Did you know that recent studies have shown that, 4 out of 5 banking customers prefer to do their banking digitally, rather than in person and 89% now use online banking to manage their accounts? These findings and other similar finance industry statistics have been reported by researchers and analysts at leading US banks and business journals. This trend toward digital services is also being followed in the financial sector. Digital Process Automation (DPA) is the technology which more and more financial institutions are using to approach digitization. Read on to find out why and what criteria financial institutions should look out for when choosing a suitable tool.
Starting point: Don't fall behind competitors
Digital disruption exists at all levels of the financial sector. Banks, insurers, investment firms and asset managers alike are under pressure to provide digital services around the clock. Otherwise, they risk falling behind their competitors. A confusing market, new technologies and competitors, and ever-increasing consumer expectations are forcing financial institutions to drive major change.
Financial services providers often have to deliver new functionality through existing systems that were not originally designed for digital business. In addition, as much as 80 percent of data in corporations are unstructured. Processing this data is very labor-intensive and therefore costly.
Financial institutions can seize and use this challenge as an opportunity. To do so, they need to digitize and automate processes. The tool - Digital Process Automation. DPA helps to integrate and adapt business processes in an existing system landscape. This enables banks and insurers to adapt more quickly and flexibly to changing market requirements, make evidence-based decisions and focus even more strongly on the needs and wishes of their customers.
Example: ESG rating in the loan application process - solving challenging tasks.
Automation can, in many cases, solve challenging tasks faced by the financial industry. One example is the collection of data for an ESG rating in the loan application process. DPA can be called upon to determine the parameters for an ESG rating and retrieve them from various sources. Additional technologies such as Robotic Process Automation (RPA) or artificial intelligence (AI) can also be used. RPA is used to automatically retrieve data from existing systems or the web, while AI analyzes existing text documents, such as annual reports.
Digitalization in the financial sector promotes remote work
The Covid-19 pandemic has shown that finance employees also need to be able to do their jobs regardless of location. Digital transformation, including DPA and everything from data capture to e-signatures, is enabling employees in the financial sector to do just that. In addition, the issue of how to fund digital automation initiatives and solutions has become more prominent. As a result, it has become clear that the digital solution chosen should be quick to implement and applicable in as many places as possible. A digital solution than can seamlessly integrate RPA and AI is also very important. In addition, financial institutions also require that integration with Microsoft Office be as comprehensive as possible.
Simplifying customer interactions
Financial institutions use DPA to simplify customer interactions. For example, this is the case with complex lending applications. This is where customers are guided through the application steps with the help of DPA. DPA also helps coordinate and execute interactions that are not directly related to data collection. For example, involving tax advisors or archiving documents. This strengthens the institution’s market position in comparison to financial service providers that are less digital.
Financial institutions and customers benefit from digitization
Two business processes to start with
A classic example to start with is the loan application process, which is still not completely paperless at many financial institutions. There are numerous points where DPA can optimize this business process. From the automated collection of data from a wide variety of sources, to performing intelligent calculations (for example, for a preliminary credit rating), to digital signatures, virtually everything can be done digitally and automatically.
In the financial industry, internal as well as external approval processes are frequently found, such as the review and subsequent approval of accounts payable invoices. Since approvals often happen across departments, it is worthwhile to digitize and automate these processes and make them available more or less generically. As a sub-step of an overall process, approvals are also a standard component of automated processes.
Audit-proof - Criteria for a suitable DPA solution
The use of software for individual data processing (IDP) is increasingly becoming the focus of the Banking Regulatory Authority. At the same time, the degree of flexibility required by the departments to constantly meet new requirements is increasing. This increasingly puts banks in a quandary. As a result, more and more financial institutions are deciding to create new platforms that take over the tasks of existing IDVs. These platforms have to be flexible enough to meet the needs of the business units on the one hand and to fulfill compliance requirements on the other. DPA platforms deliver exactly this and in doing so not only help to replace IDV and provide audit-proof documentation, but also offer the additional option of further automating processes.
In addition to flexibility and auditability, those responsible in the financial sector should consider other criteria when selecting a suitable DPA solution. How important each of these features is for a particular financial institution must be considered on an individual basis. However, the following criteria can play a role in the selection:
- Providing low-code workflow and application development capabilities.
- An intuitive and visual interface that requires no technical knowledge to use
- Seamless integration of AI and RPA solutions
- System functionalities (digital signature, OCR, archiving, email connectivity, etc.)
- Integrated data management
- Integrated functionality regarding identity & access management
- Easy implementation of multi-language functionality
- Universal programming Language
Digitization can help the financial sector to reduce costs, optimize processes, provide better service quality, and free up human resources. In this context, DPA has the ability to act as a cornerstone of digital transformation for banks. As a result, leading companies are now focusing on digitizing their operations with DPA - both in terms of how they meet customer requirements and when introducing new products to the market.
About the authors
Ralph Schöneberger is a management consultant at PwC, focusing on the digitization and automation of business processes. He advises PwC clients on setting up digitization platforms. Within the company, Mr. Schöneberger leads the BPM team in the FS Technology area.
As a partner at PwC, Rainer Wilken has been supporting the transformation of banks for many years. The digitalization of business processes plays a special role in this. At PwC, Mr. Wilken is responsible for the topic "Compliance of the Future" in Financial Services.