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Automation: The Next Evolution in Banking

When’s the last time you visited a bank?

Financial transactions used to take place on premise. From deposits and withdrawals to thousands of other mundane and complex financial transactions the average person makes, it either happened in person or it didn’t happen at all.

Then, in 1967, Barclays of London placed an ATM on a street corner and everything changed.

From internet banking, to the proliferation of credit cards, to virtual wallets and emergence of blockchain technology, the world of finance continues to evolve at an exponential rate.

Today, the average individual, business owner, or high net worth banking client can conduct nearly, if not all, of their financial business without stepping foot in a bank. The popularity of the phrase “cashless future” says it all; the very machine that started the modern banking renaissance, the ATM, may soon be obsolete.

In everything from interest rate calculation and loan handling to basic accounting, the story of commercial banking is the story of automation and innovation. Never before has there been a time where successful banks were not pushing the envelope, developing new ways to improve their systems and customer experience.

To Everyone’s Benefit

Automation helps banks, customers, and regulators save valuable time and money, often while producing superior results.

 

For global banking, the potential for value creation is one of the largest across industries, as McKinsey estimates that AI technologies could potentially deliver up to $1 trillion of additional value, annually.

Many areas in banking and finance are ripe for innovation:

  • banking regulatory and compliance
  • anti-money laundering (AML) and sanction screening
  • letter of credit and guarantees
  • cash management operations
  • transaction screening automation
  • automated payment operations
  • payment investigations

Progress and Room for Innovation

Over the next few years, banks will be leveraging automation to streamline their processes and reduce overhead, all while improving customer experience at every touchpoint.

On the retail side, automation is already incredibly prevalent in low-level loan approval, account setup, customer support, and more. Over the next several years, banks are expected to continue their trend of reducing physical bank branches in favor of increased digital and automated touch points for their retail clients.

On the commercial side, automation is expected to revolutionize lending operations over the next few years. With processes to automate loan approval, credit analysis, and even payment and payment investigations, banks will become far more agile in their ability to adopt, offer, and support new loan products when they become available.

To put this into perspective, according to McKinsey’s Research, cost per customer is expected to be reduced by 10%, time to onboard is expected to be cut by 20%, costs per loan are expected to be reduced by 10% and loan processing time is expected to be shortened by 15–40% simply through implementing automation and collaboration platforms.

Huge strides are being made every day toward this future.

Consider commercial lending operations: banks throughout the country experienced a massive shuffle last year and into this year as they struggled to build out systems and procedures to process and ensure compliance on PPP loans. Those institutions which leverage automation tools such as the ones offered by Cleareye.ai to streamline their PPP process benefited greatly.

Furthermore, artificial intelligence is changing the game when it comes to fraud detection. Automated tools, trained properly, can scan through hundreds of millions of rows of financial transactions and identify patterns and inconsistencies where a human simply could not, both due to scale and complexity.

Over the next several years, the prevalence of artificial intelligence and automated review of financial statements is only going to increase. As fraud becomes ever more sophisticated, the tools needed to fight it must become equally sophisticated. Automated and intelligent tools are the approach of the future.

Enhancing Customer Experience

Automation delivers quality and consistency (often cited as customers’ number one concern).

When no question exists in the mind of customers that their deliverables will be on schedule, accurate, and consistent every single time, it creates a drastically improved experience for them.

Nobody needs to worry that a loan won’t be processed correctly, that a payment won’t be received, that an invoice will be mislabeled simply because somebody made an error. With a properly implemented automation system, these issues are greatly minimized.

Embrace Change

It’s clear that the benefits of embracing automation and innovation are immense. The risks of ignoring these emerging technologies, however, are just as acute.

Banks around the world are adapting, implementing new processes, embracing emerging technologies, and streamlining their aging systems. As this trend continues, legacy procedures and methods that used to be efficient will start to look outmoded by comparison.

Additionally, automation has accelerated significantly due to the COVID-19 pandemic, and big-tech companies are looking to enter financial services. McKinsey claims that in order to compete successfully and thrive, incumbent banks must become “AI-first” institutions, adopting AI technologies as the foundation for new value propositions and distinctive customer experiences.

Banks that hold off and stick to the way things have always been done will begin to find that what once worked no longer does.

McKinsey found that the entire global banking industry could generate new value of $30 billion or more, assuming that core business processes could be streamlined to improve productivity by 8 to 10 percent through modernizing workforce technologies.

There’s another way to put this: banks who fail to embrace automation stands to lose out dramatically.

Beyond the financials, the fact remains: there are certain things that machines just do better.

Nobody would argue that a manual teller is more efficient and cost-effective for a bank and for the customer than an ATM.

Nobody would argue that it is easier to call or visit your bank in person than it is to log into a website.

And in 10 years, nobody will argue that it is more efficient to process loans by hand or manually review financial transactions than it is to have a machine do it.

Banks today have a choice: stay ahead of the ball, or fall behind it. I recommend the former.

For banks looking to improve their systems and implement new automation technologies, Cleareye.ai can help. We develop a suite of industry-leading applications and toolsets that enable financial institutions, both large and small, to streamline the way they get work done.

Learn more about how we are supercharging the future of banking.



About the Author – Sarath Sasikumar

Sarath Sasikumar is the Co-Founder & Chief Operating Officer and Member of the Board of Directors of Cleareye.ai. Sarath has vast experience managing large and complex programs, both in engineering and in business, spanning multiple teams, geographies and varying degrees of uncertainties. He has a degree in Electronics & Telecommunication Engineering and passionate about exploring new avenues to apply engineering breakthroughs to unlock value at exponential scale. He is based in Orange County, California where he lives with his wife and daughter.

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