Making sense of automation in financial services: PwC

Automation in the banking industry QuickLook blog Deloitte US

automation banking industry

For example, they enable the launch of entirely new business models in a matter of months. APIs also give partners access to banking services (such as loans or accounts) to develop complementary products, which increases the bank’s reach and effectively opens up a new distribution channel. To track how perspectives have changed, we conducted a survey of IT executives at leading banks in June 2022 and compared the results with findings from our 2019 and 2020 surveys. Our analysis explores how banks are building their API capabilities along the dimensions of strategy, operating models, technology, and people.

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RPA tools and software have the ability to mimic human abilities and actions to perform repetitive tasks quickly and accurately. We encourage technology leaders in banking and financial services to reap their full potential. With accelerated AI deployment utilizing NVIDIA and VMware, banks, insurers and asset managers can reduce their costs using technologies such as conversational AI, robotic automation banking industry process automation (RPA), and recommendation systems to automate manually intensive tasks. AI and computer vision enable a financial services application to “read” a digitized document, such as a loan or mortgage, and automatically analyze its content. Leaders are building enterprise AI platforms because they understand the significant impact it will make on their organization.

How AI Is Powering Modern Banking Transformation

An operating model that is fit for scale-up is cross-functional and aligns accountabilities and responsibilities between delivery and business teams. Cross-functional teams bring coherence and transparency to implementation, by putting product teams closer to businesses and ensuring that use cases meet specific business outcomes. Processes such as funding, staffing, procurement, and risk management get rewired to facilitate speed, scale, and flexibility. Just as the smartphone catalyzed an entire ecosystem of businesses and business models, gen AI is making relevant the full range of advanced analytics capabilities and applications.

  • The back and middle offices of investmentbanking and all other financial services for that matter could also benefit from AI.
  • Second, we employed the Leximancer software to supplement the manual classification process.
  • In the future, RPA platforms will move to UI centric automation and the end customer will provide the input at the processor level, unlike the current situation where the operations are dependent on the developer and not the actual user.
  • The use of these two approaches provides additional validity and quality to the research findings.

The opinions expressed in QuickLook are those of the authors and do not necessarily reflect the views of Deloitte. Since their modest beginnings as cash-dispensing services, ATMs have evolved with the times. Today, customers want to be met, courted and fulfilled through any organization that wants to establish a relationship with them. They also expect to be consulted, spoken to and befriended in times, places and situations of their choice.

Mortgage Loan

Several business management processes within the banks have benefited tremendously from banking automation. As the name suggests, it is a scientific field of computer science that is rapidly emerging. RPA uses software or software robots to perform various tasks like automating transaction, processing data, communicating with systems, perform huge calculations, and problem-solving. Many industries are exploring the potential of this technology in order to simplify jobs, reduce human efforts, increase productivity and efficiency, and perform time-consuming jobs faster.

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These technologies require little investment, are adopted with minimal disruption, require no human intervention once deployed, and are beneficial throughout the organization from the C-suite to customer service. And with technology fundamentally changing the financial and consumer ecosystems, there has never been a better time to take the next step in digital acceleration. In another example, the Australia and New Zealand Banking Group deployed robotic process automation (RPA) at scale and is now seeing annual cost savings of over 30 percent in certain functions.

Best Practices For Leveraging Automation In Banking M&As

Fraud detection, enhanced customer service, and personalized recommendations are a few of many powerful applications for AI-powered banks. Now, the priority has shifted to move smaller-scale AI projects from R&D to enterprise-ready deployment. Regarding processes, AI and credit is one of the areas that has been extensively explored since 2005 (Bhatore et al., 2020). We recommend expanding beyond the currently proposed models and challenging the underlying assumptions by exploring new aspects of risks presented with the introduction of AI technologies. In addition, we recommend the use of more practical case studies to validate new and existing models. Additionally, the growth of AI has evoked further exploration of how internal processes can be improved (Akerkar, 2019).

While smartphones took many years to move banking to a more digital destination—consider that mobile banking only recently overtook the web as the primary customer engagement channel in the United States6Based on Finalta by McKinsey analysis, 2023. Goldman Sachs, for example, is reportedly using an AI-based tool to automate test generation, which had been a manual, highly labor-intensive process.7Isabelle Bousquette, “Goldman Sachs CIO tests generative AI,” Wall Street Journal, May 2, 2023. And Citigroup recently used gen AI to assess the impact of new US capital rules.8Katherine Doherty, “Citi used generative AI to read 1,089 pages of new capital rules,” Bloomberg, October 27, 2023. For slower-moving organizations, such rapid change could stress their operating models.

In the right hands, automation technology can be the most affordable but beneficial investment you ever make. Once you’ve successfully implemented a new automation service, it’s essential to evaluate the entire implementation. Decide what worked well, which ideas didn’t perform as well as you hoped, and look for ways to improve future banking automation implementation strategies. Traditional software programs often include several limitations, making it difficult to scale and adapt as the business grows. For example, professionals once spent hours sourcing and scanning documents necessary to spot market trends. Today, multiple use cases have demonstrated how banking automation and document AI remove these barriers.

automation banking industry

McKinsey sees a second wave of automation and AI emerging in the next few years, in which machines will do up to 10 to 25 percent of work across bank functions, increasing capacity and freeing employees to focus on higher-value tasks and projects. To capture this opportunity, banks must take a strategic, rather than tactical, approach. In some cases, they will need to design new processes that are optimized for automated/AI work, rather than for people, and couple specialized domain expertise from vendors with in-house capabilities to automate and bolt in a new way of working. There are clear success stories (see sidebar “Automation in financial services”), but many banks face sobering challenges. Some have installed hundreds of bots—software programs that automate repeated tasks—with very little to show in terms of efficiency and effectiveness.