Digital worker in a bank – threat or opportunity
Uber-phenomenon is expected to hit the banks next: new players come to market and attract customers by providing financial services faster, cheaper and more efficiently. Traditional financial supermarkets offering online banking, no longer hold sufficient advantage. Instead, banks face pressure to renew services.
Complex information systems have developed tremendously over the last years speeding up transactions. Yet, using multiple IT-systems has resulted in employee’s time being tied to navigating them. Bank staff now has to transfer information between systems, update data based on various reports and draw up an increasingly greater variety of regulatory documents. At the same time offices close and personalized service is being reduced.
While customers are generally happy to use online banking and conduct transactions independently, the banks continue to have a lot of services where personal contact is important. While bureaucracy has grown the amount of bank offices is being cut, as a result a lot of banks have been forced to allocate resources towards increasing legal competences. The number of customer service personnel is therefore being dropped while the number of reports increase. Workers carry out reports and records, even if they should better serve the customers. Will the big traditional banks lose their business to new agile actors as a consequence of drowning in reports?
Risk Management and Profitability
The core of banking is managing risk. Customer service workers need to be very careful in reviewing client data and personal information, as well as identifying credit risks. Naturally, calculating collateral values and margins is also risk management.
In addition to risk management, banks are facing a growing number of regulations. Basel III regulations concern financial solidity: according to the new regulations banks must have stable funding and liquidity. Next to this, the Financial Supervisory Authority supervises and regulates banking operations in Finland. Banks have been forced to improve their understanding of corporate governance and allocate resources to legal expertise in order to manage the regulation and control.
While the regulatory framework and the associated requirements are growing, negative interest rates melt income causing further pressure to improve profitability. Banks have transferred their services online and closed unprofitable offices, but many sticky processes continue to burden the organizations. People move and gather information from different systems, when they should be serving customers and growing the business. There is still room for improvement. Most often organizations look forward with savings in mind. What if banks focused instead on improving productivity and creating competitive advantage via personal service?
Banks have a lot of processes that haven’t been updated or renovated in to their most efficient model. Of course many processes must be carried out under legal guidelines, but even in this case the processes generally include numerous steps where data is being copied, checked or generated on a report. These are routine tasks but require precision.
Tireless digital workers are happy to take care of routine tasks. A digital employee may check credit histories, register basic customer information on an application system, read due deposits, make reports or lists to be used as a tool for sales, and much more. The customer service staff is released to serve the customers and to make sales or decisions that require human understanding. Digital workers don’t mind boring routines, working day and night, get sick or take vacations. The quality of work is high, even and error-free.
Could bank secrecy become public as a result of using digital workers?
It is natural that the arrival of digital workers to a bank should arise suspicion. What if they destroy or release information? Could the digital employee change interest rates and approve loans? Software robots do what they are taught. When they are taught correctly, and are given the right credentials they don’t interfere with any other tasks. Bank systems are built on decision levels, employees are granted rights to act in scope of predetermined powers, for example a person may or may not have the right to make credit decisions. When the digital worker is not granted a specific power, it won’t be able to make decisions related to it.
The tasks carried out by a robot can be tracked in order to see what it has done. However, the digital worker never stores any customer data, nor is it interested in the balances or assets of customers’ accounts. A much greater risk compared to a digital worker releasing information, would be bank’s employees discussing customers’ data too loudly in the office.
In a Bank it is important that usernames and passwords are not being shared among employees. A digital employee is able to change their own password, so that no one else can access the codes to carry out tasks.
Robots in a bank’s back-office
Banks have already woken up in many countries to the profit building opportunities brought about by digital workers. Experiences can be found especially in Britain and the United States, but more recently also in Finland. Experiences of digital workers being adopted by banks are precisely related to back-office missions. Robots are responsible of transferring data to credit applications so that the decisions can be made quickly. They are mailing customers a variety of reports regarding their accounts, seeking financial statements and credit ratings. Digital employees look for pre-defined changes in overnight reports and alert staff to react.
Digital employees can be seen as a threat, like everything new and different. They can also be seen as an opportunity, a tool to help organizations reach better results. You may not be able to discuss the past summer vacation over a coffee with a digital colleague, but you can happily delegate boring routines to it and focus on serving the customers. Customers, who will be delighted when the clerk has time for them.
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Article: Hanna Saari – Sales Executive & Service Manager, Digital Workforce