Banking Automation: The future of financial services

To maintain profits and prosperity, the banking industry must overcome unprecedented levels of competition. To survive in the current market, financial institutions must adopt lean and flexible operational methods to maximize efficiency while reducing costs.

However, banks face several difficulties, including adjusting to the growing digital skills gap, ensuring appropriate solutions and platforms based on customer- or client-specific needs, and navigating the business amidst shifting regulations. It has led to widespread difficulties in the banking industry, with many institutions struggling to perform fundamental tasks, such as evaluating loan applications or handling payment exceptions.

To successfully navigate this, financial institutions require to have a scalable, automated servicing backbone that can support the development of customer-centric systems at a reasonable cost. Establishing high-performing operational teams led by capable individuals and constructing lean, industrialized processes out of modular, universal components can bring out the best.

Undertaking a complete digital transformation can feel like taking more than you can chew, especially for large, traditional banks still grappling with the effects of having developed their businesses using antiquated legacy technologies.

Automation is the future, but it must be properly managed against where human aid or direction is needed.

Success lies in automating processes

Different industries feel that the optimization of business through artificial intelligence and robotics, as well as the automation of regular administrative and IT chores, will significantly influence how operations are carried out.

The elimination of routine, time-consuming chores that slow down processes and results are a significant benefit of automating operations. Tasks like examining loan applications manually are an example of such activities. The paperwork is submitted to the bank, where a loan officer then reviews the information before making a final decision regarding the grant of the loan. Human intervention in the credit evaluation process is desired to a certain extent.

For situations where funds are limited, or past credit is spotty, there is a “perfect balance” where the right amount of automating and straight-through processing can be found, along with the right amount of selective oversight and scrutiny. Finding the sweet spot between fully automated processes and those that require human oversight is essential for satisfying customers and making sound lending choices.

The Benefits of Automated Banking Systems

 1. Computing with data in real-time

Banks must comply with a rising number of laws, policies, trade monitoring updates, and cash management requirements. Data of this scale makes it impossible for even the most skilled workers to avoid making mistakes, but laws often provide little opportunity for error. Automation is a fantastic tool for managing your institution’s compliance with all applicable requirements and keeping track of massive volumes of data about agreements, money flow, transactions, and risk management. More importantly, automated systems carry out these tasks in real-time, so you’ll always be aware of reporting requirements.

Use case: Real-time computation

Banking Automation is revolutionizing a variety of back-office banking processes, including customer information verification, authentication, accounting journal, and update deployment. Banking automation is used by financial institutions to carry out physically demanding, routine, and easily automated jobs.

2. Better Customer Experiences

Financial institutions today emphasize client satisfaction. Analyzing client behavior and preferences using modern technology can help. This is how companies offer the best wealth management and investment advisory services. Banks can quickly and effectively assist consumers with difficult situations by employing automated experts. Banking automation can improve client satisfaction beyond speed and efficiency. Customers can get individualized assistance 24/7.

Use case: Enhancing customer service

Improving the customer service experience is a constant goal in the banking industry. Furthermore, financial institutions have come to appreciate the numerous ways in which banking automation solutions aid in delivering an exceptional customer service experience. One application is the difficulty humans have in responding to the thousands of questions they receive every day.

AI-powered chatbots handle these smaller concerns while human representatives handle sophisticated inquiries in banks.

3. Enhanced Efficiency

Employees no longer have to spend as much time on tedious, repetitive jobs because of automation. We’re discussing tasks like analyzing budget reports, maintaining software, verifications for card approval, and keeping tabs on regulations. By automating routine procedures, businesses can free up workers to focus on more strategic and creative endeavors, such as developing individualized solutions to customers’ problems.

Use case: The Processing of Credit Cards

It used to take weeks to verify customer information and approve credit card applications using the old, manual processing method. Customers were unhappy with the wait time, and the bank had to pay for it. However, RPA has made it so that banks can now handle the application in hours. Robotic process automation (RPA) can communicate with various systems in parallel to verify data such as supporting paperwork, background checks, and credit checks and make a judgment based on criteria to approve or reject an application.

4. Reduced expenses

The potential for significant financial savings is the driving force for the widespread curiosity about Banking Automation.  By removing the possibility of human error and speeding up procedures, automation can greatly increase productivity. It helps with financial savings as well. Automation, according to experts, can help businesses save up to 90 percent on operating expenses.

Use case: Automated banking risk reporting

There has been a rise in the adoption of automation solutions for the purpose of enhancing risk and compliance across all areas of an organization. Banks can do fraud checks, and quality checks, and aid in risk reporting with the aid of banking automation.

5. Compatible with already established IT infrastructure

The greatest advantage of automation technologies is the fact that they do not necessitate any additional infrastructure or setup. Most of these can be included in the system with little to no modification to preexisting code. In addition, they can be tailored to work with as many existing systems as feasible and provide value across the board.

Use case: Use the existing infrastructure

Daily customer inquiries flood banks. From accounts inquiries to loan inquiries to bank fraud. Banks can automate low-priority queries with RPA.

There is no need to completely replace existing systems while putting RPA into action. Traditional banking infrastructure is sufficient for robot deployment. RPA’s flexibility in connecting to different platforms is one of its most valuable features. Your bank’s development technology is irrelevant. The scope of where RPA can be used within an organization is extremely broad. Various divisions within banks, from operation and marketing to finance and HR, are implementing RPA.

Challenges and potential drawbacks of banking automation

While there are many benefits to adopting automation, doing so is not simple. Let us see the few challenges of banking automation:

1. Inadequate legal framework for the use of automated systems

There are some specific regulations and limits for process automation when it comes to automation in the banking business, despite the undeniable advantages of bringing innovation on a large scale. The requisite legal restrictions established by the government, central banks, and other parties are also relatively new. Many nations have not yet adopted this kind of legal law.

2. Difficulties in managing change

Without addressing the human side of change and preparing users with adequate organizational change management, meaningful transformation is not feasible, regardless of how brilliant the technology and its benefits may be.

Banking automation has injected a more significant concern for losing job security, adopting new technology, shifting organizational hierarchies, and altering business processes, leading to a general reluctance to embrace the changes automation has brought about. Creating a “people plan” for the rollout of banking process automation is the primary goal.

3. Organizational challenges and process standardization

Process standardization and organization misalignment are banking automation’s biggest banking issues. IT and business departments’ conventional split into various activities causes the problem. To align teams and integrate banking automation solutions, an organization must reorganize roles and responsibilities. This hurdle implies the difficulty of process standardization for unstructured data and human-involved procedures. When choosing which business operations to automate, things can go wrong. Processes can be interpreted and executed differently.

 4. Loss of external and internal credibility for the company

This is especially challenging for the banking industry, which relies on the trust of society and, internally, employees may fear for their jobs as a result of changes in business processes, making the social effect of automation an immediate reputational issue for organizations considering the incorporation and usage of Banking automation.

Current examples of banking automation

 1. Automated Teller Machine (ATM)

ATMs are computerized banking terminals that enable consumers to conduct various transactions independently of a human teller or bank representative. You only need a credit or debit card to withdraw cash from most ATMs. The speed and ease with which customers can complete self-service operations, including making deposits, withdrawals, payment services, and account transfers at their convenience, is a significant selling point for automated teller machine services.

 2. Online and mobile banking

Thanks to online banking, you may use the Internet to handle your banking needs. Internet banking, commonly called web banking, is another name for online banking.

Customers can do practically everything through their bank’s internet site that they could do in a branch, including making deposits, transferring funds, and paying bills.

The process of banking online is quick and easy. If the accounts are kept at the same financial institution, transferring money between them takes virtually no time. Many types of bank accounts, including those with longer terms and more excellent interest rates, are available for online opening and closing by consumers.

Furthermore, customers can safeguard their accounts by keeping a close eye on their account activity frequently. The ability to monitor financial data around the clock allows for the early discovery of fraudulent behavior, protecting accounts and customers from loss.

Transacting financial matters via mobile device is known as “mobile banking”. Nowadays, many banks have developed sophisticated mobile apps, making it easy to do banking anywhere with an internet connection. People prefer mobile banking because it allows them to rapidly deposit a check, make a purchase, send money to a buddy, or locate an ATM.

3. Automated investment and financial planning tools

Increased Individualization in Portfolio Analysis. An investment portfolio analysis report details the current investments’ performance and suggests new investments based on the report’s findings. The report needs to include a thorough analysis of the client’s investment profile.

Income is managed, goals are created, and assets are invested while taking into account the individual’s needs and constraints through financial planning. The process of developing individual investor recommendations and insights is complex and time-consuming. In the realm of wealth management, AI can assist in the rapid production of portfolio summary reports and individualized investment suggestions.

That’s a huge win for AI-powered investment management systems, which democratized access to previously inaccessible financial information by way of mobile apps.

A Robo-advisor analysis of a client’s financial data provides investment recommendations and keeps tabs on the portfolio’s progress automatically. The user inputs their desired return on investment (ROI) and the software promptly constructs a portfolio based on the user’s stated preferences. It’s an excellent illustration of automated financial planning, taking care of routine duties including rebalancing, monitoring, and updating.

4. API & RPA automation across banking

API automation across banking

Automated data management in the banking industry is greatly aided by application programming interfaces. You may now devote your time to analysis rather than login into multiple bank application and manually aggregate all data into a spreadsheet. This is due to open banking APIs that aggregate your account balances, transaction histories, and other financial data in a unified location.

Using an API for banking might help your company be more open and honest. Algorithms trained on bank data disperse such analysis and projections across your reports and analyses. Your entire organization can benefit from the increased transparency that comes from everyone’s exposure to the exact same data on the cloud.

Accurate reporting and forecasting of your cash flow are made possible through banking APIs. Data from your bank account history is analyzed by algorithms for machine learning and AI to generate reports and projections that are more precise.

Open Banking API Growth. Payment processing, cash flow forecasting, and other monetary operations can all be simplified with banking application programming interfaces (APIs), which help businesses save time and money.

RPA automation across banking

In the financial industry, robotic process automation (RPA) refers to the application of   robot software to supplement or even replace human labor. As a result of RPA, financial institutions and accounting departments can automate formerly manual operations, freeing workers’ time to concentrate on higher-value work and giving their companies a competitive edge.

RPA is further improved by the incorporation of intelligent automation in the form of artificial intelligence technology like machine learning and NLP skills used by financial institutions. This paves the way for RPA software to manage complex operations, comprehend human language, identify emotions, and adjust to new information in real-time.

Robotic process automation (RPA) is poised to revolutionize the banking and finance industries. Simple chatbots may handle repetitive chores, like letting consumers order new payment cards and change PINs, while sophisticated automation can handle more complex jobs, including sifting through client data to find unusual activity and sending out notifications.

Banking on the future of Robotic Process Automation

RPA refers to Robotic Process Automation. RPA is a software solution that streamlines the development, deployment, and management of digital “robots” that mimic human tasks and interact with other digital resources in order to accomplish predefined goals.

Competition in the banking industry is fierce, and the industry is struggling to maintain profitability and performance at historic levels. To maintain their competitive edge in the current market, banks must prioritize reducing operational costs while simultaneously increasing productivity and maintaining a lean and flexible business model 24*7 all through the year. Thus, Robotic Process Automation (RPA) within banking is through a period of fast development, allowing financial institutions to adapt their operations to a dynamic market.

Advantages of Robotic Process Automation in the banking sector

Many CFOs, eager to implement RPA technology, look for the jobs that are most prone to human mistakes, generate the most significant workflow bottlenecks, or produce inefficiency that leads to poor service quality and staff engagement.

Here are a few ways in which a robotic process automation (RPA) platform supported by artificial intelligence and machine learning could revolutionize financial institutions:

1. Code-Free

RPA doesn’t require programming. Modern RPA solutions automate clerical work in any company function. Thus, employees simply require RPA training to effortlessly construct bots using Graphical User Interface and straightforward wizards. It accelerates corporate application delivery and improves automation. Installing, training, and deploying this platform costs less.

Use case : With RPA, banks may speed up a number of processes, including onboarding new customers, validating existing ones, and answering questions about accounts and loans.

2. Security

There will be a greater need for RPA tools in an organization that relies heavily on automation. Accordingly, solid user access management capabilities are crucial. Role-based security features are an option in RPA software, allowing users to grant access to only those functions for which they have given authority. In addition, to prevent unauthorized interference, all bot-accessible information, audits, and instructions are encrypted. You can keep track of every user and every action they took, as well as every task they completed, with the business RPA solutions. As a result, it keeps the facility safe from the inside and up to code.

Use case : According to the numbers, certain financial institutions spend money every year to ensure they are in full compliance with KYC regulations. Information about customers is gathered, verified, and processed with the use of RPA. Productivity and quality in the compliance process are enhanced with fewer FTEs and continuous operation around the clock.

3. Flexibility

Artificial Intelligence powering today’s robots is intended to be easy to update and program. Therefore, running an Automation of Robotic Processes operation at a financial institution is a smooth and a simple process. Robots have a high degree of flexibility in terms of operational setup, and they are also capable of running third-party software in its entirety.

Use case : Core banking, customer relationship management, credit card processing, and external systems like regulatory checks, etc. are all places where these bots may get to work rapidly.

4. RPA Limits Integration Budget

It is important for financial institutions to invest in integration because they may utilize a variety of systems and software. By switching to RPA, your bank can make a single platform investment instead of wasting time and resources ensuring that all its applications work together well. The costs incurred by your IT department are likely to increase if you decide to integrate different programmes.

Use case : The use of RPA technology in applications integration eliminates the need for repetitive, error-prone human labor by automatically transferring data between systems. The implementation of robotic process automation (RPA) seems to be a viable option for integrating applications when the data being integrated is not often updated.

5. Bank errors are reduced due to RPA

At times, even the most careful worker will accidentally enter the erroneous number. Error-prone manual processes are rendered obsolete by automation. Manual data entry has various negative effects, including lower output, lower quality data, and lower customer satisfaction. With an automated system, these mistakes can be avoided totally. Without wasting workers’ time, the automated system may fill in blanks with previously entered data.

Use case : With many different systems needing such specific information to produce a financial statement, it is crucial for a general ledger to generate without any errors. RPA is used to save the day. It ensures that data from many sources is gathered, verified, and kept up to date without any mistakes. Financial institutions and banks can increase their speed, productivity, and efficiency once the proper systems are in place.

6. Effectiveness that’s tailored to your needs

By using RPA, financial institutions may free up their full-time workers to focus on higher-value, more difficult jobs that demand human ingenuity. They may use such workers to develop and supply individualized goods to meet the requirements of each customer. In the long term, the organization can only stand to prosper from such a transition because it opens a wealth of possibilities.

Use case : Customer support teams at banks have a lot on their plates, with inquiries varying from financial crimes to account inquiries to loan inquiries, and so on. With the assistance of RPA, low-priority inquiries can be handled, allowing the customer support team to concentrate on more pressing matters. Time spent verifying customer information across multiple onboarding platforms is reduced thanks to RPA. Banks were able to strengthen their bonds with customers, thanks to shorter wait times and simpler dispute-resolution processes.

7. Savings on Expenses

To keep up with demand and keep customers coming back for more banking services are continuously on the lookout for qualified new hires who can boost productivity and reliability. Even if the business decided to outsource, it would still be more expensive than using robotic process automation.

Use case: By doing a process review activity in conjunction with the RPA implementation, repetitive tasks inside a system can be removed, saving money in the process. According to market data, profit margins will grow, although RPA is only worth around half as much as an individual living resource system for banking processes. In addition, robots help to cut down expenditures connected to overtime, healthcare, and other human-related overhead.

What the Future of Banking Automation holds

The successful banks of the future will welcome innovations, are adaptable to new business models, and always puts their customers first. Let’s see the future of banking automation.

1. Increased use of blockchain and other emerging technologies

With the rise of Blockchain technology, banking firms are implementing risk management methods that make it harder for hackers to steal sensitive data like customers’ bank account numbers. Current asset transactions are being replicated on the Blockchain as part of industry trials of the technology. It’s beneficial for cutting waste, beefing up on safety, completing deals more quickly, and saving cash.

The Importance of New Technology

• Disintermediation: Due to blockchain’s distributed ledger architecture and the immutability of transactions, centralized trust authorities are superfluous. Distributed, immutable data eliminates the need for trust between parties and ensures that all parties use the same, accurate information.

• Transparency: The use of blockchain technology will significantly improve communication and openness in the marketplace. Blockchain systems encourage the construction of a public ledger of ecosystem activity to ensure that all financial markets have access to accurate and timely information.

• Provenance: The blockchain keeps an unalterable record of transactions and, thus, ownership, of assets from the moment such assets are first referenced in a transaction on the blockchain. This considerably lessens the risk of different asset types and the necessity of associated mitigating procedures. Theft, fraud, and the improper sale of expensive assets and ideas can all be mitigated because of this capacity. Additionally, the blockchain’s digital footprint will be helpful for goods whose provenance is a critical factor in determining their worth.

2. Banking automation is being incorporated into the loan underwriting process

Automated underwriting saves manual underwriting labor costs and boosts loan providers’ profit margins and client satisfaction.  Automated Loan Underwriting facilitates loan cycle digital verification. It automates processing, underwriting, document preparation, and digital delivery. E-closing, documenting, and vaulting are available through the real-time integration of all entities with the bank lending system for data exchange between apps.

The five main objectives of automating the loan and underwriting processes are:

●       Putting financial dealings into an automated format that streamlines processing times.

●       Establishment of a centralized accounting department responsible for monitoring all banking operations.

●       Conceiving a malleable product line-up that caters to the tastes of consumers in a specific area.

●       Fast and accurate credit processing decisions; skilled portfolio risk management; Protection against customer and employee fraud.

3. Development of fully automated “smart” banks

Banking mobility, remote advice, social computing, digital signage, and next-generation self-service are Smart Banking’s main topics. Banks become digital and remain at the center of their customers’ lives with Smart Banking.

The Smart Bank project helps banks to optimize customer engagement methods to promote and retain customers with a more remarkable customer experience, also attract new clients with a streamlined marketing experience, and eventually become more connected with customers.

By replying immediately to a customer’s request, for instance, virtual attendants can speed up raising that person’s credit card limit. Collaborative virtual associated technology has rapidly advanced and become widely available, allowing customer service representatives to manage phone-in requests for increased credit limits actively. This is achieved using tools that enable agents to provide the requested information more efficiently and effectively answer customers’ questions.

Thanks to the virtual attendant robot’s full assistance, the bank staff can focus on providing the customer with the fast and highly customized service for which the bank is known. Another potentially fruitful field is the analysis of fraud warnings. When robotic process automation (RPA) is combined with a case management system, human fraud investigators may concentrate on the circumstances surrounding alarms rather than spend their time manually filling out paperwork.

4. Potential for collaboration between traditional banks and fintech companies

Businesses in the financial technology industry and traditional banks can work together to provide customers with convenient and cutting-edge services in areas like financial planning, insurance aggregate, lending, account opening, and more. Collaboration on problems affecting customers is the goal.

• Software Interface (API) Access: Banks can provide this access to their fintech partners and other financial services. Therefore, when fintech and banks work together, fintech can expand their services and become a one-stop shop for their customers’ needs.

• Deal with complex rules: Banks can help fintech companies by guiding them through the industry’s stringent rules. With this, fintech can gradually increase its footprint in the financial services sector.

• Lift the company’s image: The partners’ brands will strengthen due to the exposure received by the others. Further, this can increase both parties’ pool of potential buyers.

• Immediate availability of cutting-edge equipment: Direct access to cutting-edge software or technology is another significant benefit of banking and fintech collaboration. These are typically provided in a white-label format to financial organizations like banks. Banks will benefit significantly from working with fintech firms to offer cutting-edge services. They put less emphasis on creating and maintaining their internal technology to save additional time and money.

Wrapping up:

The advent of automated banking automation processes promises well for developing the banking and other financial services sector. By streamlining and improving transactions, these technologies will free up workers to concentrate more on important projects. In the future, financial institutions that adopt these innovations will be in a solid position to compete.

Looking to automate your banking processes? Transform your financial institution with Zuci Systems: the trusted RPA implementation partner for banks and credit unions. Our comprehensive Banking RPA Services will help you modernize and automate your processes for increased efficiency and productivity.

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