A Practical Guide to Automation in Banking Sector

Customers expect an easy omnichannel onboarding experience with zero manual intervention. Banks need to offer a smooth, hassle-free know-your-customer (KYC) process with minimal data entry and to integrate their digital interfaces with automated back-office operations. With multiple documents to check, scan, and validate, KYC is an error-prone and manual process for most of banks. Banking automation is a method of automating the banking process to reduce human participation to a minimum. Banking automation is the product of technology improvements resulting in a continually developing banking sector. The result is a significantly more efficient, dependable, and secure banking service.

As a result, the way financial services are traditionally discovered, evaluated, purchased and delivered is being challenged, making intelligent automation essential for future competitiveness and differentiation in the industry. While caution is called for at this stage, financial institutions can benefit from incremental AI implementation especially when it comes to upgrading the customer experience through solutions including ChatGPT-like offerings. The key is for financial institutions to understand the AI compliance and regulatory landscape of today as well as what may transpire as AI develops to best manage potential compliance risks.

RPA, or robotic process automation in finance, is an effective solution to the problem. For a long time, financial institutions have used RPA to automate finance and accounting activities. Technology is rapidly growing and can handle data more efficiently than humans while saving enormous amounts of money.

• Processes such as funding, staffing, procurement, and risk management get rewired to facilitate speed, scale, and flexibility.
• RPA software can be trusted to compare records quickly, spot fraudulent charges on time for resolution, and prompt a responsible human party when an anomaly arises.
• With these six building blocks in place, banks can evaluate the potential value in each business and function, from capital markets and retail banking to finance, HR, and operations.
• However, a robust strategy around reliable, all-encompassing solutions is often elusive.
• It is essential to select a marketing automation platform that provides built-in compliance features and facilitates adherence to regulatory guidelines.
• Global FinTech Series covers top Finance technology news, editorial insights and digital marketing trends from around the globe.

An automated business strategy would help in a mid-to-large banking business setting by streamlining operations, which would boost employee productivity. For example, having one ATM machine could simplify withdrawals and deposits by ten bank workers at the counter. It is important for banks to stay updated with these future trends and emerging technologies to remain competitive and deliver exceptional customer experiences.

What are the benefits of Automation in Banking?

Domain expertise should be available on demand from the top bras within banks if the digital team lacks it. Together these folks should have a determined approach to achieving the end-to-end vision of the entire automation exercise. Automation has always sounded a death knell for jobs in any industry and banking is no different. But today, your existing workforce do not have to fear about their jobs being replaced by robots or software bots.

As per Gartner, the pandemic has catalyzed the business initiatives to adapt to the demands of employees and customers and make digital options the future of banking services. Delivering personalized messages and decisions to millions of users and thousands of employees, in (near) real time across the full spectrum of engagement channels, will require the bank to develop an at-scale AI-powered decision-making layer. First, banks will need to move beyond highly standardized products to create integrated propositions that target “jobs to be done.”8Clayton M. Christensen, Taddy Hall, Karen Dillon and David S. Duncan, “Know your customers ‘jobs to be done,” Harvard Business Review, September 2016, hbr.org. Further, banks should strive to integrate relevant non-banking products and services that, together with the core banking product, comprehensively address the customer end need.

Two-thirds of senior digital and analytics leaders attending a recent McKinsey forum on gen AI1McKinsey Banking & Securities Gen AI Forum, September 27, 2023; more than 30 executives attended. Said they believed that the technology will fundamentally change the way they do business. The pressing questions for banking institutions are how and where to use gen AI most effectively, and how to ensure the applications are fully adopted and scaled within their organizations. But the business teams at multiple departments would be the people who face the most disruption in their operational models due to the exercise.

Additionally, banks will need to augment homegrown AI models, with fast-evolving capabilities (e.g., natural-language processing, computer-vision techniques, AI agents and bots, augmented or virtual reality) in their core business processes. Many of these leading-edge capabilities have the potential to bring a paradigm shift in customer experience and/or operational efficiency. Being an automation solution provider for multiple industries, AutomationEdge has scaled multiple banking and financial services providers in accelerating their business process efficiency and workplace experience. For example- one of our clients HDFC bank had been facing huge challenges in process inconsistency and a high rate of errors that were leading to lower revenue and higher operational costs. To process a single loan application through HDFC bank processing time was 40 minutes.

By automating these routine tasks, RPA accelerates cash flow, enhances customer satisfaction, and improves operational efficiency. AI chatbots are revolutionizing the banking landscape by demolishing language barriers and making financial services universally accessible. In today’s globalized world, a diverse customer base is the norm, not the exception.

Nanonets online OCR & OCR API have many interesting use cases that could optimize your business performance, save costs and boost growth. Automation has likewise ended up being a genuine major advantage for administrative center methods. Frequently they have many great individuals handling client demands which are both expensive and easy back and can prompt conflicting results and a high blunder rate.

Automation enables banks to identify relevant opportunities, deliver personalized recommendations, and track the effectiveness of their efforts. Ultimately, this targeted and data-driven approach enhances the overall customer experience while driving business growth. It involves the integration of various tools, such as customer relationship management (CRM) systems, email marketing platforms, content management systems (CMS), and analytics software, to create a cohesive and efficient marketing ecosystem.

This personalized approach significantly increases the chances of customer engagement and satisfaction. Banks should be transparent about their data usage practices, obtain proper consent for data collection and usage, and provide customers with clear options to control their data preferences. Building and maintaining customer trust is vital for successful marketing automation implementations. Integrating marketing automation platforms with existing banking systems can be a challenge.

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. Banks cannot entirely do away with complexity of their operations, but they can use end-to-end automation to unlock simplicity for consistently great CX. With a platform that unifies automation technologies across process, content, communication, and AI, banks can achieve end-to-end automation at enterprise scale. Many banks use mobile apps and web portals to consolidate their products and services, but a single interface often doesn’t translate to a consistent experience across products, due to fragmented back-office operations. Banks must create a process backbone that can offer to customers, employees, and partners a consistent experience across products and services. A number of financial services institutions are already generating value from automation.

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It also helps avoid customer-facing processes until you’ve thoroughly tested the technology and decided to roll it out or expand its use. For many banks, ensuring adoption of AI technologies across the enterprise is no longer a choice, but a strategic imperative. Envisioning and building the bank’s capabilities holistically across the four layers will be critical to success. Banks can transform their complex operations even if they face the challenges of technical debt and fragmented infrastructure.

RPA software can be seamlessly integrated within the bank’s existing tech stack, which allows the bank to pull data from various systems to inform decision-making, define processes, and identify opportunities for improvement. Another area warranting strong consideration by financial institutions is discrimination and bias. Bias is often implicit with AI since everything from data input to training algorithms and continuous learning can lead toward discrimination. Since AI is only as effective as the data and direction it receives, financial institutions must find ways to avoid a “Bias in – Bias out” situation. Additionally, in April 2023, the CFPB, along with the DOJ, FTC and EEOC, issued a joint statement declaring their commitment to enforce existing laws and regulations to mitigate the risks of AI. Their specific area of concerns included black box algorithms that make credit decisions along with algorithmic marketing and digital redlining.

A robotic process automation bank can easily prepare updated financial statements as frequently as needed. Business leaders can act swiftly and make informed decisions when they have the most up-to-date financial information. Human employees can focus on higher-value tasks once RPA bots have taken over to complete repetitive and mundane processes.

How Do Banks Use Automation: Benefits, Challenges & Solutions in 2024

These digital robots enable the bank to quickly develop and deploy processes that help customers access government pandemic and relief funds. Core banking services, such as loan approvals that previously took twelve days, are now provided to customers within four hours, representing a tremendous increase in customer value. Furthermore, detailed compliance reports for multiple national and European authorities and jurisdictions are compiled and formatted by digital robots for human review and approval. AI stands to empower financial institutions more than ever before with tools that can improve efficiency while providing cost savings and a more refined consumer experience. However, with a loose regulatory framework, AI can also pose significant risks if not implemented diligently.

Moreover, a single error in the important banking process leads to the case of theft, fraud, and money laundering case. Instead of humans processing data manually, simple validation of customer information from 2 systems can take seconds instead of minutes with bots. Introducing bots for such manual processes can reduce processing costs by 30% to 70%. Several processes in the banks can be automated to free up the manpower to work on more critical tasks. RPA in banking industry can be leveraged to automate multiple time-consuming, repetitive processes like account opening, KYC process, customer services, and many others.

All they need is a robust end-to-end automation strategy and a platform that can support it. The Newgen low-code platform can help banks develop business applications in only weeks from ideation to deployment instead of months or years. When it comes to automating your banking procedures, there are five things to keep in mind. Follow this guide to design a compliant automated banking solution from the inside out.

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Banking automation now allows for a more efficient process for processing loans, completing banking duties like internet access, and handling inter-bank transactions. Automation decreases the amount of time a representative needs to spend on operations that do not need his or her direct engagement, which helps cut costs. Employees are free to perform other tasks within the company, which helps enhance production.

• Follow this guide to design a compliant automated banking solution from the inside out.
• Once implemented, AI chatbots in banking offer unparalleled scalability, enabling institutions to efficiently manage fluctuating customer demands with minimal additional investments.
• Unlike human resources, scaling up AI chatbot services does not require a proportional increase in costs.
• The future belongs to banks that understand the evolving needs of their customers, leverage the power of technology, and continuously innovate their marketing automation strategies.
• A lot of innovative concepts and ways for completing activities on a larger scale will be part of the future of banking.

Thus, enabling customer self-serve options to instantly resolve customer queries with conversational AI. AI chatbots free up human employees to focus on more complex and high-value interactions by automating routine tasks and inquiries. This shift allows bank staff to concentrate on strategic activities and deepen customer relationships. Through data analysis and machine learning, AI chatbots offer personalized banking experiences. They remember customer preferences, suggest relevant products, and provide tailored advice, making each interaction unique and meaningful. Financial institutions should also establish an AI program that defines and enforces acceptable use.

In the banking sector, hyperautomation has grown to become an essential tool for reducing operational costs, improving customer experiences, and enhancing overall efficiency. This combination of multiple technologies is expected to see further advancements in 2023, leading to broader implementation and usage across industries, including hyperautomation in healthcare, insurance, retail, and education. Companies in the banking and financial industries often create a team of experienced individuals familiar with the entire organization to manage digital acceleration. This team, sometimes referred to as a Center of Excellence (COE), looks for intelligent automation opportunities and new ways to transform business processes. They manage vendors involved in the process, oversee infrastructure investments, and liaison between employees, departments, and management.

In essence, banking automation and AI are not just about keeping up with the times; they are about setting new standards, driving growth, and building more robust, more resilient financial institutions for the future. Embrace these technologies with Yellow.ai and embark on a journey toward a more efficient, customer-centric, and innovative banking future. As we journey through the evolving landscape of the BFSI sector, it’s evident that AI-driven banking automation is no longer a futuristic concept but a present-day necessity. This evolution is not just about efficiency and cost savings; it’s about redefining the banking experience for customers and employees alike. AI chatbots work with unparalleled speed and efficiency, handling tasks like data entry, transaction processing, and customer queries much faster than humans, increasing overall operational efficiency in the bank.

Hyperautomation is a disciplined, business-driven approach that organizations use to quickly identify, examine and automate as many business and IT processes as possible. Businesses have discovered that hyperautomation can be used to automate routine customer servicing tasks. By 2029, it is projected to rise at a strong CAGR of 22.79% to reach USD 2,133.9 million. In today’s rapidly evolving landscape, the successful deployment of gen AI solutions demands a shift in perspective—that is, starting with the end user experience and working backward. This approach entails a rethinking of processes and the creation of AI agents that are not only user-centric but also capable of adapting through reinforcement learning from human feedback. This ensures that gen AI–enabled capabilities evolve in a way that is aligned with human input.

The effects withinside the removal of an error-prone, time-consuming, guide facts access procedure and a pointy discount in TAT while, at the identical time, retaining entire operational accuracy and mitigated costs. You can foun additiona information about ai customer service and artificial intelligence and NLP. As it transitions to a digital economy, the banking industry, like many others, is poised for extraordinary transformation. While most bankers have begun to embrace the digital world, there is still much work to be done. Banks struggle to raise the right invoices in the client-required formats on a timely basis as a customer-centric organization.

This is where marketing automation steps in, providing banks with a powerful solution to effectively engage with their target audience and nurture lasting customer relationships. In the banking sector, where customer expectations are constantly rising, and competition is fierce, leveraging marketing automation has become crucial for staying ahead. Banking, inherently a business of digital transactions and trust, stands to reap unparalleled benefits from AI adoption. While AI won’t alter banking’s core functions, it promises to revolutionize its operational landscape. They use RPA automation to help key in, move, and transform data across systems to conduct financial analysis, execute repetitive manual processes, and generate valuable reports.

The banking sector is highly regulated, and banks must adhere to a multitude of regulations and policies. When implementing marketing automation, banks need to ensure compliance with industry-specific regulations, such as data protection laws, anti-money laundering (AML) regulations, and know-your-customer (KYC) requirements. It is essential to select a marketing automation platform that provides built-in compliance features and facilitates adherence to regulatory guidelines. Banks must carefully evaluate the compatibility and integration capabilities of different marketing automation solutions. Seamless integration ensures a smooth data flow between systems, enabling comprehensive customer insights and personalized experiences.

In the coming years we expect to see an increase in automation so that financial institutions can remain competitive and survive on the market in the long term. Significant benefits from automation can be observed in terms of productivity, accuracy and speed. Intelligent automation not only delivers significant cost savings to companies but also relieves them of the time spent manually moving, collecting and posting data between different systems.

Banks may need to invest in IT resources and expertise to facilitate the integration process effectively. Handling loans and credits got much smoother with some help from banking automation and AI chatbots. AI chatbots can dive into a centralized data pool to quickly fetch the information needed for loan and credit processing. They’re like digital assistants, making it super easy for the customers and bank teams to make informed, data-driven decisions. These intelligent bots help speed up the process, from approval applications to ensuring cases are wrapped up efficiently. Many resources are also available for banks looking to implement hyperautomation, including consulting firms, technology vendors, and industry associations.

With the advent of digital technology and the rise of online banking, customers expect personalized experiences, timely communications, and relevant offers tailored to their specific needs. RPA in banking industry operations can be adapted to automate various finance and accounting processes, such as expense reporting, payroll management, and financial forecasting, leading to improved service delivery and cost savings. This leads to significant timeline acceleration and frees up employees who can then focus on higher-value operations. This leads to massive cost savings, boosting profitability and improving the business’s overall margins. Implementing robotics process automation in financial services dramatically reduces or eliminates the need for human involvement in mundane and repetitive tasks. This greatly reduces the likelihood of human errors together with unconscious bias and subjectivity that could contribute to skewed decision-making or increase risk.

In addition, automated systems can identify and flag suspicious activity that poses a threat to the bank and its customers. Leading South African financial services group Old Mutual integrated multiple systems into one platform to provide employees with a holistic view of both customers and services available. This helped them to onboard customers 10x faster and provide 9x shorter queues in branch, plus an uplift automation in banking sector in sales from service. This in turn reduces employee workloads, helping them to feel more fulfilled and productive as they are equipped with the data and the time they need to provide the best possible experience for customers. Increasing customer expectations, stringent regulations and heightened competition are making it more important than ever for banks to optimize and modernize their operations.