Banks are speeding up the adoption of automation technologies to ride the wave of cost-effectiveness, productivity, and improved customer experience. Automation in banking sector in India gives banks a unique opportunity to maintain a competitive edge by transforming a core part of their strategy and delivering a comprehensive banking experience.
The industry is rapidly marching ahead on the digital transformation road, unlocking tremendous advantages for organizations that adopt and master new innovative capabilities. The industry’s adoption of new technologies is being accelerated by rapid advances in digital domain expertise on the part of banks and their beneficiaries, as well as a better ability to balance human and digital capabilities. The adoption of Robotics Process Automation is a case in point. As per a report, the global RPA market is expected to reach USD 25.66 Bn by 2027. RPA has been able to strengthen its position with banks as a result of the pandemic, opening the way for a future that makes use of the potential of intelligent automation.
Let’s explore in greater detail how banking automation is influencing the financial services sector.
- Elevated customer experience: One of banking automation’s most significant benefits is improved customer service. Automation allows for 24/7 customer support, ensuring that customers can access banking services and support whenever needed. For example, chatbots can be deployed to answer customer queries, while voice-activated systems can guide customers through more complex processes, such as applications. Automation has also enabled financial institutions to personalize customer experiences. By tracking customer behavior and preferences, banks can offer tailored products and services to individual customers, enhancing their overall experience. Personalization helps to build customer loyalty and improves the reputation of the bank.
- Higher levels of efficiency: Automation has also brought significant improvements in the efficiency of banking operations. As repetitive tasks such as data entry and account reconciliation are automated, banks free up their staff to focus more on the complex tasks. Automation in banking sector in India has also helped to reduce errors and improve the accuracy of processes, thereby resulting in huge time and resource savings on rework. In addition to routine tasks, automation has helped banks to streamline end-to-end processes across different departments. Automation can ensure data is transferred seamlessly between departments without errors and delays. This improves the overall efficiency of the bank and helps to achieve cost-effectiveness.
- Compliance: Compliance is a crucial area for the financial services industry, and automation has helped financial institutions meet regulatory requirements more efficiently. No matter how much an organization may change the financial landscape, failing to follow regulatory guidelines can halt its development. Banking automation can ensure compliance procedures and regulations are followed. For example, automation can flag suspicious transactions and alert the bank’s compliance team to investigate further. This reduces the risk of fraud and money laundering. In addition to ensuring compliance, automation has also helped banks manage risk more effectively. Automation now allows banks to analyze data and spot behavioural trends that might point to risk. This makes it possible for banks to take proactive steps to reduce the risk, which lowers the likelihood of losses.
- Fraud prevention: Fraud is a major concern for the banking sector because it can harm the institution’s finances and reputation. Banks can use automation to monitor customer behavior and flag unusual transactions. For the purpose of looking into the instances that automated systems have flagged, human intervention may be used. This enables the bank to act quickly to stop further fraud and reduce losses. Automation in banking sector in India can also assist in identifying document forgeries in addition to monitoring customer behavior. A bot can compare the signature on a cheque with the customer’s signature on records, or it can scan documents for inconsistencies. This helps to diminish the risk of fraud and ensures that the bank complies with regulatory requirements.
- Digital transformation: Banking automation has been indispensable to digital transformation in the financial services industry. Today’s financial institutions provide their clients with a variety of digital services, including mobile banking, online account opening, dematerialized share trading, the ability to create deposits and investments, and digital wallets. As a result, customers now interact with their banks in a new, more integrated and convenient way.
Source: Bain & Company
Automation is imminent to economic growth
Digital transformation has also enabled financial institutions to tap new customers and expand their market reach. Banks can now offer services to customers in remote areas or in countries where they do not have a physical presence. This has increased competition in the financial services industry and has driven innovation. As per a report, India’s digital banking platform market is predicted to grow at a CAGR of 9.8% by the end of 2028.
Source: TechSci Research
Technological disruption is not the death of legacy systems. Organizations with a flexible mindset can benefit from the opportunity to think out of the box and provide a greater degree of customer experience. Banks and other financial institutions can take advantage of the power of digital transformation by deploying technology and collaborating with platforms that streamline the shift to digital. At some point, banking and other sectors of the financial industry will be centered around automated business processes.
- How does automation impact the banking industry?
Automation in banking enables higher productivity as teams are now able to focus more on complex tasks that require a superior level of human sensitivity and judgement. Since they can spend more time on planning new business acquisition, automation has indirectly facilitated a huge degree of personalization and greater trust between banks and their customers. The benefits of automation in banking are all-encompassing and are certain to encourage banks to accelerate the deployment of automation across their processes.
- What are the objectives of automation in banking?
Banking automation is deployed with the aim to increase productivity, reduce costs, improve customer service, achieve employee satisfaction, and drive better results. All of these help banks combat competition more effectively and establish deeper engagements with customers. The automation of manual and repetitive tasks has been a major outcome of the adoption of automation in the banking industry.
- Will automation take over more financial services?
Many industries are transitioning towards the adoption of automation in end-to-end processes. Financial service institutions are making an effort to take advantage of this potential because work can be done more quickly, more cheaply, and efficiently. However, the scenarios are more likely to be a combination of man-machine models instead of just one eliminating the other.