Future of Automation in the Banking Sector

As the automation wave has increased in the banking sector, its capacity has increased and now the employees have more time to focus on bigger value projects. This opportunity should be captured by the banks to take a strategic approach rather than a tactical approach.

Automation in the banking industry has been a big focus and an area of huge interest globally in the banking industry. Banks have started deploying the latest automation techniques to deliver a wave of productivity, improvement in experiences, and cost savings. The results of this strategic move have started paving the way for transformation in the banking sector. This has resulted in higher gains for these institutions which are mastering bigger capabilities.

Automation in Financial Services

There are many stories of success when it comes to automation in the financial sector. Although the banks also face many trials due to these challenges. The bots and software programs that are installed in the banking sector also automate many repetitive tasks. But it does not necessarily result in higher effectiveness and efficiency. Some of the financial institutions have also launched tactical pilots but they do not have a long-term plan, which has resulted in many challenges in their expansion and scaling.

These banks that have started these programs have trained developers. They need to move their solutions into force. Many have also started their automation process only to find that they do not have the capabilities to move forward. This will prove to be a hindrance to transform their banking sector comprehensively.

Although there were some setbacks in Artificial intelligence and robotics to bank processes, it seems that the future will be bright. This technology has been maturing rapidly and the expertise in the domain has been developing among the banks and the vendors. These banks are now moving away from a single solution for all problems approach and looking for specialized solutions. The banks have learned critical lessons about their workflow and how to effectively manage both men as well as technology. They have embraced techniques where the typical process of redesigning or re-engineering can be skipped to apply automation.

As AI and automation will be emerging in the coming years, machines will be doing 10 – 25% work across all the bank functions. This will increase capacity and will free employees so that they can focus on high-value tasks. This opportunity can be captured if banks started working strategically and redesigning their processes for optimized and automated work. This along with expertise in the specialized domain and in-house automation capabilities will create a new future for them.

How to move towards Strategic Transformation in the Financial Sector

If banks are looking towards strategic transformation for full benefits from automation, they should follow the below steps:

1. Develop Strategy for end vision – The biggest tactic for successful banks is that they develop a wider vision for their future. They are reimagining their organization and automation capabilities. This is true for their present as well as their future plans. These capabilities do not exist today and they focus on the automation processes which are essential to competitiveness in the long term.

Bank have to look towards their vendors for their automation processes. Banks become commodities like routine finance and basic reporting. Banks need quick diagnostics which help them to assess the complete value that is at stake. They also define the aspirations for the organization and they develop a sequencing for high-level application or roadmap. Banks should set ruthless targets and aim to cost lower and this can turn their cost base into an advantage.

Set up an essential team – Banks should put a centre of excellence which is critical for automation in the long term. This COE will help in administering an enterprise-wide approach to transformation, and this has played many critical roles. This helps in managing the vendor relationships for business interference and in building capabilities. These are critical functions in Human Resources and IT.

Centre of excellence with potential designs – One of the major considerations for automated banking is the capability of the centre. This also includes the technical capability of organizations and groups. This will redefine the working of people with technology. This will help banks to work with many stakeholders across the organization. This helps the banks to translate different working ways into measurable efficiencies. The capabilities help these banks to adapt to any technologies.

Ensure an IT partner – Automation should be sponsored by individual functions and individual businesses. Banks should have a partnership with the IT sector. IT sector designs systems lifecycle and this helps them manage IT rollout, performs ongoing support and maintenance functions. Having successful partnerships with an IT function with strong governance structures and steering committee.

5. Focus on HR function – Every organization that implements automation has many changes associated with the process. This helps banks to realize their full value. These automation technologies also help in shaping the roles within a bank, and it gives the employees chance to learn new working ways.

Although automation has many significant benefits when it comes to revenues and risks, as well as in client experience, it also needs efforts to automate the current work. The HR function plays a crucial role in creating practices of workforce management and in actively managing change. They help in using analytics for planning and coordinating employee redeployment and reskilling. So, it is important to work with HR closely right from the beginning.

6. Detailed Roadmaps – Some implementations of automation capabilities have occurred comparatively faster. Banks need to spend time rolling out their transformation across their support function. To be successful in the long-term banks need a clear plan for a function and business. The whole enterprise should experiment in developing an opportunity.

7. Create Proper Roadmap – The banks also aid in evading paralysis for the stakeholders that are involved in the banking process. The initial changes for the building will create excitement and this gives an inspiring narrative for the enterprise. Such early deployments help to train business functions that can be implemented later. There are many ways for achieving follow-up success learnings through the Centre of excellence.

8. Choose Pilot area – Any business function that is chosen for the automation pilot is crucial and leaders become initial change for the automation efforts. An opportunity size and seamless implementation are crucial. If we have the right leaders who are initiative sponsors then we are bound to succeed.

The selection of the banks in the pilot area is based on the commitment and the energy level of the business leader. The business has many other initiatives that are in progress and they help in stopping the hampering of work. Banks start in the middle office area which avoids the processes in the customer-facing. The riskier areas include the areas of focus mainly finance, accounts payable, reporting, and reconciliations.

Synopsis

The fact is in today’s scenario, it is very important for the banking sector to automate this functioning and make the best out of this process which is also the call of the hour.

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