Thursday, Dec 1, 2022
International Finance
Magazine Technology

What you need to know about automation

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Banks and insurance companies are seeking complex automation to streamline tasks—but first they must ensure governance is in place

The financial services industry has been at the forefront of adopting automation technologies. Over the last five years, banks and insurance companies have sought automation to streamline a wide-range of tasks from HR to accounts to contact centres to field sales. But the focus has shifted from tactical deployment to more complex and strategic initiatives—for growth and innovation. 

Intelligent automation which combines robotic process automation with artificial intelligence functionality and additional capabilities such as natural language processing, is enabling banks and insurance firms to automate workplace processes in a secure, effective and efficient manner. We recently undertook a research to explore this shift in automation strategy and examine the key drivers for banks and insurance companies to scale-up their automation programs.

Pace and scale of automation is set to multiply 

The pace and scale of automation within financial services is expected to increase significantly over the next five years. While just 7 percent of organizations currently claim to have automated more than 20 percent of all of their operational processes to date, the number is predicted to rise to 38 percent within five years and as high as 50 percent within the financial services industry. Interestingly, the drivers for the next wave of automation adoption are very different from the ambitions that organizations had when they first started out. During their early initiatives in process automation, financial services were very much focused on streamlining repetitive and time-consuming processes to drive efficiencies and reduce cost. 

However, as banks and insurance companies now look ahead to the next wave of adoption with the possibilities of more sophisticated intelligent automation platforms. Enhanced productivity is now seen as the main objective for future automation programmes by more than half of financial services strategy leaders, while only 17 percent cite cost as the primary goal.

This is reshaping the way leaders seek to identify the areas of greatest potential benefit for intelligent automation. Only a quarter are focused on addressing the most under-performing processes, while the vast majority are more keen to assess the potential benefit of intelligent automation. This represents a marked shift in thinking from where the industry was five years ago, or even two years ago.

The need for governance 

Automation leaders are facing a new set of challenges as they look to scale-up their automation programmes. On the operational side, these include difficulties accessing the technical skills they need to drive automation across businesses and a lack of alignment between the IT department and other business functions. These issues were certainly around at the outset of automation programs but they have become more pronounced.

At a technical level, however, new barriers have emerged. Within financial services, 33 percent of automation leaders point to bot lifecycle management as the main technology challenge they are experiencing in scaling-up their automation and another third cited low-bot utilisation. A quarter of them state that software licencing is the biggest issue. At a strategic level, the big challenge for automation leaders is how to roll out digital labor at scale across multiple business units, while maintaining the visibility, control and consistency to deliver optimisation. It is in fact a question of governance.

Many financial services organisations have previously looked to address the governance challenge with a centralised approach. Specialist automation skills have resided in this function and many banks and insurance companies have built up sizable teams. Smaller, discreet automation projects are relatively easy to manage and control—usually with a central team of experts (both internal and external) overseeing and delivering the technology platform, skills and staff training required to introduce digital labor.

New opportunities in financial services

Governance frameworks and policies need to evolve to support scaling-up.

Also, leaders need to identify and execute on governance strategies that are agile and support rapid adoption—while maintaining a consistent, efficient and effective approach to business automation.. This is a very exciting time for banks and insurance companies that are looking to scale-up their automation programmes and transform their operational models. The opportunities to pursue new business initiatives, develop new products and services and drive growth are almost limitless.

Meanwhile, financial services need to learn the lessons of their previous initiatives and put in place the right foundations to ensure success. This means developing robust governance structures and adoption models to ensure automation is pursued in a controlled and sustainable way. Empowering people across  organisations with skills and tools required to deploy digital labor in an agile manner is important.

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