By Asheesh Mehra, Co-Founder and CEO, AntWorks
Financial services are on the cusp of evolving thanks to new automation technologies. Most financial services companies will need to use the most advanced automation that exists in order to efficiently ingest, process and organise the documents they work with most frequently. The reports, email and text files that are primarily used by Banking, Financial Services and Insurance (BFSI) businesses are considered ‘unstructured data.’ This refers to data where information is scrambled and not presented in a clear way, from videos, to images, audio files, text data and much more. Unstructured data is expected to make up 80 per cent of all the world’s business data by 2025, which means that BFSI companies will need automation solutions that can process unstructured data which will be clogging up the electronic pipelines in the next decade.
Robotic Processing Automation (RPA) isn’t going to cut it, as this type of automation can only process structured data, like inventory control, sales transactions, and ATM activity. RPA is also very task-based and can’t automate a business process from start to finish and requires human intervention. RPA isn’t AI.
So how can a BFSI enterprise prepare for the era of intelligent automation? To prepare accordingly, companies need to address which aspects of an entire business processes is most in need and can gain the most value from end-to-end automation, and then decide which technology solution will help them achieve their automation goals. It’s time for enterprises to move past RPA and implement intelligent Integrated Automation Platforms (IAPs) which provide a one-stop solution for data curation, and building, deploying, and managing AI-enabled digital workforces.
Innovate, don’t procrastinate
Despite 83 per cent of Chartered Institute of Management Accountants (CIMA) supporting automation in finance, only 43 per cent of finance executives admit that they need to innovate more. Companies are often reticent to innovate simply because they are skeptical about the real financial benefits and ROI of being the first mover to adopt technological solutions.
Financial services is an industry that is constantly under pressure to innovate. Take online banking for instance where UK citizens using online banking as their primary way of tracking spending increased dramatically from 47 per cent in 2012 to 73 per cent in 2019. With this sharp increase in the uptake a more digital service in such little time, banking firms have had to innovate quickly for fear of being left behind. By the end of 2014 there were 51 million contactless cards in circulation in the UK, but by 2017, there were close to 120 million – almost the equivalent of 2 cards per person. This signifies that BFSI can and will innovate when there’s a clear need for it. All this innovation has meant greater revenue opportunities for banks and has given rise to a new wave of challenger online banks becoming popular, like Monzo and Revolut.
Intelligent automation is expected to add US$512 billion in global revenue to the financial sector, but this can only be achieved when finance executives take the initiative to automate their processes with IAP.
As enterprises begin to embark on their AI journey, it’s imperative that employees are fully integrated into the process with employers simultaneously ascertaining which business processes need automating, and which employees will need reskilling and retraining to meet changing demands. With concerns mounting around automation replacing people’s jobs, it is the business’ responsibility to quell these fears. In fact, if done right, people shouldn’t be afraid of robotics and AI in the workplace, they should embrace it. AI has the power to enrich the employee experience—by removing the mundane and allowing people to focus on tasks that are more complex, creative, and require higher levels of decision making. It is up to leadership to invest in not just the technology but also in their talent.
Where do you need to automate?
Financial services and banking are industries where a huge variety of datasets exist. Customers still fill out paper forms to set up bank accounts, but they also use online services too. Banks are also managing customer service requests over the phone and via email. This means that employees in the BFSI sectors work with a huge variety of different types of data throughout their working days, meaning that several different departments can benefit from being automated with IAP.
The first key thing for companies to consider would be to identify which areas of the business are most reliant on unstructured data, and where the productivity lapses are with regards to processing this data.
With this in mind, enterprises need to be prepared and identify which processes requires automation. There are numerous departments in BFSI firms that deal primarily with unstructured data, including support teams, administration, fraud detection and among others. All of these departments can experience increase productivity in the digital workforce when adapting to IAP solutions.
Fraudsters are getting more sophisticated in gaining access to bank accounts and the banks need to always stay ahead of the latest technology in order manage customers’ expectations and safeguard assets. Automation which is built on fractal science can process both unstructured and structured data of all forms and help fraud detection teams ascertain whether a transaction is genuine or not by analysing all forms of a customer’s previous transactions that are recorded through unstructured and structured data. Giving customer assurances that their bank provide superior and automated fraud detection services, and providing further convenience for their employees will improve customer services by offering quicker and more efficient responses to enquiries or requests.
Remaining agile and competitive for the future
All industries have challenges ahead in terms of remaining competitive in their respective markets, especially in the UK where issues such as Brexit pose a threat to economic stability. More than a third of financial services firms have seen a 2 – 5 per cent increase in revenue from automation, and as more and more businesses realise the potential of intelligent automation, this figure will continue to rise.
Don’t procrastinate when it comes to innovation, but also be mindful about which type of solutions to adopt and how. As we move into the 2020s, companies need to seriously consider how automation will impact their businesses and make smart decisions about where to automate with IAP.
HOW TO MANAGE YOUR CASH FLOW IN UNCERTAIN TIMES
While the world is constantly changing, probably at a faster pace now than ever before, businesses need to manage cash flow and costs to drive success in uncertain times, says Matthew Thorpe, partner at Haines Watts Essex.
Managing people and expenses
There are certain costs that you just can’t avoid as a business – to keep your operation running seamlessly, but scrutinise the detail and cut down on any non-essential expenses. Check things like your SaaS subscriptions and look out for costs that auto-renew and if you do cancel, remember to also cancel your direct debits too.
You might want to put a freeze on hiring new people, but ensure that other roles and responsibilities are clearly and efficiently assigned across your team. The Coronavirus Job Retention Scheme (CJRS) has been introduced by the Government to help UK employers access support to continue paying part of their employees’ salary to avoid redundancies. Affected employees are classed as “furloughed workers”.
Once furloughed, the employee cannot work or they will not qualify for the scheme. For businesses that perhaps need to go further, there may be some roles they don’t need any more, but businesses should work sensitively with people to manage this.
Cash is king
In uncertain times, owner managers will need to keep operations going to ensure financial stability. You should look to manage debt more efficiently by negotiating extended payment terms with creditors. You could also renegotiate loans for longer repayment terms to give yourself a lower monthly payment, helping the business to set some cash aside each month.
As a business owner, you need to create a cash flow projection and update this regularly if you are to improve things. You can do this using financial information to create a picture of how the business will look in the next 12 months. The forecast needs to show revenue sources and expenses, which will show the ups and downs of business income and can be used to make sure that enough finance is in place.
While banks and other finance providers recognise that the cashflow of a business may be disrupted by the impact of Covid-19, they are still going to want to see that you are viable and continue to trade in these uncertain times. Make sure your business is organised and don’t let disorganisation cause unnecessary issues. You can evidence this by having detailed forecasts; current order books and projections (as best as possible).
Having instantly accessible, accurate financial information allows you to plan effectively, spot issues before they become problems and manage your money in the most efficient and rewarding way.
Software is now incredibly user-friendly and accessible from anywhere. For a business owner embracing the technology, this means:
- Invoicing can be done instantly when a job is complete, emailed to the customer with an easy to use link to a payment platform.
- Comparison websites can automatically monitor and help maintain lowest cost for things such as light & heat, insurance etc.
- Technology can be used in place of face-to-face meetings. It can also enable them to adapt production lines to different demands.
All of these things and more, used properly, can make managing your business finances quicker, easier and often cheaper. You will also be able to bring clarity to where your business stands and prepare for the next steps.
HOW FINANCIAL SERVICES CAN GET TO GRIPS WITH RISING SUPPLY CHAIN RISK
By Alex Saric, smart procurement expert, Ivalua
UK businesses have never been more dependent on their suppliers to help them deliver goods and services to their customers. Be it retail, manufacturing or financial services, suppliers have a vital role to play when it comes to innovation and meeting customer expectations. However, as supply chains become increasingly global, businesses are potentially exposing themselves to more risk than ever before.
This is especially true in financial services. Whether it’s the impact of geopolitical events like Brexit or global tariff wars, supply shortages, security or the businesses impact on the environment, an organisation’s failure to identify and mitigate risk could see millions wiped off its share price, and its corporate reputation left in tatters. Risk can present itself anywhere and at any time, so financial services firms must be ready to address it. However, many simply don’t have the ability to evaluate suppliers for risk factors, leaving them wide open to business operations being hindered, or being slapped with financial penalties.
More suppliers, increasing risk
One reason why financial services firms aren’t able to evaluate suppliers is the breadth and scale of today’s supply chains. For example, French oil company Total said in in a recent human rights briefing paper that they work with over 150,000 direct suppliers worldwide. This is just one example of how large and varied the roster of partners has become. Research from Ivalua has found that financial services businesses on average are working with around 3,600 suppliers annually, which is evenly split between UK-based and international partners. That number is expected to rise, with 60% expecting the number of suppliers they work with to rise.
The expanding nature of suppliers is only going to expose financial services firms to more potential risk than ever before, yet 78% say they face challenges gaining complete visibility into suppliers and their activities.
A lack of supplier visibility leaves businesses unable to identify and mitigate against supply chain risk. In fact, almost three-quarters (73%) of financial services firms have experienced some type of risk during the last 12 months. These include; supplier failure (43%), environmental impact, such as pollution or waste (35%) and supply shortages (45%). Supply shortages can be among the most damaging to a business, as seen by both the KFC chicken shortage which closed stores, and the summer 2018 CO2 shortage which caused companies such as Heineken and Coca-Cola to pause production, impacting supply across Europe during the World Cup.
Businesses unprepared for the worst
One way financial services firms can better prepare for risk is to ensure they know what to plan for to reduce the impact. However, whilst some say they have a contingency plan in place to deal with risk, many of them are unprepared. Financial services firms admitted to not having comprehensive and deployed contingency plans in place to prepare the supply chain for risk such as; natural disasters (68%), supply shortages (67%), geopolitical changes (65%), environmental impact (63%), supplier failure (62%) and modern slavery (50%).
In order to effectively prepare for these types of risks, it’s vital that financial services businesses fully understand their suppliers, their business environment, global variations in regulations, geopolitics, and a host of other factors. But for many, there are multiple challenges when it comes to gaining this understanding. A prevailing factor is an inability to gain visibility into all suppliers and activity because supplier management data is stored in multiple locations and formats, making insights difficult to access. This leaves teams unable to review supplier activity and assess compliance.
Making supplier management smarter
It’s imperative that financial services businesses are able to respond or prepare for supply chain risk. Clearly, much more needs to be done to ensure they have complete visibility of suppliers, especially in an era where regulators can levy heavy fines for GDPR breaches and scandals spread in minutes over social media. These types of risks can be reduced in the future if procurement teams have a 360-degree view of suppliers which will help with contingency planning and risk management.
For example, in the instance of supply shortages, plans could be put in place that identify alternative suppliers to ensure any shortages do not impact end users. This type of supplier collaboration is paramount when it comes to managing and mitigating against supplier shortages. When it comes to regulations, financial services firms can’t allow a lack of visibility to limit their ability to ensure all suppliers are compliant.
To do this, teams must take a smarter approach to procurement that gives complete visibility into suppliers throughout the supply chain. This will allow financial services firms to identify and plan for risk, reducing the potential damage, and ensuring they are working with and awarding business to low-risk suppliers. Supply chain risk is rapidly becoming an overarching concern for financial services firms, but by providing the ability to assess suppliers, they will have all the insights they need to mitigate the impact on business operations.
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