Banking M&As: The Role Of Automation In Maximizing Profitability

Banks can also automate account structures in a process known as householding or superhouseholding, which provides additional insight into broader account relationships, such as opportunities for products and services or potential risks within the relationship. By leveraging this approach to automation, banks can identify relationship details that would be otherwise overlooked at an account level and use that information to support risk mitigation. Being an automation solution provider for multiple industries, AutomationEdge has scaled multiple banking and financial services providers in accelerating their business process efficiency and workplace experience.

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. Automating compliance procedures allows banks to ensure that specified requirements are being met every time and share and analyze data easily. This frees compliance departments to focus on creating a culture of compliance across the organization. In addition, automated systems can identify and flag suspicious activity that poses a threat to the bank and its customers.

New technologies are redefining the customer and employee experience in financial services.

The final item that traditional banks need to capitalize on in order to remain relevant is modernization, specifically as it pertains to empowering their workforce. Modernization drives digital success in banking, and bank staff needs to be able to use the same devices, tools, and technologies as their customers. For example, leading disruptor Apple — which recently made its first foray into the financial services industry with the launch of the Apple Card — capitalizes on the innovative design on its devices. After the data have been collected through the online channel, data mining and machine learning will aid in the analysis and provide optimal credit decisions.

We believe that our findings may benefit industry professionals and decision-makers in formulating strategic decisions regarding the different uses of AI in the banking sector, and optimizing the value derived from AI technologies. We advance the field by providing a more comprehensive outlook specific to the area of AI and banking, reflecting the history and future opportunities for AI in shaping business strategies, improving logistics processes, and enhancing customer value. Robotic process automation (RPA) has been adopted across various industries to ease employee workloads while cutting costs – and banking is no exception. From taking over monotonous data-entry, to answering simple customer service queries, RPA has been able to save financial workers from spending time on repetitive, labor-intensive tasks. Over the past decade, the transition to digital systems has helped speed up and minimize repetitive tasks. But to prepare yourself for your customers’ growing expectations, increase scalability, and stay competitive, you need a complete banking automation solution.

With volatility, inflation, and rate hikes so high… give banking automation a try.

A successful gen AI scale-up also requires a comprehensive change management plan. Most importantly, the change management process must be transparent and pragmatic. Gen AI, along with its boost to productivity, also presents new risks (see sidebar “A unique set of risks”). Risk management automation in banking industry for gen AI remains in the early stages for financial institutions—we have seen little consistency in how most are approaching the issue. Sooner rather than later, however, banks will need to redesign their risk- and model-governance frameworks and develop new sets of controls.

However, as customers continue to become accustomed to AI, it may be imperative to develop theories that go beyond its acceptance and adoption. Thus, we recommend investigating different variables (e.g., social influence and user trends) and methods (e.g., cross-cultural studies) that impact customers’ relationship with AI. The gradual shift toward its customer-centric utilization has prompted the exploration of new dimensions of AI that influence customer experience. Going forward, it is important to understand the impact of AI on customers and how it can be used to improve customer experience. This means you spend less time searching through open-source documentation and more time focusing on operations. In turn, you take back the time you need to support critical decision making based on the intelligence you gathered.

Reskilling employees allows them to use automation technologies effectively, making their job easier. Robotic process automation, or RPA, is a technology that performs actions generally performed by humans manually or with digital tools. In the event of an M&A, if a bank’s loan trading desk is managing loans manually, using spreadsheets and traditional methods, the integration process can become cumbersome and error-prone. An automated approach to loan participation and syndication management can streamline this process significantly.

Fast-forward to 2020, and banks are now viewed under the same lens as customer-facing organizations like movie theatres, restaurants and hotels. But my point is that advanced technology, customer demand and fintech disruptions have all dramatically changed what constitutes banking and how digital customers expect it to be. The adoption of automation in M&A balance sheet management is a significant part of a broader cultural shift toward technological innovation in banking. It echoes the sector’s historical adaptability to change, reminiscent of the banking industry’s transition with the introduction of ATMs. My colleague, Mike, often recounts how these machines, initially viewed with skepticism, became integral to banking. This evolution signifies how the banking world, traditionally seen as conservative, has progressively embraced technological advances.

Moreover, we recommend using AI as a marketing segmentation tool to target customers for optimal solutions. To establish a robust AI-powered decision layer, banks will need to shift from attempting to develop specific use cases and point solutions to an enterprise-wide road map for deploying advanced-analytics (AA)/machine-learning (ML) models across entire business domains. To enable at-scale development of decision models, banks need to make the development process repeatable and thus capable of delivering solutions effectively and on-time.

• The sub-theme, AI and credit (15 papers), covers the use of AI technology, such as machine learning and data mining, to improve credit scoring, analysis, and granting processes.
• Banks can use AI to transform the customer experience by enabling frictionless, 24/7 customer service interactions — but AI in banking applications isn’t just limited to retail banking services.
• Wu and Olson (2020) highlight the need for banking institutions to continue investing in AI technologies to reduce future risks and enhance the integration between online and offline channels.
• Intelligent automation combines robotic process automation (RPA) and AI, giving it the remarkable ability to handle rote predictive tasks (e.g., number crunching) as well as more complex functions such as activity monitoring.

Your money was then sucked up via pneumatic tube and plopped onto the desk of a human bank teller, who you could talk to via an intercom system. 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. The competition in banking will become fiercer over the next few years as the regulations become more accommodating of innovative fintech firms and open banking is introduced. For end-to-end automation, each process must relay the output to another system so the following process can use it as input. The report highlights how RPA can lower your costs considerably in various ways.

How a bank manages change can make or break a scale-up, particularly when it comes to ensuring adoption. The most well-thought-out application can stall if it isn’t carefully designed to encourage employees and customers to use it. Employees will not fully leverage a tool if they’re not comfortable with the technology and don’t understand its limitations. Similarly, transformative technology can create turf wars among even the best-intentioned executives.

This may imply the importance of utilizing AI in improving customer service and satisfaction, and in marketing to retain and grow the customer base. For instance, Trivedi (2019) examined the factors affecting chatbot satisfaction and found that information, system, and service quality, all have a significant positive association with it. Ekinci et al. (2014) proposed a customer lifetime value model, supported by a deep learning approach, to highlight key indicators in the banking sector. Xu et al. (2020) examined the effects of AI versus human customer service, and found that customers are more likely to use AI for low-complexity tasks, whereas a human agent is preferred for high-complexity tasks. It is worth noting that most of the research related to the customer theme has utilized a quantitative approach, with limited qualitative papers (i.e., four papers) in recent years.

The ability to make changes at speed also facilitates faster delivery of innovative new products and services that give them an edge over their competitors. This was another benefit of automation for Bancolombia, as automating repetitive and manual data-based tasks reduced operational risk by 28%. Applying business logic to analyze data and make decisions removes simpler decisions from employee workflows. Plus, RPA bots can perform tasks previously undertaken by employees at a faster rate and without the need for breaks.

A big bonus here is that transformed customer experience translates to transformed employee experience. While this may sound counterintuitive, automation is a powerful way to build stronger human connections. Automation reduces the need for your employees to perform rote, repetitive tasks. Instead, it frees them up to solve customers’ problems in their moment of need. We integrate these systems (and your existing systems) to allow frictionless data exchange.

A digital portal for banking is almost a non-negotiable requirement for most bank customers. The company decided to implement RPA and automate the entire process, saving their staff and business partners plenty of time to focus on other, more valuable opportunities. For legacy organizations with an open mind, disruption can actually be an exciting opportunity to think outside the box, push themselves outside their comfort zone, and delight customers in the process. For the best chance of success, start your technological transition in areas less adverse to change.

We offer a suite of products designed specifically for the financial services industry, which can be tailored to meet the exact needs of your organization. We also have an experienced team that can help modernize your existing data and cloud services infrastructure. With threats to financial institutions on the rise, traditional banks must continue to reinforce their cybersecurity and identity protection as a survival imperative. Risk detection and analysis require a high level of computing capacity — a level of capacity found only in cloud computing technology. Cloud computing also offers a higher degree of scalability, which makes it more cost-effective for banks to scrutinize transactions. Traditional banks can also leverage machine learning algorithms to reduce false positives, thereby increasing customer confidence and loyalty.

With cloud computing, you can start cybersecurity automation with a few priority accounts and scale over time. 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. Implementing RPA can help improve employee satisfaction and productivity by eliminating the need to work on repetitive tasks. Landy serves as Industry Vice President for Banking and Capital Markets for Hitachi Solutions, a global business application and technology consultancy. He joined Hitachi Solutions following the acquisition of Customer Effective and has been with the organization since 2005.