How can banks harness automation to its fullest value?

Automation technologies could contribute an additional $US 1 trillion annually in value across the global banking sector – through increased sales, cost reduction and new or unrealized opportunities. But this value is still largely being left on the table. Why? There are well documented challenges with automation, including lack of clear and strategic intent and senior executive support for automation, plus heavily siloed deployment within organisations, resulting in disconnects within and across digital transformation efforts.

To be frank, operating models are, per se, neither enable nor ask for strategic use of automation technologies. But a hidden key reason has become increasingly obvious – the failure to grasp the nature and size of the opportunity. If automation technologies can be recombined in new ways, not only can existing opportunities be seized, but new ones can be created, ad infinitum.

Prescient banking executives we are researching understand two things: the strategic opportunities offered by intelligent automation; and how automation can drive the twin engines of compound growth and combinatorial innovation. They have also, for some time, been anticipating how automation can be deployed to address inescapable competitive pressures driven by rising customer expectations on digital banking.

Financial institutions are aggressively deploying automation technologies. This has accelerated during the COVID-19 crisis. Moreover, digital ecosystems are disintermediating and re-shaping how financial services are discovered, assessed, purchased, and delivered. Intelligent automation has become vital for future competitiveness and differentiation in financial services. Let’s look at some examples of banks that have grasped both the problem and the opportunity.

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North America – human and digital workers blend and multiply outcomes

In 2015, a major Canadian bank adopted a new value-oriented, purpose-driven management philosophy of increasing organisational agility and improving customer experiences. A key focus involved transforming disjointed operating processes on an end-to-end basis, but from the customer’s perspective. This went far beyond simply tweaking existing systems and processes for incremental improvement and cost reduction.

Accordingly, the automation business case was based on increasing the value of the bank’s services as measured by customer metrics – retention rates, service expansion, and improved net promoter scores – rather than simply “doing (bad) things faster”. Taking an agile approach, aided by design thinking, the bank realised that a unified customer data structure was a critical requirement for improving service experience. They integrated front-end artificial intelligence and machine learning tools with their Blue Prism platform to capture, structure, and curate existing customer data in a shared repository supporting multiple service lines.

In addition to efficiency savings estimated at more than 200% from the ability to access and use previously trapped data, the bank also estimated a 400% gain in enterprise effectiveness – measured by increased customer retention and revenues from broader services integration.

The technology platform, moreover, enabled a new organizational structure built on a blended human and digital workforce that could better match task times and volumes to appropriate resources. As the bank’s automation lead notes, “it changes how you think about ‘work’.” Taken in aggregate, the bank’s gains in efficiency and effectiveness feed and reinforce each other. It changes how you think about ‘work’. The bank’s intelligent automation platform has also supported greater enablement gains in terms of new products and services, enterprise resilience, and first-mover advantage.

When the COVID-19 pandemic required major government response, for example, the bank was able to develop custom automations in just a few days to support massive government referral and aid programs. Without adding headcount, the bank was able to complete thousands of aid applications, attracting new customers and generating widespread public good will and reputational equity.

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Europe – reduced customer wait time from 12 days to 4 hours

One of Europe’s oldest and largest banks, serving over 10 million customers in multiple countries, realized major gains in service quality, speed to market, and customer experience from its intelligent automation deployments. Over 300 acquisitions led to a complicated operating environment with no core banking system. Intelligent automation, however, enabled the bank to manage operations across legacy estates, using APIs to bridge systems and alleviate problems.

The senior automation lead describes its RPA platform as the “arms and legs” that pull data from systems, and cognitive tools such as ML and OCR as the “brains” that analyse and interpret it. The bank estimates it has achieved a significant 150% improvement in overall efficiency from its automations and expects additional gains from process improvements in 2021.

The bank also estimates it has captured an additional 30-50% value to date in overall enterprise effectiveness – resulting in higher transaction volumes, better regulatory compliance and improved service quality, availability and timeliness. The automation platform has increased enterprise productivity and brought significant growth in both customer and employee satisfaction. On regulatory compliance, the complicated ‘Know Your Customer’ (KYC) remediation process is now supported by digital workers and presented in “dashboard” formats for management decision-making. The result: on time with 100% quality. And by integrating chatbots with its Blue Prism automation, the bank’s customers can request credit and debit card cancellation and replacement in a single fully-automated transaction.

While the bank had not set out to achieve transformational gains, it is doing just that by progressing an infrastructure platform for innovation. Digital workers take on many roles, for example: chatbots that automate customers’ bank statement requests; accountants that read income statements from customers, saving time for their colleagues on the front line; work schedulers that park payments during peak volume time to make maintenance cheaper. The bank has already realised an estimated 30% additional enablement value to date from its more than 500 digital workers. They enabled the bank to rapidly develop and deploy processes giving customers access to government pandemic aid and relief funds. Core banking services such as loan commitments – previously taking 12 days – are now provided to customers within four hours – a huge expansion in customer added value. Service is now available at weekends, increasing volumes by 5%. And detailed compliance reports for multiple national and European authorities and jurisdictions are now compiled and formatted by digital workers for human review and approval.

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Conclusions – what are we learning from these leaders?

  1. Adopting a strategic executive mind-set in deploying intelligent automation is critical in capturing maximum value. Without a transformative view and an enterprise vision suffusing from the top, the strategic uses of automation for greater effectiveness and enablement are foregone by tactical local initiatives, focused narrowly on what can easily be measured: cost savings and cost avoidance.
  2. Leaders in automation deployment start with an external focus on customers and competition, using that perspective to design an end-to-end business process architecture that accelerates digital innovation. By ‘seeing the business through the customer’s eyes’, they use automation to improve every aspect of the customer experience rather than “doing bad things faster”. Creating value is the primary objective; cost is important, but secondary.
  3. Building a robust in-house automation capability creates flexibility and a knowledge base which, with strong governance and disciplined behaviours, forms part of the Enablement platform and accelerates strategic uses of automation technologies.
  4. Longer term strategic effectiveness and enablement value from intelligent automation far outstrips near-term efficiency gains in the leading deployments we have studied – by multiples ranging from 3x to as much as 7x – demonstrating the value of compound thinking.

Written by John Hindle and Leslie Willcocks, managing partner and research director at Knowledge Capital Partners

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