demands of your business. Customers can contact their bank any time through internet, mobile, or email channels and receive quick, real-time decisions. On the back end, systems would perform almost instant data evaluation about the dispute, surveying the customer’s history with the bank and leveraging historical dispute patterns to resolve the issue. Instead of waiting on hold or being pinballed between different representatives, customers could get instant, efficient automated customer service powered by advanced AI.

• From enhancing customer experiences to streamlining operations and ensuring compliance, the benefits are clear and compelling.
• Centralized steering allows enterprises to focus resources on a handful of use cases, rapidly moving through initial experimentation to tackle the harder challenges of putting use cases into production and scaling them.
• When you automate these tasks, employees find work more fulfilling and are generally happier since they can focus on what they do best.
• It can slow execution of the gen AI team’s use of the technology because input and sign-off from the business units is required before going ahead.

With the successful implementation of RPA in loan origination, XYZ Bank expanded its use of RPA to other areas, including customer onboarding, payment processing, and data analytics. This further enhanced operational efficiency, reduced costs, improved compliance, and provided a superior customer experience. Increasingly popular, automation delivers advanced operational and process analytics, and ensures technical viability without the need for interfaces at more lucrative price points than previous automation approaches. Aeologic Technologies stands at the forefront of this transformation, offering cutting-edge automation solutions tailored for the banking sector. Our expertise in AI, machine learning, and robotic process automation (RPA) enables us to design systems that streamline operations, enhance customer service, and ensure compliance with regulatory standards.

First, ATMs enabled rapid expansion in the branch network through reduced operating costs. Each new branch location meant more tellers, but fewer tellers were required to adequately run a branch. Second, ATMs freed tellers from transactional tasks and allowed them to focus more on both relationship-building efforts and complex/nonroutine activities. Book a discovery call with us to see first-hand how automation can transform your bank’s core operations. We’ll create an automation solution specifically for your organization that works in tandem with your current internal systems.

By providing personalized services based on individual needs and preferences, banks can enhance customer satisfaction and loyalty. They can anticipate customers’ requirements and proactively offer solutions before customers even express their needs. This level of personalization not only makes banking more convenient but also shows customers that their financial well-being is valued. After a successful pilot implementation, XYZ Bank launched the RPA solution on a larger scale. The loan origination process became significantly faster, with applications processed in a fraction of the time it previously took.

In phase one, the bank examined ten macro end-to-end business processes, including retail-account opening and wholesale customer service requests, to identify the automation potential and to prioritize efforts. Our research indicates that a significant opportunity exists to increase the levels of automation in back offices. By reworking their IT architecture, banks can have much smaller operational units run value-adding tasks, including complex processes, such as deal origination, and activities that require human intervention, such as financial reviews.

In 2014, there were about 520,000 tellers in the United States—with 25% working part-time. You may wonder how radically machines will transform work and society in the decades ahead. Advances in robotics, artificial intelligence, and quantum computing make machines so smart and efficient that they can replace humans in many roles now and in the next few years. Discover the true impact of automation in retail banking, and how to prepare your financial institution now for a brighter future. With RPA and automation, faster trade processing – paired with higher bookings accuracy – allows analysts to devote more attention to clients and markets. The system can auto-fill details into a report and prepare an error-free report within seconds.

Banking automation eliminates the need for manual work, freeing up your time for tasks that require critical thinking. Equally important is the design of an execution approach that is tailored to the organization. To ensure sustainability of change, we recommend a two-track approach that balances short-term projects that deliver business value every quarter with an iterative build of long-term institutional capabilities.

These pressures spread IT teams too thin, diverting their attention from the largest areas of opportunity. By taking full advantage of this approach, banks can often generate an improvement of more than 50 percent in productivity and customer service. To capture this opportunity, banks must take a strategic, rather than tactical, approach.

A North American bank transformed its lending practices to better service and retain customers—savings $20M and avoiding $2B in exposure. Automate at scale, augment human talent with technology and harness the power of cloud to transform the cost curve. Organizations that achieve a high level of maturity become “future-ready.” They are fully focused on digital transformation (i.e. Digital Focused) and gain the agility and resilience needed to thrive amid uncertainty.

However, banks must resolve several weaknesses inherent to legacy systems before they can deploy AI technologies at scale (Exhibit 5). Core systems are also difficult to change, and their maintenance requires significant resources. What is more, many banks’ data reserves are fragmented across multiple silos (separate business and technology teams), and analytics efforts are focused narrowly on stand-alone use cases.

Roles that previously toiled in obscurity and without interaction with customers will now be intensely focused on customer needs, doing critical outreach. They will also have tech, data, and user-experience backgrounds, and will include https://chat.openai.com/ digital designers, customer service and experience experts, engineers, and data scientists. These highly paid individuals will focus on innovation and on developing technological approaches to improving in customer experience.

As a result, you improve the campaign’s effectiveness, process efficiency, and customer experience. By eliminating room for error, automation ensures improved customer experience, increased quality assurance, and the number of cases processed each month, according to a McKinsey study. Sure, you might need to invest some money to improve the customer experience and make it seamless and efficient, but the potential ROI is excellent. Automation will eliminate much of the manual and low-value in-person interaction, saving your sales reps plenty of time to focus on running effective sales campaigns. Once this alignment is in place, bank leaders should conduct a comprehensive diagnostic of the bank’s starting position across the four layers, to identify areas that need key shifts, additional investments and new talent.

Learn how top performers achieve 8.5x ROI on their automation programs and how industry leaders are transforming their businesses to overcome global challenges and thrive with intelligent automation. With Aeologic, embark on a journey towards a more efficient, secure, and customer-centric banking future. Partnering with Aeologic means gaining access to a suite of tools that not only address current needs but are also scalable to future demands.

The remaining institutions, approximately 20 percent, fall under the highly decentralized archetype. These are mainly large institutions whose business units can muster sufficient resources for an autonomous gen AI approach. RPA works by creating a virtual workforce that can handle a wide range of tasks, including data entry, data extraction, form-filling, report generation, and more.

The company decided to implement RPA and automate the entire process, saving their staff and business partners plenty of time to focus on other, more valuable opportunities. Implementing RPA can help improve employee satisfaction and productivity by eliminating the need to work on repetitive tasks. Automation helps banks become more adaptable in the fast-changing banking industry.

Let’s explore some of the common use cases where RPA has proven to be beneficial. Leveraging the potential of innovative solutions like Hyperautomation, Robotic Process Automation, Business Process Automation, and Autonomous Automation to transform your business. For more, check out our article on the importance of organizational culture for digital transformation.

Banks and other financial institutions can take different approaches to how they set up their gen AI operating models, ranging from the highly centralized to the highly decentralized. We have observed that the majority of financial institutions making the most of gen AI are using a more centrally led operating model for the technology, even if other parts of the enterprise are more decentralized. A financial institution can draw insights from the details explored in this article, decide how much to centralize the various components of its gen AI operating model, and tailor its approach to its own structure and culture.

Today, these scenarios would be a nightmare for banks to orchestrate—each card or loan would almost require its own operations team. But soon, operations will use their knowledge of bank processes and systems to first develop customized products and then leverage technology to manage and deliver them. Today, many bank Chat GPT processes are anchored to how banks have always done business—and often serve the needs of the bank more than the customer. Banks need to reverse this dynamic and make customer experience the starting point for process design. To do so, they need to understand what customers want, and how and when they want it.

This results in faster resolution times, improved customer satisfaction, and enhanced operational efficiency. The dynamic landscape of gen AI in banking demands a strategic approach to operating models. Banks and other financial institutions should balance speed and innovation with risk, adapting their structures to harness the technology’s full potential. As financial-services companies navigate this journey, the strategies outlined in this article can serve as a guide to aligning their gen AI initiatives with strategic goals for maximum impact. Scaling isn’t easy, and institutions should make a push to bring gen AI solutions to market with the appropriate operating model before they can reap the nascent technology’s full benefits.

Blanc Labs helps banks, credit unions, and Fintechs automate their processes. Today, many of these same organizations have leveraged their newfound abilities to offer financial literacy, economic education, and fiscal well-being. These new banking processes often include budgeting applications that assist the public with savings, investment software, and retirement information.

Ultimately, the banking industry may need to get better at anticipating and proactively shaping how automation will stoke the flame of innovation and demand while shifting competitive dynamics beyond operational transformation. On another note, ATMs also introduced new jobs as armored couriers have been required to resupply units and technology staff to maintain ATM networks. However, dealing with the complexities of having multiple systems access customer information provided new challenges.

Plus, RPA bots can perform tasks previously undertaken by employees at a faster rate and without the need for breaks. Another European bank launched a strategic initiative to shrink its cost base and increase competitiveness through superior customer service. Upon completion of the first successful pilots, the bank’s automation program consisted of three phases.

By implementing digital twins and virtual factories, banks enhance operational excellence and detect anomalies promptly, aligning with regulatory compliance. This proactive approach, backed by senior management and cross-functional task forces, ensures robust security and protection of sensitive information. Incremental adoption and cultural alignment foster a culture of innovation, while AI ambassadors drive workflow automation and efficiency. Through this integration of AI and human ingenuity, banks fortify defenses against fraud, securing trust in the financial sector. Systems powered by artificial intelligence (AI) and robotic process automation (RPA) can help automate repetitive tasks, minimize human error, detect fraud, and more, at scale.

These data-driven insights enable banks to make more informed decisions regarding product offerings, marketing campaigns, risk management, and operational efficiency. By rapidly identifying opportunities and challenges, banks can proactively adapt to market changes and customer demands. At this very early stage of the gen AI journey, financial institutions that have centralized their operating models appear to be ahead. About 70 percent of banks and other institutions with highly centralized gen AI operating models have progressed to putting gen AI use cases into production,2Live use cases at minimal-viable-product stage or beyond.

RPA software is designed to be intuitive and user-friendly, allowing business users to easily configure and deploy bots without the need for extensive programming knowledge. The software typically includes a visual interface that enables users to define the steps of a process, set rules and conditions, and specify data inputs and outputs. In this article, we will delve into the world of RPA in banking, exploring its benefits, common use cases, implementation challenges, and the future outlook.

The future of banking operations is set to be transformed by Robotic Process Automation (RPA). As technology continues to advance and banks increasingly embrace digital transformation, RPA is poised to play a vital role in driving operational efficiency, enhancing customer experience, and improving overall profitability. In another example, the Australia and New Zealand Banking Group deployed robotic process automation (RPA) at scale and is now seeing annual cost savings of over 30 percent in certain functions. In addition, over 40 processes have been automated, enabling staff to focus on higher-value and more rewarding tasks.