Will the new year see an economic slowdown and crisis as has been prophesied, or is the economy about to grow instead? It will be some time before we find out, and this year’s main tech trends offer technologies that can help banks to prepare for both scenarios at the same time.
News and rumours are coming from around the globe about a planetary economic slowdown, while opponents say that the growth is bound to continue for another couple of years. Both sides may find a single solution: productivity, efficiency and effectiveness improvement. Technology-driven productivity growth is now generally accepted as the main trend for the coming years. Productivity improvement should be viewed at two levels. The first level aims at more efficient sales and hence higher income, while the second focuses on costs, including company operations, processes, front office and back office.
New technologies help to sell even more and still not increase back office and front office staffing levels. Up-to-date technologies enable fully automated sales of banking products through online channels, free of any human intervention. (The only situation when a manual intervention is required is when a client fails to complete a process online and the process has to be taken to a branch and completed with traditional methods.) Examples of the tech implementations include the account opening and consumer loan selling solutions running now in banks such as Česká spořitelna and ČSOB. The solutions are based on a number of tried-and-tested technologies contained in the Impresto platform delivered by Trask jointly with EY.
Online Distribution Through Partners
Online sales through partners are another potential step towards sales efficiency improvement. Digitalisation of products opens up an opportunity to sell online, using various partners. Trask’s solution for Unicredit Bank is an example. By activating API-based distribution channels and engaging partners, the so-called network effect can be achieved, with sales growing at a higher-than-linear pace while the bank is not required to enhance its personnel capacity at the same pace. Online distribution can totally eliminate paper documents and allows for full automation of processes. Examples include using e-shop payment methods to sell loans or using financial consultants’ tablets to open accounts online.
Banks and IoT
It has been noticed that API-based sales have opened up opportunities to access clients in situations of life that were inaccessible to banks before. IoT (Internet of Things) technologies are still largely undervalued in this respect, even though banks too can explore data and impulses from connected smart devices without actually owning such a device: API and real-time events enable a bank to be present, with the assistance from its partners, at the so-called “business moments” of a client. Examples include partnerships between banks and insurance companies with their IoT insight into clients’ homes, partnerships with car manufacturers and their mobility ecosystems (connected cars, as well as services attached to the shared economy, operational leasings, etc.), or smart grid services of energy companies. IoT is expected to become, in the future, an important channel for banks to acquire, and interact with, clients.
Efficient Sales and Back-Office Processes
Even the efficiency of the traditional banking products selling processes can be significantly improved. Processing automation is one possible way, smart optimisation based on the newly available data and on the capability to work with such data is another.
Trask has prepared a concept of a fully paperless bank branch and we are currently discussing it with an interested bank. A fully paperless branch will comprise a series of automated processes, saving time to people in branches, middle office and back office. Still, it will be a full-scale bank branch, not a shopping-centre kiosk. It is feasible because many of the technologies that now serve online product sales are fit for implementation in a bank branch as well.
Automation means robotisation, but not only that — by the way, people tend to expect more from the latter than it is capable of delivering (especially in a longer perspective). The past few years have witnessed new features added to the traditional automation technologies such as business process management, rule engine, integration and event processing. Even entire tasks that were done manually until very recently are apt for automation. Many decision-making processes can be automated because of the larger volumes of data available. Another example is automated processing of client IDs (online and at branches), capture and processing of documents such as notarial requests, financial balance sheets, tax returns and loan contracts, all that feasible thanks to artificial intelligence and NLP (Natural Language Processing, i.e. understanding documents that contain unstructured natural language data). Capture of data from digital sources through an API has eliminated the need to submit documents for subsequent manual processing (e.g. account statements, proofs of income, property valuation, identity verification, scoring inputs such as the economic profile of a client, and many documents from corporate clients, such as the above-mentioned financial balance sheets).
Procedural Data Analysis
Even efficiency improvement needs to be efficient. With that in mind, the first step on the way to efficiency improvement must be a thorough analysis to reveal sources of inefficiency and, most importantly, to identify the improvement potential correctly — it goes without saying that hard numbers and data should be used, not feelings. Now, this is where automated process discovery technologies come in. They work with automated discovery and reconstruction of bank processes from the electronic trail each user leaves behind. An automated analysis of such data enables reconstruction, analysis and simulation of how processes work in each specific case. Then, a map can be generated of the real course of each process. Processes can be optimised before their automation begins and bottlenecks can be identified in processes that have been already automated. What matters most is that a process can be analysed and optimised in a fraction of the time and for a fraction of the price that the traditional analytical methods would inevitably “swallow”.
After years of focus on innovation, attention is now turning back towards more pragmatic aspects of productivity, effectiveness and efficiency improvement. Many new technologies are at hand, though it is not a good idea to adopt them mechanically. One needs to search and assess which technology will pay off and where. Sift through segment after segment, product after product, process after process, look for where you can move forward, what can be improved, changed or replaced, where to optimise the costs side and the income side. You will discover where and how to do things to make sure that regardless of whether the future is bright, or grim, your bank will be prepared to take up the opportunities and will not be hindered by, say, a lack of its back office flexible scalability.
It remains to be seen which course the Czech business and banking industry are about to take in the new year and which trends are about to prevail. Trask will follow the trends very closely and our corporate magazine Innovator will be here to let you know what is new. Or you may like to read our articles in the next issues of the Bankovnictví magazine.