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MANUAL PROCESSES FULLY OPTIMISED? YOU’RE PRIMED FOR AUTOMATION

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– By Chris Huff, Chief Strategy Officer, Kofax

 

Imagine this: You’re a bank with a very detailed and precisely executed loan origination process. Since it’s fully optimised and running smoothly, should it be on top of your list for automation? Is there room for improvement?

 

Many businesses scan their organisations and wonder which processes among many are the most appealing candidates for automation. The answer may surprise you. While you might believe the big wins are in fixing inefficient processes, the most immediate gains actually come from applying robotic process automation and intelligent automation to prioritised, well-defined and well-executed processes.

 

Chris Huff

50% of Processes Ready for Automation

 

Many executives might be surprised at how prevalent optimised processes are within their organisation. According to the first-ever Intelligent Automation benchmarking survey conducted by Forbes Insight and Kofax, most companies say their processes are prioritised and well-executed. Almost one-third claimed that all of their processes were optimised to achieve their goals, while another half said that most were optimised.

 

The McKinsey Institute has even pegged the amount of menial work ripe for automation at 50%. And yet, Max Cheprasov, Chief Automation Officer at Dentsu Aegis, says he believes 75% of his firm’s rote tasks are candidates.

 

These observations align with findings in our survey. There is a broad opportunity for intelligent automation within the enterprise. More than three-quarters of survey respondents said that 60% or more of process work could be automated, and almost one in five said that 80% or more could be automated.

 

This shouldn’t come as a surprise. After all, there are usually multiple, complex, legacy processes supporting just about every business objective. Some are simple – such as filing new customer orders or setting up invoices – while others are more complex, like loan originations.

 

The Upside of Automation

 Although many organisations have optimised their processes through experience, research and/or trial and error, there may still lie opportunity to realise further improvement via automation. The next wave of productivity lies in leveraging intelligent automation to converge the digital (automation) and physical workforces into a collaboratively run machine to ‘work like tomorrow’. Companies that ‘work like tomorrow’ realise benefits such as enhanced service levels, reduced operational costs and increased productivity as a byproduct of leveraging automation to increase organisational capacity and empower the physical workforce.

 

Organisations stand to gain in numerous ways from applying RPA and intelligent automation to repetitive, manual tasks. These technologies eliminate errors, cut processing times by half, deliver 100% accuracy, and increase capacity by as much as 50%. Perhaps even more importantly, automation relieves employees of tedious tasks and enables them to focus on value-added activities that require a human touch.

 

Further, using automation to improve the quality of products and services has a direct effect on the bottom line. In banks, for instance, the loan application process mentioned above is usually highly defined. When financial institutions deploy robots to handle tasks such as assessing property valuation and consumer data, they reduce processing time.

 

That’s exactly the experience Western Australia’s P&N Bank had when it put bots to work in the home loan process. Two bots extract required lending data and order valuation reports. Another two assess the information, upload it to the bank’s core lending platform and progress the deal. The result? The bank now processes its annual lending volumes with 11% less human effort.

 

When forward-thinking organisations such as P&N Bank harness the power of intelligent automation operationally and strategically, they deliver higher customer and employee satisfaction and competitive differentiation. These outcomes aren’t simply good talking points. They lead to real, tangible benefits, including higher revenue and deeper profit margins.

 

Where to Start?

The first step toward automation is to identify processes that are the strongest candidates for RPA and intelligent automation. According to the benchmark survey, the five most frequently automated processes were quality control (43% of executives), technology enhancement (42%), financial transactions/reporting (35%), customer experience (32%), and delivery of products and services (32%). Thus, it makes sense to start your evaluation in these areas.

 

Further, most executives said their processes were executed in a precise and consistent manner. In fact, 68% indicated that their process execution is either somewhat or very detailed, and 75% remarked that their processes are either consistently or very consistently executed. These findings indicate that – similar to these organisations – you’re likely to discover dozens of processes in the above areas that are excellent candidates for RPA and intelligent automation.

Once business users have strategically identified how and where to apply these technologies, they can take steps to prioritise which to automate first. This is the next wave of productivity, and organisations that move quickly to embrace RPA and intelligent automation across their optimised processes will set themselves up for competitive advantage and success in the digital age. The time to work like tomorrow is here.

 

 

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Finance

WHY SUBSCRIPTIONS ARE KEY TO THE FUTURE OF THE FINANCIAL SERVICES SECTOR

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Michael Mansard, Principal Director – Subscription Strategy at  Zuora

 

The business world is wondering: what does post-pandemic growth look like?

A phenomenon known as the “Subscription Economy” might give us a clue. This term describes a new business model where customers pay a recurring fee at regular intervals — weekly, monthly, yearly, or just based on a customer’s usage — to access a product or service.

Unlike the more well-known “Product Economy”, which relies on one-off transactions, subscription business models are built around generating stronger lifetime customer value.

For the financial services sector, this could mean more opportunities to upsell and cross sell services to customers, helping to reduce customer churn and to unlock new revenue streams.  Amid a decade of challenging regulatory frameworks, a wave of digital disruptors, failure to pivot business models accordingly could spell the end for many businesses operating within the financial services industry.

 

Signing up to the Subscription Economy

The subscription economy is just getting started, and use cases are likely to continue evolving as the technology develops to meet demand. During the COVID-19 lockdowns, many digital-based subscription business models fared well due to their promise of convenience and strong business continuity. Research from our recent Subscription Economy Index has shown that companies that embraced subscription-based models grew at 400% on average over the last 8.5 years, outpacing S&P 500 revenues by almost 6x during the pandemic last year.

One of the recurring success factors for these organisations across the board is personalisation – those that embrace customer-centric business practices prevail over those that don’t.

Tailoring a product or service to a customer’s needs in a time of immense change is a sure-fire way to gain loyalty and win over those who previously favoured more traditional financial organisations.

Subscriptions also help cast a wider net to expand an organisation’s addressable market. Financial services companies can expand their addressable market by making their products and services more affordable, not necessarily by reducing the overall cost, but by allowing customers to spread their payments over a longer time period. Given their ability to grow user bases, subscriptions can boost revenue growth in the long run.

 

Accelerating digital transformation with subscription services

Though the transition to the Subscription Economy is still in its infancy for the financial services industry, we are seeing significant traction from organisations in this area, outlined in our recent whitepaper, A new formula for growth for The Financial Services Industry (FSI).

Multinational wealth management and financial advisory company, Charles Schwab, for instance, shifted to the subscription model on just one of their product lines. Charles Schwab automated investing to build and manage clients’ portfolios for $30/ month fee for accounts with at least $25,000, and in doing so brought in $1B in new client assets, primarily from younger investors.

Financial services company Wells Fargo took a slightly different approach, leveraging subscription services to develop a hybrid digital advice platform. The service provides access to both a robo-advisor and human advisor through an annual subscription model which was recently lowered to 0.35%, with the aim to attract more mass and emerging affluent clients taking their first steps into investing.

Insurance provider Metromile, on the other hand, used their subscription model to offer pay-per-mile car insurance through its driving app, basing pricing on usage in addition to a monthly base rate. Metromile claims that the service allows its customers to save on average $741/year.

Meanwhile, in the B2B space, Serai (by HSBC) leverages HSBC’s trade banking client network, connecting buyers and sellers around the world and helping them to simplify the complexities of international trade. For “high touch” B2B offerings, the sales force is a crucial building block of sales strategy.

Since most established FSI players are using the same operating models they’ve used for decades, a shift to a completely new approach can seem daunting. Industry transformations are never fast, and never easy. But the good news is that financial services companies don’t have to dive in and completely change their business model to reap the benefits: new revenue streams, churn reduction, upsell and cross-sell to name a few.

Transitioning to the Subscription Economy can be an iterative, try-and-learn approach. That said, in a time of upheaval and rapid industry changes, financial services companies can’t afford to ponder the relative merits of the Subscription Economy for their business. Industry leaders need to be asking not if, but how they can adopt subscription models to position their organisation for growth and success.

 

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Technology

THE FINTECH REVOLUTION: BALANCING INNOVATION AND SECURITY

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By Altaz Valani, Director of Insights Research at Security Compass.

At a time of significant disruption for the financial services industry, a sector forecasted to be worth $300bn by 2022, organisations are facing important decisions when it comes to digital transformation.

Among ever growing customer expectations and the need to comply with changes in the regulatory landscape, fintech companies are under increasing pressure to ensure innovation is properly implemented.

Failure to do so comes with a significant cost; that of security breaches and exposure to new vulnerabilities. From AI and biometric authentication to Robotic Process Automation, the growing adoption of technology among the financial services industry is intensifying the volume of customer data at risk.

Internal and external threats

To mange this risk carries both internal and external challenges for fintechs. Internally, the main challenges are centred around cyber skills, knowledge and expertise; externally, coordination with regulation is demanding.

Balancing an ever-increasing appetite for innovation and growth with robust security and risk management processes is absolutely crucial. Cyber threats continue to grow and diversify, and every new digital product and service carries an ever-evolving array of security risks.

Solving the cloud puzzle

Historically, due to the perceived value of the information held, the financial services industry is one of the primary targets for data breaches. This is why many financial services organisations have turned to the cloud as a solution for their IT infrastructure.

However, migrating to the cloud increases the attack surface of applications. That is why the importance of meeting security and compliance requirements cannot be overlooked in the rush for deploying new apps directly in the cloud or developing analytics-as-a-service or automation-as-a-service capabilities.

Strategically aligning digital delivery and security is one of the most complex challenges facing financial service businesses, and so many are turning their attention to Balanced Development Automation (BDA).

BDA: Aligning DevOps with security

To ensure success and competitive edge in the long run, fintechs need to create synergies between their DevOps, security, and business teams. This is where BDA comes in because it aligns DevOps with security, ensuring the latter is “baked” into the software development process. It acts as a guide through every step of software development, ensuring that security checks are built into the process from the beginning, and ultimately enabling DevOps teams to deliver secure products.

Consider it a three-step process:

1) Security should equip the development team with awareness of what is required from a security controls perspective. The same goes for risk and compliance. Developers need to know from the outset what these parameters are and factor them into their work from the get-go.

2) The next stage is examination of security metrics based on existing controls and emerging risks. The result of this might be the creation of new controls, but they have to be developed with an understanding of impact based on cost and business exposure. Ultimately, it is a business decision to determine the right risk threshold.

3) The third and final stage of the BDA process lies with governance at an audit and board level. Metrics collected from the first two stages are rolled into this and KPIs measured at this level are based on core business concerns around compliance, resilience, reputation, cost, and so on.

Balancing innovation with security

Ultimately, the success or failure of the fintechs of today can hinge on how they balance the adoption of new technologies with maintaining the privacy of their customers and the security of their customers’ data. This is a delicate balance, and one which requires action from the very start to identify and address risks.

Building security into applications from the very beginning of the software development lifecycle enables financial services companies to align security, compliance and risk priorities with business needs. This is ultimately a recipe for success.

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