The customer facing side of banks is becoming more comprehensive seemingly by the day. Financial institutions everywhere now have online banking, mobile applications and other tools to operations more efficient for those who use these banks. But what about the back office? McKinsey Quarterly said banks still rely on manual processes and papers to complete many back office processes. Banks may want to look into automated data collection to make work as easy for employees as it currently is for banking customers.
“This high degree of manual processing is costly and slow, and it can lead to inconsistent results and a high error rate,” the website said. “IT offers solutions that can rescue these back-office procedures from needless expense and errors. Our research indicates that a significant opportunity exists to increase the levels of automation in back offices.”
McKinsey Quarterly said financial companies should consider restructuring their IT infrastructure and making it into much smaller units that can take complicated processes like deal origination and activities that used to require manual labor, such as financial reviews, and automate them. By doing this, banks can see a 50 percent increase in productivity and customer service, the website said.
Specific ways banks can improve operations
Ernst and Young said there are a few steps that can help banks prepare for not only better automation, but standardization and alignment. Institutions can:
- Better align data to yield benefits. This means having better information flow to help meet reporting requirements and make the most of scarce resources
- Improve operations through policy changes organizational restructuring and technology, as all of these can be consistently evaluated and improved upon when the bank deems it possible
- Have a data governance system in place to see which data is the most important and needs to be protected more versus that which may be considered less important or sensitive
There are already many banks and other financial institutions taking steps toward an automated data collection or similar system, McKinsey Quarterly said. For example, a large universal bank shifted more than 900 end-to-end processes into fully automated, partially automated and “lean” manual configurations. The bank found 85 percent of operations, which accounted for 80 percent of the full-time employees it had, could be at least partially automated. Thus far, fewer than 50 percent were automated by the bank, but if the ideal level was reached, the company could optimize about half of their back office tasks. This would mean employees would have time for other important tasks such as dealing with customers and paying attention to business tasks at hand.
“This scenario sounds promising, but achieving it is easier said than done,” the source said. “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. It concluded that only half the opportunity (measured by the automation business cases completed on each manual process) could actually be captured.”
Each bank will need to see what works for them, but there is definitely space for automated data collection in the financial world.