The Role of Automation in Banking Operations

Whether in retail or commercial lending, every customer’s situation is unique, calling for its own set of documentation to establish creditworthiness. Consequently, traditional loan origination and underwriting are bottlenecks to digital experience. Banks must automate manual, paper-driven processes to simplify and streamline complex lending operations. In 2018, Gartner predicted that by the year 2030, 80% of traditional financial organizations will disappear.

This allows the low-value tasks, which can be time-consuming, to be easily removed from the jurisdiction of the employees. Compared to a manual setup, the repetitive processes are removed from the workflows, providing less scope for extra expenses. Majorly because of the pandemic, the banking sector realized the necessity to upgrade its mode of service.

Implementing automation allows you to operate legacy and new systems more resiliently by automating across your system infrastructure. Cybersecurity is expensive but is also the #1 risk for global banks according to EY. The survey found that cyber controls are the top priority for boosting operation resilience according to 65% of Chief Risk Officers (CROs) who responded to the survey. For example, Credigy, a multinational financial organization, has an extensive due diligence process for consumer loans. A North American bank transformed its lending practices to better service and retain customers—savings $20M and avoiding $2B in exposure. A European bank used automation, analytics and top talent to cut operating costs by 20-30%—freeing up resources to reinvest.

Moreover, AI-driven decision-making tools are not limited to credit assessment. They can also help in predicting customer churn, optimizing investment portfolios, detecting fraudulent activities, and even personalizing customer experiences. With AI’s powerful capabilities, banks can enhance operational efficiency, minimize risk, and ultimately improve customer satisfaction. All banking operations—whether onboarding, lending, trade finance, or customer service—can use artificial intelligence (AI) with process, content, and communication automation.

• Automation helps in ensuring that processes adhere to regulatory standards, reducing the risk of non-compliance.
• They can also help in predicting customer churn, optimizing investment portfolios, detecting fraudulent activities, and even personalizing customer experiences.
• As automation takes over routine tasks, the skills required from the banking workforce will shift towards more analytical, technical, and interpersonal roles.
• This blog will explain how automation can make banking tasks smoother, which banking activities can be automated, and what key features to consider in a bank automation system.
• For start-ups, it’s also important to ensure that operational processes are as efficient as possible before expanding, which could otherwise lead to accumulating large amounts of operational debt.

For instance, IoT sensors can predict equipment failures or maintenance needs in bank branches, reducing downtime and maintenance costs. Many banks operate on legacy systems that may not easily integrate with new automation technologies. Overcoming technical challenges and ensuring seamless integration without disrupting existing operations is a critical hurdle. This may require significant investment in system upgrades or replacements. The implementation of artificial intelligence in the banking business has significantly enhanced client experience. AI-powered technologies, notably chatbots and advanced analytics, have changed how banks interact with their customers, enabling degrees of customization and responsiveness that were before unavailable.

Additionally, it eases the process of customer onboarding with instant account generation and verification. With the rise of numerous digital payment and finance companies that have made cash mobility just a click away, it has become a great challenge for traditional banking organizations to catch up to that advanced service. Most of the time banking experiences are hectic for the customers as well as the bankers. In the context of banking, leveraging Gen AI can offer personalized assistance, streamline transactions, provide real-time financial advice, and even enhance security measures. Given the challenges they face, banks need more than incremental or isolated productivity gains.

‍1. Financial services and technology

The landscape of automation in retail banking is rich and varied, encompassing several key technologies that are transforming the sector. McKinsey predicts a future where automation and AI could handle 10 to 25% of tasks across bank functions, significantly freeing up human employees for more strategic roles. This not only boosts productivity but also enriches job satisfaction by removing mundane tasks from the daily workload. Banks are now using AI algorithms to evaluate client data, identify individual financial activities and provide personalized advice. This kind of individualized attention enables clients to make better informed financial decisions, increases trust and strengthens customer loyalty. Work closely with the relevant stakeholders, including accountants and IT professionals, to understand the existing workflows.

Operations staff will have a very different set of tasks and thus will need different skills. Banks, in other words, will look and feel a whole lot more like tech companies. The future of AI-driven automation in banking holds immense potential for transforming the industry and enhancing efficiency and customer experience. As driven technology continues to advance at an unprecedented pace, banks are increasingly embracing the power of AI to automate processes, streamline operations, and deliver personalized services to their customers. These systems employ natural language processing algorithms that enable them to understand the content of customer queries and provide relevant responses in real-time. By automating the handling of routine inquiries or requests for basic information, banks can free up their human agents’ time to focus on more complex issues that require human intervention.

Automation in banking not only enhances operational efficiency but also contributes significantly to error reduction and improved customer experiences. Automation and artificial intelligence, already an important part of consumer banking, will penetrate operations far more deeply in the coming years, delivering benefits not only for a bank’s cost structure, but for its customers. Digitizing the loan-closing and fulfillment experience, for instance, will speed the process and give customers the flexibility and freedom to view and sign documents online or with their mobile app. Typically, US consumers have to wait at least a month to get approval for a mortgage—digitizing this process and automating approvals and processing would shrink wait time from days to minutes. Customer experience is one of the key differentiators for success in the banking industry. Traditional methods of customer interaction often involve time-consuming processes like waiting in line or navigating complex IVR systems.

The Need for Automation in Retail Banking

Banks must integrate centralized and automated communication management into their operations to deliver the right message through the right channel at the right time. Omnichannel customer engagement enables that and lets banks manage all communications centrally and efficiently. To get the most from your banking automation, start with a detailed plan, adopt simple-but-adequate user-friendly technology, and take the time to assess the results. In the right hands, automation technology can be the most affordable but beneficial investment you ever make. ​The UiPath Business Automation Platform empowers your workforce with unprecedented resilience—helping organizations thrive in dynamic economic, regulatory, and social landscapes. The world’s top financial services firms are bullish on banking RPA and automation.

To transfer funds, the AI may consider that and reorganize the UI to make the transaction easier around that time. Selecting the appropriate RPA tools is crucial for successful implementation. Evaluate available RPA solutions in the market, considering factors such as scalability, compatibility with existing systems, and ease of integration. In this article, we’ll explore why the banking industry needs hyperautomation, its use cases, and how banks can get started with their hyperautomation journey. All of the workflows in Next Matter are also built specifically for auditors as each process has a dashboard where the times of completion can be seen for each workflow. Automation can help standardize processes and workflows while allowing COOs and heads of operations access to these workflows and quickly adapting them when needed without having to train their teams on new processes.

Maintaining regulations and compliance is a hectic task with consistent changes in policies and regulations. With automation’s ability to erase complicated workflows, it enhances all operations. Through automation, communication between outlets of banks can be made easier. The flow of information will be eased and it provides an effective working of the organization. Managing these processes, which can be cross-functional and demanding, needs to be processed without causing unnecessary delays or confusion.

Automation Without Integration

Reskilling employees allows them to use automation technologies effectively, making their job easier. A number of financial services institutions are already generating value from automation. JPMorgan, for example, is using bots to respond to internal IT requests, including resetting employee passwords. The bots are expected to handle 1.7 million IT access requests at the bank this year, doing the work of 40 full-time employees. And at Fukoku Mutual Life Insurance, a Japanese insurance company, IBM’s Watson Explorer will reportedly do the work of 34 insurance claim workers beginning January 2017.

According to McKinsey, the potential value of AI and analytics for global banking could reach as high as $1 trillion. In phase three, the bank implemented the new processes in three- to six-month waves, which included a detailed diagnostic and solution design for each process, as well as the rollout of the new automated solution. Organizations that achieve a high level of maturity become “future-ready.” They are fully focused on digital transformation (i.e. Digital Focused) and gain the agility and resilience needed to thrive amid uncertainty. They also—probably as a result—realize higher market valuations and derive more profit. Banks must look for ways to integrate compliance and regulatory requirements in their operational fabric so they can focus on delivering value.

And with technology fundamentally changing the financial and consumer ecosystems, there has never been a better time to take the next step in digital acceleration. The automated banking processes are performed seamlessly without any errors. Being in the financial sector, banks are most required to be conscious and attentive about the data that they handle. The processing of data through automated banking reduces such risks and errors to zero.

Key Features to Consider in Choosing an Automation in Banking Tool

Our research suggests that technology challenges are impeding banks from achieving operational transformation. This holds true particularly in areas such as artificial intelligence (AI), analytics and automation, each of which would complement banking’s strong data capabilities. Some have made significant strides in addressing customer experience (CX) and operational efficiency by investing in mobility, cloud, automation, and enterprise integration. However, fragmented systems and processes continue to stall their progress. When you decide to automate a part of the banking processes, the two major goals you look to attain are customer satisfaction and employee empowerment. For this, your automation has to be reliable and in accordance with the firm’s ideals and values.

Blanc Labs helps banks, credit unions, and Fintechs automate their processes. Our systems take work off your plate and supercharge process efficiency. Despite some early setbacks in the application of robotics and artificial intelligence (AI) to bank processes, the future is bright. The technology is rapidly maturing, and domain expertise is developing among both banks and vendors—many of which are moving away from the one-solution-fits-all “hammer and nail” approach toward more specialized solutions. Banks cannot entirely do away with complexity of their operations, but they can use end-to-end automation to unlock simplicity for consistently great CX.

Choose an automation software that easily integrates with all of the third-party applications, systems, and data. In the industry, the banking systems are built from multiple back-end systems that work together to bring out desired results. Hence, automation software must seamlessly integrate with multiple other networks.

Gen AI reshapes the landscape of back-office operations by tapping into the power of large language models. It seamlessly integrates automation into workflows, removing internal friction and reducing the reliance on outsourcing. It can include visual features of the app interface, including themes, layouts and notification styles, which are tailored to the user’s habits and preferences. For a consumer who favors a minimalist design, the AI may streamline the interface by removing clutter and emphasizing key functions. On the other side, for users who are more interested in specific analytics and insights, the app might provide a more data-rich interface that displays detailed financial figures at a glance.

With the fast-moving developments on the technological front, most software tends to fall out of line with the lack of latest upgrades. Therefore, choose one that can accommodate the upgrade versions and always partners with you. An approval screening is performed where it identifies any false positives.

It also supports additional features or external support outside of its structure if the customers demand it. This can be easily done with the integration features of our platform and it can be done without disintegrating yourself from the user interface. Your automation software should enable you to customize reminders and notifications for your employees. Timely reminders on deadlines and overdue will be automatically sent to your workforce. Customized notifications by the workflow software should be linked, and automatically to all common tasks. Automation lets you carry out KYC verifications with ease that otherwise captures a lot of time from your employees.

This keeps things efficient, and it encourages a positive work environment. Since little to no manual effort is involved in an automated system, your operations will almost always run error-free. For example, a sales rep might want to grow by exploring new sales techniques and planning campaigns. They can focus on these tasks once you automate processes like preparing quotes and sales reports. The cost of paper used for these statements can translate to a significant amount. Automation and digitization can eliminate the need to spend paper and store physical documents.

Enhancing Customer Experience

Banking automation behind the scenes has improved anti-money laundering efforts while freeing staff to spend more time attracting new business. You can foun additiona information about ai customer service and artificial intelligence and NLP. Cflow is one such dynamic platform that offers you the above features and more. As a no-code workflow automation software, employees and customers enjoy a smooth and fruitful banking experience. A few examples of these changes can be seen in underwriting (or risk analysis) models, collection processes, and monitoring systems.

There are clear success stories (see sidebar “Automation in financial services”), but many banks face sobering challenges. Some have installed hundreds of bots—software programs that automate repeated tasks—with very little to show in terms of efficiency and effectiveness. Some have launched numerous tactical pilots without a long-range plan, resulting in confusion and challenges in scaling. Other banks have trained developers but have been unable to move solutions into production. Still more have begun the automation process only to find they lack the capabilities required to move the work forward, much less transform the bank in any comprehensive fashion.

What is Automation in Retail Banking?

Lenders rely on banking automation to increase efficiency throughout the process, including loan origination and task assignment. One of the most basic features of any software is that it supports mobile (or any device) compatibility. Automation software that supports built-in mobility is important for banking workflows. Mobile compatibility offers flexibility where your workforce can work when and where they desire.

• This bank then did some due diligence to determine whether there was a viable business case to automate each process within a reasonable time frame.
• The combination of IoT with automation and AI opens up new avenues for innovative banking services, such as smart ATMs that offer personalized greetings and services based on facial recognition or biometric data.
• By speeding up processes through AI-driven automation, banks can improve operational efficiency, reduce turnaround times, and provide customers with faster and more seamless experiences.
• Addressing these challenges proactively and involving key stakeholders in the implementation process can contribute to a more successful and sustainable automation initiative.

In addition to RPA, banks can also use technologies like optical character recognition (OCR) and intelligent document processing (IDP) to digitize physical mail and distribute it to remote teams. You’ll have to spend little to no time performing or monitoring the process. Moreover, you’ll notice fewer errors since the risk of human error is minimal when you’re using an automated system.

For many, automation is largely about issues like efficiency, risk management, and compliance—”running a tight ship,” so to speak. Yet banking automation is also a powerful way to redefine a bank’s automation in banking operations relationship with customers and employees, even if most don’t currently think of it this way. Banks have enhanced many of their customer-facing, front-end operations with digital solutions.

Our goal is to build a low- and no-code tool for organizations to automate all of their operational needs, regardless of the department. You can think of it as a workflow management and automation tool, but one that takes former features to the next level of software development. One assumption that can be made is that traditional banks are still lagging behind in technological advancements to make lending to small businesses and individuals easier in terms of operational efficiency.

It concluded that only half the opportunity (measured by the automation business cases completed on each manual process) could actually be captured. In fact, over the last eight years, these banks have managed to reduce their costs more than those that have been slower to embark on their journey to a digital operating model. Business and technology leaders in banks and FIs have had their eyes on these digital transformation priorities. However, a robust strategy around reliable, all-encompassing solutions is often elusive. Download this e-book to learn how customer experience and contact center leaders in banking are using Al-powered automation. As mentioned in the features, Cflow seamlessly works with some of the essential third-party applications like SAP, and Zapier among many others.

Customers expect an easy omnichannel onboarding experience with zero manual intervention. Banks need to offer a smooth, hassle-free know-your-customer (KYC) process with minimal data entry and to integrate their digital interfaces with automated back-office operations. As RPA and other automation software improve business processes, job roles will change. As a result, companies must monitor and adjust workflows and job descriptions. Employees will inevitably require additional training, and some will need to be redeployed elsewhere.

Automation can help improve employee satisfaction levels by allowing them to focus on their core duties. By making faster and smarter decisions, you’ll be able to respond to customers’ fast-evolving needs with speed and precision. AI and ML algorithms can use data to provide deep insights into your client’s preferences, needs, and behavior patterns.

These new banking processes often include budgeting applications that assist the public with savings, investment software, and retirement information. Imagine a leading bank integrating Robotic Process Automation in retail banking to refine its loan processing system. This strategic move could drastically streamline the approval and disbursement process, significantly enhancing operational efficiency and reducing costs without compromising accuracy or customer service quality.

While banking has been suffering, fintech has been set on a course of hypergrowth with a market value sitting at around $5 trillion, with estimates above 23% growth for the next 5 years. Now that we have examined the importance of rapid response to queries, let’s move on to exploring the role of AI in decision making within the banking industry. And it is also a great example of how banking has always been an innovative industry.

Gen AI chatbots excel at handling routine inquiries and transactions swiftly, reducing those dreaded wait times and processing delays, thereby transforming your banking experience into a fast and frictionless process. Banks must ensure that automation solutions are scalable and flexible enough to adapt to changing business needs and technological advancements. Choosing the right technology consulting services and platforms that can grow and evolve with the bank is crucial to achieving long-term success. Exploring the realm of automation in retail banking reveals several potential use cases that underscore the transformative power of this technology. These scenarios, while hypothetical, draw from real-world strategies and outcomes observed across the industry.

By opting for contactless running, the sector aimed to offer service in a much more advanced way. In the 1960s, Automated Teller Machines were introduced which replaced the bank teller or a human cashier. As McKinsey puts it, there are, broadly, three categories of Gen AI adoption in banking. The three main areas are back-office operations, risk management, and customer-facing interactions. AI’s creativity comes in its capacity to learn from user interactions, constantly adjusting and refining the app design to match individual consumers’ changing preferences and behaviors. For example, if a user frequently checks their investment portfolio, AI might reorganize the app’s dashboard to prioritize investment features, making them easier to access.

With huge data extraction and manual processing of banking operations lead to errors. Moreover, a single error in the important banking process leads to the case of theft, fraud, and money laundering case. Instead of humans processing data manually, simple validation of customer information from 2 systems can take seconds instead of minutes with bots. Introducing bots for such manual processes can reduce processing costs by 30% to 70%. Several processes in the banks can be automated to free up the manpower to work on more critical tasks.