:: By Dinesh Venugopal, Mphasis ::
The financial sector has put in a great deal of effort, energy and money to earn customer faith. To continue to leverage the trust, it has to be competitive and cost effective, by adopting a higher level of technology at an accelerated pace. It simply must ride the wave of digital evolution that promises to be more ‘disruptive’ than ever before.
The industry has always invested in technology and has also not been averse to adopting innovations in technology. However, the demand, from both the customers and the business leaders, has been consistently outpacing the resources available to execute all the various initiatives within the bank. Chief information officers (CIOs) have always had to prioritize and select where they will invest their resources. The initiatives that enhance revenue generation opportunities and those which improve customer experience have always taken precedence over those that address operational efficiencies. So as they expand and scale their operations, inefficiencies start building up in the operational processes.
Robotics and artificial intelligence (AI) offer an opportunity to address some of these inefficiencies, without having to do major intrusive changes in the system, thus providing a compelling business case to stay competitive in the long term. These techniques provide opportunities to reduce expenses by making operations specialist more productive, besides improving customer experience at the lowest possible cost.
Robotics in process automation is helping banks and other financial firms streamline rigid legacy systems without having to make involved and intrusive development efforts. It eliminates repetitive, manual, non-value adding tasks thus improving the efficiency of the operations teams while at the same time reducing errors and ensuring compliance to policies and regulations. Robotics has reorganized several tedious back office tasks that were once done manually; significantly reducing human intervention, presenting huge savings in costs.
Processes such as mortgage origination, payment processing, accounts payable, accounts receivable, policy administration, claims processing and compliance can be optimized and several steps can be automated thus increasing the turnaround time and accuracy. This also contributes to a much better customer experience.
According to industry findings, automating data-intensive, mundane and repetitive task and improving accuracy and efficiency of process execution can lead to 25-50 percent cost savings. Some estimates say processing costs are reduced by 80 percent. Transaction and handling time is estimated to be reduced by 40-80 percent.
Barclays Bank’s (UK) implementation of robotics automation has reportedly resulted in a substantial reduction of nearly £175 million in bad debt provision in its accounts receivable function and saved over 120 FTE (full-time employees). In the first half of 2014, Barclays reported a 4.5 percent drop in costs across all business, year on year, due to increasing automation and digitization.
Going forward, Barclays plans to increase automation and integrate new technologies, including cloud-based platforms and design apps that use robotic tech in money transfers and allow users to bank by just talking to their mobile devices.
The financial sector is using AIin payments and money management services. Some banks have intelligent digital assistants to handle routine customer inquiries and tasks. However, there are many more areas that can be addressed using these innovations. AI can be tapped for detecting online fraud by recognizing speech, text, images and human behavioral patterns. As Big Data catches on, AI can be also used for processing data and turning it into customer insights, thereby providing better service to customers.
AI can also be used in compliance monitoring, risk assessment, knowing your customer and anti-money laundering.
In Sweden, Swedbank’s Web assistant Nina has an average of 30,000 conversations per month and achieved 78 percent first-contact resolution in the first three months. UK-based Santander plans to provide secure transactions using voice recognition through its banking app.
In the U.S., Ally Bank has rolled out a virtual assistant on its mobile app, while American Express and Bank of America plan to use robots on Facebook Messenger.
The road ahead
For a sector that was rather cautious in adopting robotics and AI techniques to meet the demands of banking, current trends indicate a remarkable turnaround, pointing to increased adoption in the areas of process automation.
Industry observers say while adoption of robotic process automation will impact jobs, the primary outcome is not to replace human beings with hi-tech machines. On the other hand, it will liberate precious human talent from mundane tasks and utilize them for value-added services to solve more complex problems, ultimately benefiting consumers at large.
About the Author
Dinesh Venugopal, president of digital and strategic customers at Mphasis, a leading IT services and solutions provider.