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Blog | Oct 10, 2023

Fueling Finance: The Power of Banking Transformation

Banking Transformation
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Banks want to be more efficient and save on operational costs, but in the financial industry, data security and compliance are essential. So, the question is, how do you get it all — and more?

The financial landscape is turbulent, and new ways of working are catalyzing transformation in the banking industry. At the heart of this evolution are robotic process automation (RPA) and intelligent automation (IA), technologies helping banks embrace the future of work in novel ways.

Flash forward to today. Financial institutions have seen amazing improvements with the help of automation. It’s brought a harmonious collaboration between people, organizations and technology to maximize your strategic business value and better serve your customers, employees and stakeholders.

What is Transformation in Banking?

Banking transformation refers to the changes the banking industry undergoes to adopt new opportunities, such as technology, which we refer to as digital banking transformation. These changes aren’t small, incremental improvements like updating a website. Instead, they’re fundamental shifts in how banks operate, interact and deliver products and services to customers.

Banking transformation typically involves rethinking your business operating models to adapt to the changing environment, like adding automation to routine tasks and AI-driven systems to improve efficiencies and reduce errors. Banks undergo these transformation efforts to remain relevant and competitive against the evolving demands of customers and the industry landscape.

What is intelligent automation?

Intelligent automation (IA) is an expansive system that links AI with RPA’s capabilities to expand banking automation capabilities. It can also link with other cognitive technologies, such as machine learning (ML) and natural language processing (NLP). It plays a crucial role in driving banking transformation.

What is robotic process automation?

Robotic process automation (RPA) deploys digital workers to mimic human actions, automating time-consuming and repetitive tasks. It also supports banking transformation.

Challenges in banking transformations

Transformation is easier said than done, especially when it comes to traditional banks. It requires considerable effort and coordination between different teams, departments and systems. The challenges you could face include:

  • Legacy systems: Many banks have complex legacy systems and integrating these can be time-consuming.
  • Resistance to change: Due to factors like fear of losing their jobs and unfamiliarity with new systems, employees and stakeholders may resist adopting new technologies.
  • Regulatory compliance: Banks operate in one of the most heavily regulated environments. Digital transformation can become complex and resource-intensive when staying compliant.
  • Security and data privacy: Banks handle lots of sensitive information. Adopting any digital solutions poses risks to their cybersecurity.
  • Integration complexities: With established ecosystems and work methods, integration with other solutions or new technology can cause friction and requires meticulous planning to avoid disruption.
  • Siloed departments: Typically, banks have multiple departments, branches and systems that operate in siloes. Fostering collaboration amongst them can be challenging.
  • Budget constraints: Many believe that transformation requires heavy investment across all areas (technology, talent, training, infrastructure), so they’re more resistant to trying.

Many of these challenges can be solved. Addressing them in your digital transformation just requires a well-thought-out strategy, strong leadership, commitment and effective communication.

What is the transformation process in banking?

To help you achieve total business process transformation in banking, we recommend following a business process management (BPM) methodology for a more structured approach to understanding, modeling and improving all processes — from individual tasks to entire workflows.

By doing this, you can get total visibility into your business processes to manage work across your banking business. BPM is especially helpful with prioritizing work, providing a clear audit trail and improving communication.

The stages of BPM:

  1. Discover the processes and tasks in your organization.
  2. Analyze the collected information to see how it affects desired business goals.
  3. Design processes to ensure elements work in concert.
  4. Implement the changes, with deliverables, timelines and staff training, into the business.
  5. Improve by monitoring outcomes for optimization potential and continuously adjusting and improving your processes.

Learn more about how BPM can work for a bank’s digital transformation journey with our BPM platform.

How Does a Bank Apply a Digital Transformation Strategy?

Digital transformation is a journey. It’s an ongoing effort due to the nature of your environment, where things constantly change. This includes technology advancements and customer expectations. The first step to applying a successful digital transformation strategy would be to acknowledge that journey.

From there, as we mentioned before, we’d recommend looking into a BPM methodology for a structured approach to help you leverage the full potential of your efforts. Here are a few key considerations when applying a digital transformation strategy:

  • Do you have a clear vision of your goals and desired outcomes?
  • Do you have strong leadership support from top management?
  • What are your customers’ expectations?
  • What are your employees’ expectations?
  • Do you have robust cybersecurity measures to safeguard data?
  • Did you establish a feedback loop for continuous improvement?

How Can Automation Transform Banking and Financial Services?

You might think that transformation seems like a lot of effort and wonder if it’s worth it. In short, yes, it is. Especially when it comes to automation, and in many ways, automation is driving banking transformation. Here’s how:

  • Operational efficiency: IA and RPA can streamline routine and time-consuming tasks to increase productivity and efficiency. This reduces manual labor from employees to focus on more value-adding tasks.
  • Reduces costs: Automating repetitive processes helps reduce labor costs and increases productivity. Digital workers operate 24/7 with no errors and high accuracy, further enhancing cost efficiency.
  • Enhances customer experience: As automation frees up your employees’ time, they can spend more effort answering your customers’ needs. Automation also helps ensure quicker response and processing times, leading to more satisfied customers.
  • Enhanced employee experience: Employees are no longer chained to manual, repetitive and boring administrative work. They’re now more motivated to do higher-value and strategic tasks.
  • Improves consistency and compliance: Digital workers keep clear audit trails in real-time to ensure your compliance requirements are always followed.
  • Accurate data analysis and insights: RPA and IA eliminate manual data entry errors and ensures accurate data processing.
  • Scalability: Without pressure on staff, RPA and IA allow banks to accommodate growth as they can handle an increasing workload.

Examples of transformation in banking

There are plenty more benefits when it comes to automation transformation in banking and financial services. To help you get a better idea of these benefits in action, here are a few examples:

Account opening and customer onboarding

Manual additions of new customers into a system can be complex and time-consuming. RPA and IA can help update these manual banking processes and reduce the time and resources it takes to do these tasks. Digital workers can handle tasks like data entry, then IA can enhance this process through background checks and document verification.

Loan processing

Loans require significant resources and expertise to carry out, but manually audited services take several days to process. These manual processes can all be automated, improving accuracy and reducing the resources and time required to complete them. IA can help automate loan processes such as credit checks, income verification, direct debit cancellation, account closers, audit reports and more. IA can also analyze loan terms and model risks to help employees make decisions.

You can learn more about RPA and IA use cases in the banking and financial services sector in another blog.

Trends in Banking Transformation

Banking transformation is an ongoing process of innovation that is influenced by various trends. Currently, here are some prominent trends shaping banking transformation strategies:

  • Personalization and customer experience: More banks are leveraging big data, data analytics and AI to offer more personalized banking experiences to their customers. This helps them stand out in a competitive market.
  • Digital-first banking: With the rise of mobile banking, digital payments and digital platforms, banks are creating more seamless digital services for customers.
  • Remote work: Work trends have shifted, so banks have adopted more digital collaboration tools that align with these new ways of working, also ensuring security at the same time.

At the same time, it’s encouraging to see the notion that automation is a 'job killer’ being dispelled. With the adoption of automation also comes new job roles. Teams have transitioned from manual, repetitive work into new, more interesting roles that involve real end-to-end thinking — allowing staff to serve customer needs better.

What’s the Future of Banking Transformation?

Imagine what humans could achieve if we dealt with tasks differently.

Ultimately, IA and RPA are becoming more important for organizations to be efficient, productive and scale successfully. In banking, digital workers have delivered programs at the speed and scale required by customers; without them, employees would’ve been really pressed to execute increased demands.

Soon, many more of us will be working with digital workers, and we’ll be happy to solve more problems with new levels of human creativity. It’s time to embrace banking transformation.

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