Chris Porter, CEO, NexBotix
There is perhaps no better example of the way in which digital technology has transformed an industry than in the financial services sector. The rise of technology-led challenger brands has forced the well-established financial powerhouses to invest heavily to ensure their products and services meet the demands of a world in which the cheque book and bank branch are fast becoming historical relics.
While the speed of digital transformation has been steadily increasing in pace over the last decade, events of the past year have only served to accelerate the process. Financial services firms have, in parallel with many other sectors, quickly adjusted to the realities of the pandemic – lockdown-dominated populations whose only connections to external services have been electronically driven. As companies have adjusted to the ‘new normal’, they have hurriedly explored ways in which to streamline processes, harness data or shape entirely new ways of doing business.
2020 saw an acceleration in the pace of adoption of digital transformation technologies, particularly in response to the growing consumer use of on-line channels. A survey by McKinsey found that globally, about 55% of products and/or services were fully or partially digitised as of July 2020, compared to 35% in December 2019 and 28% in May 2018.
The findings are supported by those of the latest World Retail Banking Report, which emphasised the extent to which the global pandemic has generated more consumer demand for digital. Over half (57%) of consumers now prefer internet banking, up from 49% pre-COVID-19, and 55% preferring banking mobile apps, compared with 47% previously. Investment in digital transformation to enhance customer experience and drive revenue growth has never been more important.
A major asset in the transformation process has been automation. According to a survey by Deloitte, 68% of execs have used automation to directly address COVID-19 related problems. The finding is supported by McKinsey, which found that nearly half of 800 executives surveyed have accelerated the adoption of automation “moderately” during the pandemic, and roughly 20% reported “significantly increasing” automation.
Robotic-process automation (RPA) has enjoyed glowing headlines in recent years. The software is capable of handling high volume requests and repetitive tasks, enabling organisations to improve processes and reduce costs while freeing up employees for high value tasks. RPA’s ability to enhance the workflow for time-consuming, high-volume & repeatable tasks means it has been of particular benefit to sectors such as financial services and healthcare.
One of the most commonly reported problems with RPA is scaling, primarily because RPA can only handle structured, rule-based digital processes. Most modern businesses – especially within the finance sector – are full of unstructured data and judgement-based work. As a result, customers exploring how automation can aid transformation are hitting a wall – RPA is failing to deliver on its promised benefits.
Step forward Intelligent Automation (IA) – a combination of artificial intelligence and automation, which is changing the way organisations function in almost every sector.
What is ‘Intelligent Automation’?
Intelligent Automation is a term used to describe a group of technologies – including RPA, Artificial Intelligence, machine learning and analytics – that are integrated with each other to automate more complex business processes. On their own, these technologies deliver limited value. When combined, they can unlock significant value and transform the way businesses operate.
Once a process is automated, employees are free to work on more valuable tasks such as revenue generating activities or focusing on work where human judgement is required. Using extra capacity to review a larger sample of cases that have been prepared by the robots can drive increased compliance, reduced risk, reduced error rates, faster resolution times and increased CSAT scores as well as a healthier bottom line.
Intelligent Automation can be used to underpin broader transformation in business by extending the value of legacy IT systems and providing an orchestration layer between human operations and IT centric business processes. Once a business is no longer held hostage by legacy systems, true transformation can take place by focusing on business outcomes rather than operating around the constraints of existing systems.
How financial services firms can harness the benefits of Intelligent Automation
Demand for Intelligent Automation within financial services has increased significantly. Understanding which business processes to automate and the type of automation to deploy, or even the extent to which automation can help the organisation, can be challenging without the right expertise. Financial services firms would be wise to consider choosing an external Intelligent Automation specialist which is able to identify the best candidates for automation and provide ongoing Managed Services to make sure the automation solution is efficiently implemented and scaled to meet the demands of the organisation.
The most popular use cases for Intelligent Automation in the financial services sector include:
- Customer Engagement: Consumer demand for efficient and real-time services are driving the need to take an automation-first approach. With increasing volumes of data and emerging channels for accessing such data, market and customer analysis are becoming increasingly important to ensure that the industry is better at driving exceptional customer service. Intelligent Automation and data analytics combined are a powerful way in which organisations can access, analyse and leverage extensive resources (customer databases, social media, etc.) to design financial product tailored to needs and individual requirements.
- Compliance management and productivity: a critical business function within financial services. However, current business processes often result in large compliance backlogs due to the manual effort and archaic approaches for managing organisational compliance requirements. Intelligent Automation provides a smarter way of working by automating these repetitive and mundane processes (such as data entry between spreadsheets and systems, analysis and reporting), and empowers the human workforce to spend their time and effort on more value-added tasks.
- Accounting: a paramount requirement within financial services is for strictly accurate and efficient management of those carrying out critical tasks such as accounts reconciliation or preparation of financial statements and reports. Intelligent Automation is being adopted to support the recognised need for process improvement and optimisation, and to eliminate the time-consuming, repetitive and rule-based tasks from the human workforce.
There is no doubt that financial services firms which have already begun their Intelligent Automation journeys have a clear competitive advantage over their peers. The ability to pivot faster and allocate resources where they are needed the most has been crucial in the current commercial environment, and will be increasingly important as we move into what we all hope is the post-pandemic world.
FINANCIAL INCLUSION WITHIN DIGITAL PAYMENTS
NICK FISHER, GENERAL MANAGER, SALES AND MARKETING UK, JCB INTERNATIONAL (EUROPE) LTD.
The shift towards an economy that removes physical cash has long been on the horizon in many regions. Sweden is an example of a country rapidly heading this way. Two years ago, just 1% of Sweden’s GDP was circulating in cash compared to 11% in the Eurozone, and research by the Swedish Retail and Wholesale Council showed half of the nation’s retailers saying that they probably would not accept cash after 2025.
In 2019 in the UK, cash payments decreased by 15%, although physical money was still the second most frequently used method comprising of 23% of all payments. The Financial Inclusion Commission in the UK states that there are over 1 million people that do not have a bank account, and the World Bank estimates that there are some 1.7 billion adults globally that still lack access to a bank account.
The finance industry has collaborated over the years to develop various credit products for affluent communities. These customers are considered a lower risk. However, institutions should continue to prioritise the advancement of services to serve an audience which remains – ‘unbanked’. Research by EY showed that financial inclusion could improve GDP by up to 14% in more rural, developing economies like India, and by 30% in frontier markets like Kenya. While the positive reasons for fully embracing digital payments and eliminating physical cash are plentiful, including lower payment processing costs for the retailer and customer convenience, physical cash provides the ‘unbanked’ with the ability to function day-to-day with a legal tender.
To establish digital solutions for the unbanked, payment players should adopt an inclusive mindset. The race towards a digital cash society will naturally get closer to the finish line with the passing of each generation, but governments could lend a hand to the unbanked by encouraging financial institutions to sponsor organisations that provide legal quasi digital cash products. In my opinion, the financial industry has an important part to play in developing low cost solutions to support the unbanked with authentication tools – such as biometrics and risk tools to manage real-time credit risk reporting with anywhere accessibility.
In both developing and developed countries, QR codes can play a superhero role as they offer simple, low-cost ways of processing payments on basic mobile phones. In June last year, we collaborated with FIS to enable cross-border QR codes in the APAC region. The ‘Worldpay from FIS 2020 Global Payments Report’ found that digital wallets, at the time, accounted for 58 % of regional ecommerce purchases and were expected to reach almost 70 % percent by 2023.
In developed regions, we are issued with a formal identification when we are born, no matter our circumstances, and this comes in the form of a birth certificate or, later in life, a passport. This does not always happen in developing countries as resources are often limited. Yet, advances in biometric technologies, such as fingerprint or palm vein may offer a solution to the requirement for proof of identity to open a bank account or to create a mobile wallet. Biometric organisations, payment leaders and innovators, such as Google Pay and Apple Pay, have partnered to make this a reality, despite the initial cost implications for development.
In summary, understanding the reasons for why some prefer physical cash, and others prefer digital cash, provides holistic learnings to achieve a society that ultimately uses digital cash only. Empathy is paramount for building customer-centric commerce. For me, at least, a world without physical cash cannot be considered responsible, or fair, until everyone can be accommodated.
THE EFFECTS OF JOB HOPPING ON YOUR RETIREMENT OUTCOME
By Neli Mbara, Certified Financial Planner at Alexander Forbes
Job hopping – defined as spending less than two years in one position – is a very controversial subject. It can be an easy path to a higher salary but can also be a red flag to prospective employers, not to mention your future financial goals if you are cashing in your retirement fund every time you make a move.
When changing jobs, whether it be once a year or once every decade, one has to make decisions regarding career growth and retirement plans which affect one’s long term financial plans. One of these decisions is ‘what to do with my retirement fund?’
For many people, the first thing that comes to mind is using their pension money to pay off their debt. Alexander Forbes Member Watch statistics show that 91% of members do not preserve their retirement savings when changing jobs. As we are living in times where most household income is used to finance debt, most people use job hopping to gain access to their retirement funds, and use this money to pay off debt. However, a quick fix and instant gratification comes at a price, which in this case could be a delay in your retirement plan.
Your retirement savings are simply for that, your retirement, to pay you an income once you stop working.
Early access of your retirement fund can result in:
- Not having enough money at retirement – this is simply because most of us are already not saving enough for retirement
- Robbing yourself off the compound interest you could have potentially earned from the investment.
- Never making make up for the lost benefit
- Creating a bad habit that will delay you from achieving your retirement plan and desired income at retirement
It is easy to cash in your money from a retirement fund at resignation but it is much harder to make up for the lost benefit (capital cashed in plus interest). Calculations show that for you to make up the lost benefit depending on your retirement age and investment time horizon, you will likely need to invest more than double your contributions towards a retirement fund.
Since only 6% of the South African population are reported to have accumulated enough to retire comfortably, without having to sacrifice their standard of living, you will most likely have to invest much more towards your retirement fund to make up for the lost savings.
Therefore, leaving your retirement fund invested and preserved in a preservation fund is the recommended option when changing jobs, as this keeps you committed to your retirement plan.
Changing jobs is a life-changing event, and it is therefore important that you seek advice from a professional financial adviser who will guide you in your retirement planning ensuring that your retirement needs are taken care of, by providing solutions that help you to ensure your financial wellbeing.
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