Digital Transformation » Technology » Retail banking can automate to drive efficiency

Retail banks across the globe serve different customers but face similar challenges that automation enables them to address more effectively than ever.

They have masses of data that must be processed with maximum accuracy and high speed as it passes between applications, ATMs, and customers’ accounts. If a bank fails on any of these measures it faces multiple risks, ranging from loss of competitiveness as customers go elsewhere, to a steady diminution of efficiency. Success also brings its challenges because as banks grow, the likelihood of errors and slowdowns increases.

It is why leading global commercial banks have begun automating administrative processes, using robotic process automation (RPA) to eliminate mistakes and perform at significantly higher speeds than human workers.

High-volume financial services

In high-volume financial services, automation is having major impact on efficiency and costs.

Sumitomo Mitsui Banking Corporation (SMBC) and Sumitomo Mitsui Financial Group (SMFG), for example, were struggling to meet aggressive cost-reduction goals and looked to automation for efficiencies.

They had set a cost-reduction goal of ¥50 billion by the end of 2020 and ¥100 billion in the medium term. They needed a solution that could support compliance and risk-prevention, branch operations, routine operation-centre processes, and other high-volume routine operations.

Sumimoto built software robots to automate their operations. An RPA Centre of Excellence (CoE) was created to focus on compliance and risk operations, along with information-gathering processes to improve sales and planning, branch operations, and routine operations.

By implementing robots that worked autonomously and others that acted as assistants to staff members, SMBC and SMFG were able to save thousands of work hours, reduce costs, introduce standardisation and achieve much better standards of governance and security.

Automation saved 650,000 annualised hours across 200 operation and is projected to save one million hours of capacity by the end of 2020, eventually eliminating three million hours of work. Costs will have been reduced by almost $450m by 2020 and $1 billion in medium term.

Exchange of ATM data

In a more mundane example of retail banking automation, a Swiss bank has deployed a robotic process automation (RPA) robot to replace the work of two departments on three desktop and web applications that were unable to keep up with the intense demands of data transfer for the efficient operation of ATMs.

Some 90 per cent of processes have been automated, reducing errors to zero and processing time by 70 per cent. Full return-on-investment (ROI) was achieved within two months of implementation.

Mortgage accounts

The creation of bank accounts for mortgage customers is another area where automation has made a big impact. A German bank found such tasks occupied the equivalent of one week of an employee’s time that could have been spent on higher-return work.

Three departments used two desktop and web applications in a cumbersome process that involved a range of rules and decisions based on variable data. After deploying a robot, the work was fully automated, reducing costs by 70 per cent, and eliminating errors. Processing times were 75 per cent faster.

Detecting financial crime

Automation is also enabling banks to identify fraudulent activity much faster and more easily by sifting through masses of data from transactions, clusters, and profiles of customers, public databases of stolen information, and internal audits.

One global retail bank based in Europe uses a robot to access up to 15 internal and external applications, automating 95 per cent of processes, providing a report that can be easily and quickly reviewed by a human fraud-prevention analyst.

One hour of manual work has been replaced with five minutes of automated work.

Direct debits

The laborious processes that traditionally bedevil the management of direct debits are also being automated. For many banks, these involve paper transaction reports, a complicated set of rules, and inconsistently charged bank fees for rejected direct debits. The process is slow, error-prone, and frustrating when carried out manually, as employees of one of Australia’s largest mutual banks saw. For four hours each morning staff were manually checking 800 to 1,000 rejected direct debits with data input manually into the core banking system.

Automation has transformed these processes, analysing the data, based on standardised business rules, and accepts or rejects the direct debits. Paper client histories have been digitised and almost all daily transactions are dealt with by the time the staff arrive at work at 8am each day. Processing is not only faster, it is more accurate, saving time equivalent to two full-time members of staff. Turnaround time has been slashed to six hours from 16.

Loan document verification

Automation platforms are also transforming Know Your Customer processes required for loan approvals. The process is not only frustrating and time-consuming but can drive away clients it if takes too long. Between collecting data such as passports, utility documents, legal documents, and tax information, some major global banks spend $500m annually on verifying customers and customer due diligence.

One of Australia’s largest mutual banks has automated these processes, replacing manual cross-checking of data. A robot opens different web portals and verifies the information before sending an email to the person who reviews the documents and makes the final decision. Automation has saved the bank 20 hours per week and gives clients faster responses than was possible with manual processes.

RPA helps global banks work faster – there is no doubt about that – but it goes much further. It enables them to transform their efficiency and become infinitely smarter organisations. RPA is the fastest way to hone a competitive edge.