6 Critical Pain Points Banks Can Automate Now

With FinTech start-ups constantly emerging from Silicon Valley, and the disruption of normal work patterns brought on by the pandemic, banks are facing new challenges from all angles. As a result, banks need to evolve to not only compete in a digital world, but also to deliver digital innovation exponentially.

Banks are increasingly aware of the benefits that intelligent automation can provide. They also are aware of the negative impacts of not adopting automated solutions.

So, what is stopping them from acting today and successfully embracing an intelligent automation strategy?

According to Accenture, the three top factors stopping banks from automating include:

1. Knowing where to start – there are many channels, customer segments, IT systems and locations and products to consider. Sometimes too much thinking can cause a lack of action.
2. Betting on the best technology – the options are vast and with so many companies vying for business, it can be overwhelming.
3. Removing legacy systems – nearly 40% of bank COOs claim the cost of modernizing legacy systems is the most significant obstacle to adopting new technologies.

These drivers are slowing banks from making dramatic shifts toward digital transformation, but the market is forcing change. The pandemic and resulting remote work environment, coupled with the increasing desire for a digital-first customer experience, are fast separating the high-performing banks and credit unions from the rest.

Organizations need to find a way to step into digitization or face the reality of losing customers to competitors that do provide digital solutions for account setup, loan applications, customer service transactions, and more. 

So where is the low hanging fruit for banks? What exactly can they do to make forward progress along their top pain points without breaking the entire system?

We’ve put together a guide to help banks and credit unions navigate this tightrope, which you can download here. But if you’re short on time, or want the quickfire takeaways, read on.

1. The Impact of Manual Data Entry

According to MYOB.com, manual data entry leads to four problems:

• Higher costs: humans typing in data is expensive and a misuse of valuable human capital
• Increased errors: manual data entry error rates range from 0.55% to 3.6%, which adds up quickly when you are talking about hundreds or thousands of financial documents
• Delays related to finding and organizing documents
• Bad data: missing values, default values and “place-holder” values

Numerous solutions exist to help organizations extract data from documents for use throughout loan origination and new account opening processes. But extracting data from its original source is only the beginning.

To remove manual entry completely, financial service providers need to create end-to-end digital processes. And to do that, they need Intelligent Document Processing (IDP).

What is IDP? Learn more HERE.

2. Managing Information Across Multiple Silos

Opening a new account or applying for a loan is a data and document-intensive process. Several documents are required from applicants directly and from external sources such as credit organizations and government entities.

The term “Information Sprawl” describes the way that documents and data are spread across multiple systems within a financial services provider. This scenario leads to staff living in multiple systems, frequently transferring data between them, and working harder because they are trapped in processes with a lot of friction.

Intelligent document processing (IDP) solutions connect these internal systems to allow employees to work inside a single tool. This streamlined workflow can dramatically improve employee productivity and increase customer satisfaction, saving banks significant time and money.

3. Slow Account Opening Procedures

Onboarding new customers as quickly as possible has many benefits for banks and credit unions. If done efficiently, customers and members can start depositing funds, and buy financial products faster.

Problems occur when the onboarding process isn’t automated. Customers are no longer willing to wait for employees to find documents or make decisions about loan approvals or account openings. As a result, banks and credit unions risk losing customers to inefficient, outdated processes.

Digitizing and automating key tasks decreases the time taken across the entire onboarding process:

• Automation ensures that data flows automatically and easily from one part of the process to the next.
• Automated alerts keep customers, approvers, and customer representatives informed at all stages of the process.
• Auto-approvals driven by Artificial Intelligence can make informed decisions automatically with low risk.

A more efficient onboarding process delivers happier customers, faster access to revenue streams, and reduced stress for employees.

Download the full “6 Critical Pain Points Banks Can Automate Now” HERE.

4. Risk Management for New Accounts

The privacy and security of information collected and stored by financial services providers is of the highest priority. Digital files are subject to numerous regulations, including Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines, GLBA for privacy, Sarbanes Oxley, and many more depending on the type of account, geography, and type of institution.

Most banks use enterprise content management (ECM) systems (connected to or part of their core banking system) to maintain and control documents. These systems fall short in many areas.

Banks must define and maintain strict governance processes and dedicate ongoing resources to manage this data over time. Failure to do so can lead to big fines, loss of income through negative customer and market perception, and significant levels of business disruption for even the most minor incident or data breach.

 Learn how to use Intelligent Document Processing to control new accounts risk management HERE.

5. The Bottleneck of Distributed Paper Processes

Many retail banking institutions operate using a branch model, where local branches interact with customers face-to-face. In this model, customers fill out paperwork on-site at a branch office. In the modern world, this process is failing badly:

• 60% of companies still receive faxes into their mailrooms
• 76% say some inbound mail is incorrectly allocated
• 30% believe mishandled mail has a negative impact on their performance or reputation

Currently, only 7% of banks can handle loan products digitally from end to end. But cloud-enabled automation connects distributed branches to central processing offices, ensuring that all incoming documents end up in the same place and follow exactly the same processes. Ditching paper and putting all processes in the cloud delivers significant benefits on multiple fronts – to learn more read our ebook here.

6. Inability to Find Documents Quickly

As banks and credit unions grow, so do the volumes of information and documents they have to manage. This leads to several challenges:

• The step-by-step progress of documents from department to department slows down the process of opening an account or taking out a loan
• It isn’t fast or easy to reference existing documents during the decision-making process
• Once a loan or account is approved, the associated documents must be accessible and made available upon request

To add to the headache of searching for documents, manual processes result in inconsistencies in classifying and tagging documents, making search and retrieval even more time-consuming and inefficient. The reality is that manual tagging is time-consuming, laborious for the end-user, and prone to errors. Documents must be readily accessible. Without automation, that generally doesn’t happen.

Intelligent document processing provides an antidote to this ailment. IDP uses tools like machine vision and natural language processing to understand the context of a document, which tags make the most sense, and how they fit within various corporate taxonomies (or tagging schemas). In other words, figuring (automatically) where documents should live and how they can be searched.

Intelligent automated tagging classifies documents with the correct metadata so that employees can easily find information across multiple systems and departments. Automated tagging reduces labor costs, strengthens data integrity, and removes tedious and time-consuming employee tasks.

Next Steps

The financial services industry is changing at an ever-accelerated rate because innovation is empowering startups and disruptors to win business from traditional financial institutions. Banking and credit union leaders must look to digital automation if they want to optimize their loan origination process, reduce manual and paper-based tasks, minimize compliance and privacy risk, and increase customer satisfaction.

Automation may seem complex, expensive, and fraught with risk. But cloud-based solutions have changed the equation. The real challenge banks and credit unions face is determining when to start their automation journey.

Let’s make that an easy decision. You need to start now.

To learn more about the 6 pain points that can be automated now, click here.