The Importance of Having a Digital Transformation Strategy
This is the second part of a 4-part series on the Journey of Automation, exploring emerging automation tools, technology, strategies, and innovation.
The previous post in this series covered the evolution of automation thinking—from point processing tools to AI systems. Familiarity with the available automation tools allows managers to develop a strategy that will work best for their organization. Plenty of banks have struggled to automate because there was no cohesive plan for how automation tools would fit within their existing business workflows. Clearly, a digital transformation strategy is critical. But what exactly does that entail?
At Vikar, a successful digital transformation strategy means knowing when to automate, what to automate, and how to mesh new automation systems with existing operations.
When to Automate
If you haven’t jumped aboard the automation band wagon yet, now is the time to do so.
Digitization of services was originally only occasionally used to improve efficiencies and cost structures. But COVID has since made digitization mandatory. National lockdowns meant that bank transactions would need to be completed virtually. Accustomed to the fast, easy and virtually seamless interactions provided by online retailers and streaming entertainment services, customers quickly came to expect the same from banks in this digital arena: a few quick clicks to open and close accounts, pay bills, move money and address a long list of other tasks.
What seemed fanciful as recently as five years ago is now not only achievable, but quickly becoming standard. From robotic process automation (RPA) to AI solutions, technology is enabling banks to do more than ever. Beyond efficiencies, these tools provide a much-improved client experience resulting in revenue going up and account dropouts, well, dropping off.
The challenge for banks is how to embrace and integrate smart automation in a way that produces real value. Nearly all banks have automation pilots of some sort; however, precious few have cracked the code on how to drive value at scale.
What to Automate
I want to emphasize that automation is more of an evolution than a one-time solution. Ideally, RPA and BPM help collect data, IA then manages it, and then AI can transform that data into amazing insights. It’s a necessary journey, but where you start and how quickly you progress depends on your organization.
The first step is to identify tasks and operations that are repetitive and don’t require a human touch. Of those, which would optimize business processes and improve customer experience? These areas are great for RPA and BPM. These solutions help with speed and accuracy of repetitive manual tasks. They’re best suited for dealing with larger volumes of data that require regulatory compliance. They’re also typically employed in middle- or back-office areas, making them less risky compared to customer-facing processes. Document generation, client reports, KYC checks, and audit trails can be assigned and completed automatically, freeing up employees to deal with more high-value activities. All the automated activity means more data collection. Unfortunately, consolidating and maintaining client data is a major struggle for many financial organizations.
This is where IA and AI come in to help manage and analyze all the data being automatically collected and stored. They translate the data into knowledge and customer insight. Banks can create new offerings based on their clients’ needs, turn one-time customers into loyal partners, and modernize KYC processes.
Combining new automation solutions with existing operations
There’s a growing fear that technology will replace humans and eliminate jobs. But that’s not necessarily true, at least for the next few decades.
Digital transformation is a bit of a balancing act. The transition to robotic automation and AI digitization is more than an IT project—it will require a business-wide transformation. But these solutions shouldn’t take over or disrupt your organization.
Good strategies meld technology solutions with human problem-solving. RPA systems that aid staff and tackle routine chores augmented by AI algorithms that analyze collected data are powerful tools, but tools nonetheless. And like all tools, they are only as useful as the person wielding them. Take lending, for example. Banks (human managers) can establish parameters for automatically approving or rejecting a loan application through BPM and IA. Faster approvals mean more loans and happier clients. But when data doesn’t neatly land within those parameters, a human will intervene to make that final call. So rather than have a human employee spend a huge portion of their time manually approving or rejecting clear-cut loan applications, they can focus on tackling problematic applications.
Executed properly, banking automations result in humans doing important work and technology executing the grunt work.
One final point: automation strategies should not be static. As the technology evolves, strategies for digitization would need to adapt, all the time looking for ways to improve the client experience, whether through the development of new digital channels, identifying new opportunities, or the continued optimization of middle-and back-end operations.
Summary
Banks investing in automation need a strategy to match the technology.
The banks that will remain competitive in the future are the ones reimagining their day-to-day operations, incorporating new automation capabilities, and relying on Fintechs to take care of easily standardized processes.
Vikar Technologies offers digital transformation without disruption for Financial Institutions. We are the only Fintech provider with flexible software solutions that enable financial institutions to digitally transform their entire loans and deposits processes without migrating off their current systems.