Students of history know that the great wagon trains went West at the speed of the slowest wagon, and that wartime convoys sailed at the speed of the slowest vessel in the formation. In the financial world, a comparable limitation is that banks and credit unions can only innovate and grow at the speed of their slowest processes. The right banking technology, intelligently applied, can help streamline your operations and accelerate that growth.
Change Starts With a Plan
Except on a trial basis as a “proof of concept,” picking away at individual banking processes on a piecemeal basis is probably a losing game. In a broad overview of banking automation published in 2019, consulting firm Bain & Company strongly recommends that institutions approach automation holistically as part of an overarching strategy to improve your processes — and your culture — across the board.
Scrutinizing and documenting your existing processes is an essential preliminary step that helps you identify inefficiencies that can be addressed conventionally or through banking technology. Once you grasp the workflow of the hundreds of processes that make up your daily operations, you’ll be able to assess which ones are your highest-value targets for automation.
Ideal candidates are processes that give you the biggest return on your investment. Some will speed your back-office tasks and be invisible to users, but others will address (and ideally eliminate) user “pain points”: areas of friction that put you at a competitive disadvantage.
Identify Some Low-Hanging Fruit
With any major project, it’s useful to begin with a few “easy wins.” These will quickly demonstrate automation’s value to management and staff, and create confidence in the process. There was a time, for example, when auto manufacturers paid line workers to perform mindless, routine tasks. Now robots perform many of those tasks, with greater speed and accuracy.
The same logic can be applied to many processes at your institution — ones that are the equivalent of bolt-tightening. Aside from the efficiencies you gain, automating those tasks will liberate your staff from drudge work and free them for functions that require a human’s insight or oversight. Be careful how you present this, though, and even how you think about it.
If this is done correctly, your front-line and admin staff should feel empowered and become what McKinsey & Company calls “change champions”: enthusiastic evangelists for your automation initiatives. If your focus is on cost-cutting rather than growth and improved service, staff will feel threatened instead. Nobody does their best work when they fear being automated out of a job.
Start Your Automation Process With Paper
What kinds of tasks should be automated first? They should be back-office functions — leave crucial user-facing initiatives until you’ve worked the kinks out of your process — and ideally, processes that currently represent productivity bottlenecks or repetitive rote work.
A good starting point is anything that involves the use of paper forms. Those processes are ideal targets for a number of reasons. To choose just a few of the most obvious:
- They’re highly visible.
- They’re innately redundant; the paper form must be completed, then go through data entry to be available digitally.
- They create opportunities for error, once as they’re filled and again in data entry.
- They’re a cost at time of purchase, and then require physical storage and (eventually) secure disposal as well.
Most importantly, every paper form that’s eliminated is a highly visible “win” that helps build morale, and with it, a change-oriented culture within your institution.
Look for Integration Opportunities
Few institutions computerized their operations all at once, across the board, on a single platform. More commonly, your users’ data are spread across numerous “silos,” each containing one part of their financial life: a mortgage, a credit card, a checking account, or perhaps an investment account.
Consolidating all of that information typically requires human intervention, either in the form of IT staff running queries on multiple databases or a branch staffer looking things up manually while assisting a client. Either way, it slows down your processes. More to the point, that fragmentation means you can’t fully capture the value of the user data you already hold.
Your databases represent a massive sea of data. Automation — in the form of integration and a more-flexible architecture — opens the door to innovation. Modern predictive analytics can identify patterns and opportunities in the data, informing both your strategic direction and specific marketing opportunities. That’s a crucial advantage: In assessing the second wave of data-driven banking automation and artificial intelligence (AI) in 2017, McKinsey found that “companies with advanced digital capabilities […] grow revenue and market share faster than peers.”
Improve Risk Assessment
Risk management is a core competency in banking and one that lends itself to automation. For example, traditional lending is oriented around a straightforward picture of user income that’s increasingly out of touch with the “gig economy.” Data-driven analytics can help you work with users who have multiple income streams and find ways to confidently identify worthy loan candidates who would fall through the cracks at less-agile institutions.
Compliance is another form of risk you’ll reduce through automation. The more steps in a given process are automated, the fewer opportunities there are for an employee to make an error that puts you in a position of non-compliance.
Automation and analytics are useful in identifying other forms of risk, from possible money-laundering to anomalous and potentially fraudulent transactions. You’ll be better able to meet your compliance-related obligations, and your users will benefit from the added security.
Address User-Facing Processes
Once you’re well-schooled at identifying processes to automate and have demonstrated your ability to automate them successfully, it’s time to turn your attention to the user-facing processes. Your processes are like an iceberg. Most of these processes are invisible to your users, but inevitably they’ll judge you on the portion they do see.
User feedback, focus groups and digital “secret shoppers” can all help you identify pain points — steps along the user journey where inefficiency creates frustration and friction. Each institution does some things well and some things less well, but common irritations include:
- Inability to open new accounts digitally
- Slow approval of loans and mortgages
- Slow processing of transfers and deposits
- Being forced to use a specific channel — the call center, a branch visit — to do specific tasks
Conquering the inefficiencies in processes like these isn’t just a valuable way to reduce user churn; it provides a competitive advantage you can use to draw business from less-nimble rivals.
Speed Up Your Automation With Lumin Digital
In its assessment of automation’s potential, Bain & Company identified “driving value at scale” as one of the toughest problems facing financial institutions. Incrementally improving your existing systems can help you achieve that goal — if you have the money and IT skills to throw at them. Often, a better alternative is to turn from your existing legacy systems and start fresh with a new platform that has many of these efficiencies and automations “baked in.”
Lumin Digital’s fast, secure, cloud-native platform is exactly that kind of product. It’s a brand-new design, written from the ground up to be cloud-native, seamlessly integrated, and fueled by powerful, AI-driven predictive analytics. For your users, it’s an intuitive, modern, mobile-forward experience that’s consistent on all hardware platforms. For your back-office staff, it provides fresh, modern dashboards to replace the complex, varied interfaces of your legacy systems.
Contact us today to request a demonstration, and learn how Lumin Digital can help automate and drive growth at your bank or credit union.
References:
- https://www.bain.com/contentassets/32e2254f6dbe4f2cb32f48c4c2530c39/bain_playbook_transforming_banking_with_smart_automation.pdf
- https://www.mckinsey.com/industries/financial-services/our-insights/the-transformative-power-of-automation-in-banking#
- https://bankingblog.accenture.com/automating-bank-operations-keep-eyes-wide-open
- https://www.mckinsey.com/featured-insights/digital-disruption/whats-now-and-next-in-analytics-ai-and-automation
