Large-scale and rapid process automation is becoming a reality for many banks, as they enhance many of their customer-facing, front-end operations with digital solutions. Online banking offers customers convenience, but with mobile payments, the need for cash is slowly eliminating.
You might agree that still, too many processes within banks rely on paper and people. Their back offices have employees sifting through customer requests. This manual processing is slow and costly and can lead to errors and inconsistency. IT technologies offer solutions that can sidestep added expenses and errors in back-end office procedures.
Simplifying the bank’s IT architecture, they can have smaller units run value-added tasks. This includes complicated processes, such as deal origination, and several other tasks that need human intervention, such as financial reviews.
These IT-enabling operations can mean both automating processes (digitizing workflows, automating decision-making, digitizing customer requests) and using IT solutions to manage continuing operations that have to be handled by a human (using software for resource planning).
While the scenario sounds promising, it is easier said than done.
Barriers to Digital Transformation in Banking
There are four critical hurdles in the path toward digitization for banks:
Banks have never considered looking at their processes this way
Launching new products and enabling growth have been the top priorities for banks until now. Which means baking institutions have been adding new layers of product features and procedural requirements to their infrastructure. This lack of rigor has led us to highly complex business processes that are now hard to automate.
Complex IT infrastructure
Mergers and acquisitions, regulatory changes, and product launches have left banks with a complex IT environment. Redesigning systems now can take several years and a huge investment. Therefore, now banks must invest substantially and run the risk of lagging should the solution take too long to implement, and the market moves on.
Black boxes in IT
Typically, IT departments in banks all function in black boxes, and everyone fails to address the critical business priorities. IT solution designers and architects are more inclined to use the technology they are familiar with (meaning, it is legacy). Or, on the other end, they might be inclined to use the most exciting IT solutions, while IT vendors and system integrators get nothing in return for reducing the complexity of the integration or the effort it requires.
Lack of internal capabilities
Banks often lack the skills to introduce more automated processes. IT departments have been trained to use waterfall models of software development for big projects. These models are appropriate for developing and maintaining the traditional mainframe systems which banks use for their core systems, but they are not ideally suitable to automate business processes rapidly.
The advancing state of technology and the fierce competition between banks require they have back-end operations with lower costs.
Principles to automate banking operations
The following three principles can function as a guide path for banks wanting to leverage automation more than they do now:
Consider business priorities
There is no point in automating inefficiencies or unnecessary product features embedded in legacy software. Banks should first define the best processes to form the customer’s, business’, and implementation risk point-of-view. Then, they should take a lean approach to process design to reduce what needs to be automated, in turn bringing down the cost, time, and risk of automation. Optimizing the end-to-end functions will require the participation of all teams, including operations, IT, business experts, project governance, and so on.
Use multiple approaches and integrations
Evaluating each solution’s time to market, continuing complexity, etc. can enable banks to automate a majority of their manual interventions without rewriting or replacing legacy architectural building blocks. Banks are now creating workflow systems by overlaying business process management tools to connect separate legacy systems that eliminate manual data entry and related anomalies across end-to-end processes.
Prepare the IT shop for agile development
For rapid development cycles and using off-the-shelf solutions successfully, IT employees should build skills beyond their traditional capabilities. Specifically, they should train internal resources or hire outside experts who can analyze the software market and apply the right solutions, besides developing systems in-house. The IT department should also be able to run iterative or agile development projects and work seamlessly with business and operations counterparts.
IT and operations teams might get bogged down by the thoughts of integrating all end-to-end and back-office processes. But, it helps you to know that automation only happens gradually and start with simple steps.
Operations and business teams within the bank always push for automation whenever and wherever it can happen. This makes the IT team spread to all parts of the business, making the efforts too thin on the vital core areas.
You can start your automation journey with a tool such as Wooqer. Wooer is a cloud-based DIY tool which can be seamlessly integrated across your operations and helps teams manage functions better, collaborate on ideas, and implement solutions.
Learn more about Wooqer for banking.