How automation technology is set to redefine the finance industry
By Daniel G|
August 24, 2022
The financial services sector is the recipient of dramatic digital transformation. We may be familiar with the more consumer-facing elements, such as the proliferation of mobile banking and internet banking, but there is a lot more going on behind the scenes with regards to how service providers, including those offering credit facilities, are embracing new automation technology to best serve their clientele.
Automation and other smart technologies are making it possible for institutions, both old and new, to support the client’s journey from beginning to end via digital channels. But what is meant by “automating” that journey? Understanding what that means, and how financial and credit service providers are deploying relevant technologies, is essential for any business and its ability to make sound, long-term decisions.
Some useful definitions
The key element to consider when it comes to automation is how it enables enterprises to reduce repetitive work. The entry level of automation, robotic process automation (RPA), simply refers to software that can fulfil simple tasks with minimal input. The deployment of automated solutions means that more time and resources can be dedicated to other activities, while also increasing turnaround times and accuracy levels. Automation also demonstrates a safer way for businesses to solicit and gather information from existing and prospective clients. Data that is sent through digital channels remains encrypted end-to-end, and can be housed safely in secure, dedicated centres, as opposed to traditional paper trails that can be misplaced or mismanaged.
RPA is one end of a very wide automation spectrum. We may be some time away from software that is intelligent enough for complex decision-making to the level of humans, but we are already seeing applications of artificial intelligence (AI) that signal the beginning of a work revolution.
AI applications and concerns
The leading innovations in artificial intelligence are not the ones you see showcased on the news, like a robot that can serve drinks or answer tourists’ questions. AI, as it best serves the finance world, is when it’s combined with RPA to integrate and digitise systems that lead to improved customer service, efficient management systems, and new methods of risk mitigation.
If there is any example of how AI is being normalised in an applicable industry, it is the chatbot. Automated conversational platforms are a way for enterprises to save costs by eliminating the need for human-to-human interactions. This is not a niche technology, at least not for the time being. In a 2019 Gartner survey, company CIOs identified chatbots as the main AI-based application used in their enterprises. It was also forecasted that by 2022, 70% of white-collar workers will interact with conversational platforms on a daily basis. The key to an effective chatbot lies with keeping it simple, and equipping it with common responses and questions that reflect human mannerisms. Keeping in line with the Pareto principle, a good chatbot can solve 80% of client requests with 20% of the effort.
It must also be stressed that automation, specifically in the case of repetitive, data-focused tasks, does not reduce the need for human input or operation. According to McKinsey, the adoption of automation and AI-based technologies will accelerate a skills shift in the workplace. The need for most physical and manual skills may decline, but they will remain the largest category of workplace skills.
In the case of financial services, automation largely represents a shift in focus, allowing people to turn their attention to meaningful analysis, problem solving, and planning. This promotes increased innovation, easier and wider access to services, and more working capital to enable businesses and help encourage entrepreneurship and employment.
The possibilities in fintech
Imagine a traditional process without any kind of automation. An accountant or business owner prepares a cash flow statement every month. A simple task, but their focus lies in getting the flow to balance as opposed to thinking about what it reveals, like a predictable cash shortfall or bridging implications. Imagine another process, like a business owner working to secure credit from an alternative credit provider. A process that traditionally consumes a forest’s worth of paperwork and a large amount of the owner’s time and energy, when automated through technology, can be life-changing.
We are not talking about complex or costly solutions, here. One of the ways in which service providers have begun to automate their systems is by integrating with existing financial accounting packages to ensure a swift application and approval process. At the same time, proprietary algorithms look at various data sources to make accurate credit determinations, all within incredibly short time frames.
This is automation made possible by combining already-existing solutions. In the case of small businesses where cash flow and securing a credit facility can be a make-or-break factor, automation represents a new, more streamlined, and overall more efficient experience. The journey of automating your business’s process can start with something as simple as an accounting app or software, or by partnering with service providers that understand the technology’s potential.
Where we go from here will be exciting, as the trend is slowly spreading to other areas in finance. There may be scepticism and a reluctance to embrace automation, but the truth remains that the technological and cost-saving benefits justify the cost of its implementation. Whether you do it yourself or with the help of others, turning to automation can mark a significant turning point for your enterprise.
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