How Banks Can Implement 3 Types of Automation Solutions

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Many banks struggle with digital transformation, often because they lack an effective strategy, clear governance over the transformation process or both.

Common and current inefficiencies include relying on manual reports created in spreadsheets across multiple systems, using email or word processing to capture and document approvals and serve as a system of record and inconsistent procedures across business functions.

A digital-first approach has increasingly become table stakes for financial institutions given consumer adoption. In 2021, 88% of U.S. consumers used a fintech, up from 58% in 2020, according to an annual report from Plaid. Customers expect a frictionless experience from their bank; traditional institutions need to have a plan in place to adapt accordingly.

Banks that don’t already have a digital transformation strategy need to establish one to anchor and govern their process for evaluating, prioritizing and executing digital transformation projects. One area for consideration on that digital journey should be automation, which can help organizations become more efficient and better mitigate a variety of risks. There are three intelligent automation solutions that can help banks reduce costs and improve productivity, among other benefits: robotic process automation, digital process automation and intelligent document processing.

  1. Robotic process automation: In general, RPA is task-based automation focused on accomplishing targeted components of business processes without the need for significant human intervention. RPA is capable of handling high volume, repetitive and manual tasks on behalf of human process owners, filling gaps where systems lack integration capabilities.
  2. Digital process automation: This type of automation focuses on optimizing workflows to orchestrate more collaborative work processes. DPA typically involves highly auditable data flows to improve regulatory compliance, and is scalable in a way that helps the organization adapt to evolving business needs.
  3. Intelligent document processing: IDP automation involves the extraction of semi-structured data from digital documents such as PDFs and image files. This transforms such documents into discrete data elements that can drive decision-making. IDP can enhance the scope of RPA and DPA solutions.

Questions to Ask
On a foundational level, banks need to have a clear, intentional link between technology spending and their overall business strategy if they want to succeed in their digital journey. Leadership teams need to understand issues with current processes to ascertain where streamlining those processes could offer the greatest return on investment. Here are some key questions to consider when evaluating process automation:

  • How does the automation solution reduce friction and improve the customer or user experience?
  • What is the associated market opportunity or efficiency gain enabled by the solution?
  • Is the institution potentially automating a bad process?
  • How does the solution align with what customers want?
  • How will the institution train its teams to ensure adoption?
  • How does the automation solution fit into the organization’s current processes, workflows and culture?
  • How will the bank manage the change and govern post-transformation?

Developing a Framework
Depending on where a bank is in its digital transformation journey, there are a variety of steps the organization will need to take to implement automation solutions. Those banks that are early in their journey can use the following steps to help:

  • Plan: Establish a framework for implementation, including objectives, teams, timelines and a project governance structure.
  • Assess: Understand the current state of functions across the business and identify process gaps where automation can help.
  • Design: Use best practices to establish a “fit for purpose” system design that meets business requirements and is scalable for future growth.
  • Execute: Configure the applications and integrations according to system design; validate, test and resolve any defects identified; migrate the approved configuration to the production environment.
  • Go live: Assess user readiness and deploy the solution.
  • Support: Execute an automation support strategy and establish an external support framework.
  • Monitoring: Establish and track key performance indicators to provide metrics for better visibility into the business.
  • Road map: Evaluate business unit usage and develop a plan for optimization and expansion to realize the company’s digital transformation vision and business goals.

Addressing each of these steps can help banking leadership teams develop a more thoughtful approach to automation solutions and improve their overall digital transformation strategy.

5 Key Areas Where Banks Can Implement Automation Solutions

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As automation has become more widely available to the financial services industry, banks need to take advantage of automated solutions to streamline manual systems and processes and maintain a competitive edge.

But they would be mistaken to seek out automation only for a solution to a specific problem; rather they should take a holistic approach to automation and craft a strategy that incorporates automation in a variety of ways that could potentially improve many functions of their business. While commercial, off-the-shelf software exists for specific automation use cases, banks need to understand how automation fits into their broader business strategy and how to weave it throughout the organization’s processes. This allows leadership teams to understand where a customized approach is necessary and where turnkey solutions may be suitable.

There are five specific areas that banks should assess for automation readiness and efficiency gains.

1. Customer experience. A frictionless customer experience is a standard expectation in many industries; banking is no exception. In the past, if a customer wanted to open a deposit account at a bank one month and take out a loan the following month, the bank might require two interactions with two different employees to gather data from that customer. But there are process enhancements that can automate and streamline these processes to remove the redundancy and enhance the customer experience.

Automation can streamline the intake and digital cataloging of customer information, pulling that data together into a single place and data set that employees from various functions of the bank can query and use. The consistency of information makes the experience more palatable for the customer, and more efficient for employees.

2. Credit approval and loan operations. A typical commercial loan application and approval process can require the loan applicant to submit a significant number of documentation items and pieces of information to the bank. Using an automated tool to gather, process and organize that information can significantly cut the cycle time for the loan application, approval and origination process. Additionally, an automated process on the front end enables the loan operations process on the back end of a transaction to be more efficient and seamless, as employees can access all of the electronically obtained information in an organized format.

Automated solutions for credit and loan operations — one example of which is highlighted in this case study — can result in better information for banks and quicker decisions for applicants. Banks can use automated solutions to integrate with credit bureaus or other data providers via application programming interface (API), and apply credit policies throughout underwriting.

3. Data management. Most banks have numerous data sets that can be queried separately but not all together. What this can mean from a lending perspective is that a bank may have a commercial loan system, a retail loan system and a credit card system; all of those systems could have different outputs, which could make it difficult to analyze data and have a holistic and meaningful view of the customer’s relationship, profitability and risk profile.

Organizations should explore how automation solutions may improve their existing infrastructure and make their data more relevant and useful by enabling real-time reporting to build a more complete profile of the customer.

4. Automation tools can vastly improve the intake and data maintenance process required to comply with Know Your Customer (KYC) regulations. Automation can replace manual process during customer onboarding and ongoing monitoring and verification efforts. Compliance automation creates a uniform process and data set that the bank can use throughout the customer lifecycle, rather than on an as-needed basis, when onboarding is completed or when monitoring items arise.

5. Streamlining the audit function. As we highlight in this case study, automation can help a bank’s internal audit department “spend less time gathering data and scoping audits and more time on fieldwork such as testing hypotheses, assessing risk management, and reaching conclusions using a datacentric approach.” In that specific case, a bank used an intelligent automation solution to identify gaps and pain points in how it quantified risk during the audit planning process, accelerated its planning process and incorporated various data sources, such as consumer complaints and regulatory standards, into the audit plan.

Automation can improve virtually any function of a bank’s business, but organizations may find it daunting to determine where or how to begin implementing such solutions. Discussing options with a third-party advisor can help bankers craft a valid and thorough automation strategy that incorporates all the advantages of automated capabilities that might be relevant and available. This strategic approach maximizes efficiencies for the bank, while providing a best-in-class customer experience.

In the Search for Efficiency, Rethink Cash Management

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Despite the rise in digital payment options, cash persists as a payment method in the United States. Between October 2019 and October 2021, circulating currency in the United States increased by $423 billion, according to the Federal Reserve Bank of San Francisco. Also, cash accounted for 20% of all payments and continues to be a primary option for a substantial portion of the population.

Even as cash continues to be a vital payment tool, handling it is a headache for banks. Branch managers manually count, log and balance cash, which leaves banks vulnerable to safety issues and cash leakages due to criminal activity or miscalculations. Bankers must evaluate their cash management processes to save time and money.

What is often overlooked, or taken for granted in the cash management process, is the time it takes a bank to move, count and manage cash. Every time cash moves — from the vault to the teller, teller to teller, or teller to vault — it must be counted and balanced. If even $1 is missing, staff can spend hours counting and recounting.

Cash handling costs are rising and are estimated to account for 5% to 10% of bank costs, even as cash use declines, according to McKinsey & Co. Why? Cash distribution, maintenance and processing require expensive manual labor. Depending on the institution, a single branch will need to handle hundreds of transactions and teller-to-teller exchanges a day and, of course, opening and closing counts of cash. From cash vault to end-of-day tally, the process relies on the precision and accuracy of each count. Say your branch has a counting error. This single error from manual labor can add significant time to your staff’s day. Additionally, manual cash handling is vulnerable to counterfeit currency, tracking errors and theft.

Banks are examining every expense for greater efficiencies as the economic environment potentially turns. It’s critical that they assess the technology budget and balance sheet to ensure their investments go as far as possible. There are a proliferation of cash counting and handling processes that banks implement, but these tend to only oversee one part of the overall cash management process. Banks also often grapple with outdated technology, which is vulnerable to outages or cannot automate simple tasks.

Harnessing technology can eliminate redundancies, automate manual processes, reduce labor expenses and streamline workflows. These changes can also improve staff retention at the crucial frontline level, a huge issue for banks. In a competitive employment environment, eliminating inefficiencies and creating a positive work environment is a priority for banks looking to retain staff. Rather than counting cash by hand or dealing with an unexpected recycler outage, bank executives can leverage solutions that enable their tellers, frontline branch staff, and regional managers to worry less about cash management and focus more on customer experience.

Economic uncertainty means banks need to make tough cost-cutting decisions while thinking about investing in operational efficiency and aligning innovation. To meet employee needs, banks should transform each level of branch operations, especially in the cost centers, such as cash handling. Reimagining branch operations and improving the employee experience and bank operations through automated technologies can help unlock new workflows and solutions.

Fortunately, strategic investments in high-return technology with advanced capabilities can offer immediate benefits. Automating labor-intensive processes and increasing cash visibility at enables banks to save time, leverage scarce resources and focus on creating unique customer experiences, while eliminating pain points and redundant work. As banks further automate mundane tasks, they can optimize staffing levels and maximize profits while serving customers better. By implementing specialized technology to count, dispense and manage cash, banks can improve their accuracy and reduce the costs associated with manual cash handling — ensuring that staff are using both the procedures and technology that best meets clients’ needs with the greatest efficiency.

Detect and Prevent Check Fraud in Real Time

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Financial institutions are engaged in a never-ending battle to stay a step ahead of fraudsters that are clever and nimble enough to continuously exploit their organization or system weaknesses.

Many banks focus on combating digital fraud given the rapid digital developments in the financial services industry. However, fraudsters continue to leverage digital and physical channels to commit check fraud. In fact, checks serve as the payment method most impacted by fraud activity; 66% of payments professionals reported check fraud activity in 2020, according to the 2021 Association for Financial Professionals Payments Fraud and Control Survey.

Banks encounter check fraud in many ways, including counterfeits, forgeries, alterations, serial numbers, stop payments and check kiting. Technological advances have made it easier for fraudsters to create realistic counterfeit and fictitious checks, as well as false identification that can be used to defraud financial institutions nationwide.

Digital banking provides customers with many conveniences but also leaves banks vulnerable to risk. Perpetrators are no longer required to show their faces at physical branches or ATMs to deposit fake checks. However, 49% of fraud occurs in over-the-counter transactions, according to a recent ABA Deposit Account Fraud Survey Report.

Fortunately for financial institutions, there are three key tools they can use to combat check fraud.

The first is leveraging transaction analysis, which is the process of examining bank transactions to look for unusual and suspicious activity or other issues. This key component scrutinizes debits and credits contained in deposits and withdrawals to identify suspicious items, such as duplicate check numbers and out-of-range check numbers and amounts. It also applies tests at the account and entity level, measuring things such as account velocity, account volume and deposits or withdrawals of unusual amounts.

The second tool is check stock validation, which analyzes presented check images against historical reference check images to authenticate the check stock. This can help institutions identify counterfeit in-clearing and over-the-counter checks quicker and more effectively. accurately and reliably than visual inspections. Check stock verification leverages technology to spot aberrations that the human eye cannot detect. It also reduces the number of manual verifications and decreases false positives through digital check image analysis. This improves the check fraud detection process and alleviates the burden on in-house anti-fraud teams.

A third tool is signature verification, which uses machine learning algorithms and sophisticated decision trees to provide a detailed analysis of check signatures. This results in efficient evaluation of suspect in-clearing and over-the-counter checks and increased confidence levels for acceptance and return decisions.

Banks can improve on their ability to detect fraud by combining software innovations such as decision tree/multiple variable analysis, image analysis and machine learning predictive analytics. Data topology, which is a way to classify and manage real-world data scenarios, will increase over time, which allows banks to include contextual information and negative historical analytics. In turn, these outcomes detect transactional fraud and suspicious activity, reducing false negatives and enabling a financial institution to make better and faster fraud-related decisions.

Automation software performs fraud risk scoring on deposits and withdrawals, using specific detection algorithms for each type of check such as on-us, transit, treasury checks and local government checks. The software applies transaction and image analysis on each item in the deposit, along with a configurable scorecard that calculates the risk for the parties involved in the transaction. Today, software can analyze more than 60 parameters covering the conductor, beneficiary, issuing account, and items to produce a single fraud score. This calculated fraud score provides the bank with an appropriate interdiction message — including a hold recommendation that gives the bank the option to accept the deposit, covering the fraud and other collectability risks by holding the fund.

Fraudsters become more innovative every year, targeting vulnerable victims to execute their plans and schemes. Even though check use is increasingly uncommon, fraudsters still utilize checks as a convenient medium to exploit banks and their customers. But banks can mitigate risk and reduce fraud loss efficiently. Used together, tools like transaction analysis, check stock validation and signature verification enable banks to prevent check fraud. Providing a safer banking experience protects the financial institution from fraudulent risks, strengthens the customer experience and earns trust.

Commercial Lending Automation in 2022

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To compete today, banks need to proactively meet the needs of their commercial clients. That not only requires building strong relationships but also improving the digital experience by automating the commercial lending process. Joe Ehrhardt, CEO and founder of Teslar Software, shares how bank leaders should think through enhancing lending processes and how they should consider selecting the best tools to meet their strategic goals.

  • Shifting Client Expectations
  • Processes Banks Should Automate Next
  • Specific Technologies to Adopt
  • Selecting Providers

What 2022 Holds for Community Banks

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All banks need to prepare now for inevitably more change. As the year draws to a close, a quick look back provides some insightful clues about the road ahead. There are some trends that are well worth watching.

Changing Customer Habits
The coronavirus pandemic accelerated digitalization efforts and adoption. A recent PACE survey reveals that 46% of respondents changed how they interact with their bank in the last year. It is no surprise that consumers across generations continue to use new channels over in-branch banking.

  • The demand for drive-through banking doubled for young millennials.
  • The demand for phone banking tripled for Generation Z.
  • The percentage of young millennials communicating with their banks via email and social media rose by four times over the previous ten months.

Customers are more likely to visit a branch to receive advice, review their financial situation or to purchase a financial product. Many bank branches are being repurposed to reflect this new dynamic, with less emphasis on traditional over-the-counter services.

The way people pay has also changed, probably forever. Businesses encouraged digital and contactless payments, particularly for micropayments such as bus fares or paying for a coffee. In contrast, check use declined by about 44%. Forty-seven percent of community bank customers surveyed say they have mobile payments wallets, according to FIS’ PACE PULSE Survey for 2021.

Bank as a Partner
In addition to providing traditional services, many community banks elevated their position to financial partner, offering temporary services when and where they were needed. The immediate relief including increased spending limits on credit cards, payment deferral options on mortgages, personal loans based on need and penalty fee waivers for dipping below account minimums.

Since then, community banks have continued taking steps to boost financial inclusion. The unbanked and underbanked are prime candidates for new, low-cost financial services delivered through mobile channels and apps. Providing such services is likely to be well rewarded by enduring customer loyalty, but the banks need the right technologies to deliver them.

The State of the Industry
The last year has seen a flurry of M&A deals. Many recent mergers involved banks with mature brands, loyal customers and strong balance sheets. These institutions’ interest in deals reflects a need to reduce the cost of doing business and the universal need to keep pace with technology innovation.

Digital technologies and data are increasingly the baseline of success in banks of all sizes. Merging with a peer can jump-start innovation and provide a bigger footprint for new digital services.

Robotics Process Automation and Data
Although much of the discussion around digitalization has focused on customer services, digital technologies can also boost automation and efficiency. With the right approach, robotic process automation, or RPA, can automate high-volume repeatable tasks that previously required employees to perform, allowing them to be redeployed to more valuable tasks. But to maximize value, RPA should not be considered in isolation but as part of a bank’s overall data strategy.

The Road Ahead
Although the road ahead may be paved with uncertainty, these are things FIS expects to see across the industry:

Customers have rising expectations. They want banking services that are intuitive, frictionless and real time. Big Tech, not banks, are continuing to redefined the customer experience.

Crypto will become mainstream. Many consumers already hold and support cryptocurrencies as investments. Banks must prepare for digital currencies and the distributed ledger technology that supports them.

The branch must evolve. Banks need to reinvent the branch to offer a consistent smooth experience. Human services can be augmented by technologies that automate routine retail banking tasks. For example, video tellers can conduct transactions and banking services with customers, using a centrally based teller in a highly engaging real-time video/audio interaction. Banks must persevere to draw people back into their branches.

Investing in data and technology is essential. Banks must eliminate guesswork and harness data to drive better decisions, increasing engagement and building lifetime loyalty. Smart banks can use customer data to gain unique insight and align banking with life events, such as weddings, school and retirement.

The new age of competition is also one of collaboration. At a time when community banks and their customers are getting more involved with technology, every bank needs to adopt a fintech approach to banking. Few banks can achieve this alone; the right partner can help an institution keep up the latest developments in technology and focus on its core mission to attract and retain customers.

Furthering Digitization, Automation to Push Digital Transformation

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Banks proved during the pandemic that they are capable of rapid digital transformation when absolutely necessary, with minimal interruptions. Now, they must build on those recent investments by evaluating what improvements will be most valuable to deliver an optimal customer experience.

With the multitude of touchpoints, both in-person and online, each step in a customer’s journey presents an opportunity for you to learn more and uncover insights. Banks can unlock insights with always-on customer engagement. Being agile and nimble will give them the ability to both react to changing market conditions — and get ahead of them.

Topics addressed include:

  • Evaluating Further Digitization
  • Shifting Traditional Mindsets
  • Importance of Staying Agile, Nimble

Notching Customer, Employee Wins Through Process Automation

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Financial institutions are committed to improving digital banking services and enabled more digital capabilities over the past year out of necessity — but there is more transformation to be done.

In their haste to meet customers’ and employees’ needs, many banks overlooked opportunities in back-office processes that are critical to providing excellent customer service, such as operating an efficient Regulation E (Reg E) dispute tracking process along with other processes that can ease employee challenges with regulatory compliance issues.

To enable bank staff to better serve customers, financial institutions must automate their back-office dispute tracking processes. One way to do is through implementing process automation solutions that offer workflows to direct the disputes appropriately, a single storage location for all supporting documentation and automating mundane tasks, such as generating letters and updating general ledger accounts. Implementing this kind of automation enables banks to simplify and streamline their input of disputes, ensuring that all critical information is captured accurately and dispute intake is handled consistently. This allows banks to provide consistent engagement and faster response to their customers.

Back-office automation strengthens a bank’s regulatory compliance and customer engagement. Awaiting outcomes from back-office processes can be extremely frustrating to customers — these moments are often tied to high-stress situations, such as having their cards used fraudulently. Banks should consider how manual, error-prone dispute tracking processes negatively affect the customer experience. Institutions also gain the crucial visibility that supports their decision-making and improves compliance with regulations, mitigating the risk and cost of non-compliance.

Process automation can also eliminate the stress that impacts account holders during this process. Having back-office automation with enhanced workflows and centralized documentation allows banks to return provisional credit more quickly and minimizes errors and delays. Instead of missing deadlines and making mistakes that erode customer confidence and cause audit exceptions, back-office employees meet deadlines and process disputes consistently and accurately, avoiding fines and additional work to remedy errors.

Automation can also improve back-office productivity by enhancing visibility. Clear visibility is created when a back-office employee can immediately track documentation and data when it is needed, at any stage in the process. During an audit, an employee may need to retrieve the date that a customer filed a Reg E dispute or to prove proper credit was applied. Without the appropriate tools, such as a single dashboard for dispute tracking and one platform for all supporting documentation, employees waste time searching paper files, spreadsheets and emails to piece together the required information. A workflow automation platform means a full audit trail with supporting documentation is readily available, optimizing everyone’s time.

For example, automation at Watkinsville, Georgia-based Oconee State Bank enables employees to efficiently complete tasks and focus their attention on serving their customers without being slowed down by complicated processes. The bank reduced the amount of time it took to file consumer disputes by more than 80% through process automation.

With 12 branches across Illinois and Indiana, First Bank, based in Carmi, Illinois, reduced claim processing time by more than 50% and experienced positive impacts from its digital dispute process. Dispute processes that can be easily tracked enable bank executives to clear audits and gain greater visibility into risk and compliance across their institution.

The visibility banks gain through automation improves their decision-making. Hard-to-access information and lack of visibility can be especially defeating when managing risk and compliance. Not only does incorrect or unavailable information open the door for human error, but it can also lead to financial loss. In areas like Reg E dispute tracking, this financial loss can be a result of not identifying a fraudulent dispute or trends of fraudulent charges. Process automation helps by supporting a methodical approach to reducing fraud and increasing visibility of high-risk merchants and customers.

This kind of attentive review during the Reg E process can help banks reduce the amount of undetected fraud and lower their write-off threshold, which is the pre-established amount set by an individual financial institution, under which any dispute is automatically written off as a financial loss. These thresholds are traditionally set with the back office staff’s bandwidth in mind; with more free time, banks can lower this threshold and avoid automatic losses. For instance, after implementing an automated, Reg E dispute tracking solution, Happy State Bank, the bank unit of Canyon, Texas-based Happy Bancshares, was able to lower its write-off threshold from $100 to $50 per dispute.

Tackling process automation can help banks compete and win while improving the level of service provided to customers. This technology empowers staff to be more responsive and alert to trends, enabling better decision-making and saving both cost and time. Implementing process automation allows banks to differentiate themselves from their competitors by providing consistent engagement and faster responses to customers. Process automation is the key to optimizing efficiency within any financial institution.

Leveraging Rationalization to Tackle Digital Transformation

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The coronavirus pandemic has had a notable impact on financial institutions, creating a more-urgent need to embrace digital-first banking. However, shifting to digital doesn’t just mean adopting new digital banking tools — a common misconception. Rather, it requires that banks rethink their holistic digital strategy to evolve alongside customer expectations, digitize all aspects of the financial journey and connect their customers’ digital and physical experiences.

Such a transformation boils down to determining which processes are digital-ready and which will need to be overhauled completely. Enter rationalization.

Relying on rationalization
Three billion people will access banking through digital devices this year, according to one estimate from Deloitte. Most banks have 3, 5 or even 10-year plans, but struggle to determine where to start. Think of rationalization as triage for banks: It allows them to identify which processes are ready to be digitized right now, and which need to be reimagined entirely before embarking on digitization.

Consider the process to open a checking account. It’s a simple process, requiring proof of identity and address, and a form to complete. Customers are generally good to go. This is a prime example of a digital-ready banking service that should be moved online immediately — and that can be accomplished rather easily.

Compare that to applying for a loan: a process that involves careful evaluation of the applicant and a mountain of paperwork filled with lengthy, confusing terms and requirements. If the process is intimidating to consumers with the help of a professional, imagine how it feels left to their own devices.

For processes that contain inherent points of friction, like the loan application example above, digitizing may simply make the cumbersome process quicker. Outdated, clunky processes must be revamped before they can be digitally transformed.

Putting customers at the center
Customers are the most important part of rationalization. As customer expectations have rapidly evolved, it’s time for institutions to modernize the digital experience to strengthen relationships and solidify loyalty. Some areas that banks should consider when evaluating the customer experience include:

  • Automating previously manual processes can reduce costs, improve efficiency and deliver an “always on” experience.
  • Ease-of-use. Along with being more accessible to people who might resist digitization, intuitive use and educational resources are integral to customer adoption and success.
  • Constant support. According to Accenture, 49% of customers say real-time support from real people is key to fostering loyalty.
  • Enhanced security. Strong security efforts are fundamental to giving customers peace of mind, which is critical when it comes to their money.
  • Make simple possible. Remove friction from the process to enhance the customer experience.

As banking catapults into a digitally dominant era, institutions should establish a presence across all digital touchpoints — desktop and web browser, mobile apps, even social media — to enable customers to access financial services and information at their convenience. A mobile-first mentality will help ensure that products and services work seamlessly across all devices and platforms. Consistency here is key.

Customers are ultimately looking to their institutions to solve their individual financial problems. Banks have a wealth of data available to them; those that seek to create the strongest relationships with customers can leverage these insights to tailor the experience and deliver relevant, timely products and support to meet their unique needs.

All sectors faced the same challenge over the course of the pandemic: How does a business survive physical separation from their customers? Industries like retail were better prepared for expedited digital transformation because they’ve been establishing a digital presence for years; they were largely able to rationalize quicker. Hospitality sectors, on the other hand, more closely mirrored banking in that many processes were far behind the digital times. Some restaurants lacked an online presence before the pandemic, and now must undergo their own version of rationalization to remain in business.

While rationalization looks different to each vertical, the central mission remains the same: determining the best, most sensible order of digital transformation to provide the best customer experience possible. Those companies that leverage the principles of rationalization to manage the massive migration to digital will be better positioned to solidify and capitalize on customer loyalty, and keep their institutions thriving.

Tactical Pillars for Quick Wins in the Challenging Operating Environment

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The challenges of 2020 included a landslide of changes in financial services, and the sheer effort by banking professionals to keep operations running was nothing short of historic.

Although there will be some reversion to prior habits, consumers in 2021 have new expectations of their banks that will require more heavy lifting. This comes at a time when many banks in the U.S. are engaging in highly complex projects to redesign their branches, operations and organizational charts. Fortunately, there are some quick win tactics that can support these efforts. Consider the following three “pillar” strategies that offer short-term cost savings and guidelines to set a foundation for operational excellence.

Portfolio Rationalization
Portfolio rationalization need not involve product introductions or retirements. But, given the changing consumer landscape, executives should consider taking a fresh look at their bank’s product portfolios. Due to the many changes in accountholder behavior, certain cost/benefit dynamics have changed since the pandemic began. This fact alone makes re-evaluating and recalibrating existing portfolio strategies a matter of proper due diligence. Rationalizing the portfolio should include revising priorities, adding new features and reassessing risk profiles and existing project scopes.

Process Re-Engineering
Banking executives have been under tremendous pressure recently to quickly implement non-standard procedures, all in the name of uninterrupted service during socially distanced times.

Though many working models will see permanent change, it is critical to optimize these processes early for long-term efficiency, security and customer experience. As the digital curve steepens, banks will need to map out the customer journey across all digital channels to remain competitive. Some process re-engineering methods include eliminating workarounds, streamlining processes and updating legacy policies that are no longer relevant.

Intelligent Automation
Banks are increasingly leveraging technologies classified under the umbrella of intelligent automation. These include machine learning, robotic process automation and artificial intelligence — all of which have become especially relevant to deal with multiple types of high-volume, low-value transactions. Automated workflows remove the clerical aspects of the process from the experts’ plates, allowing them to focus time and energy on more high-value activities. When executed well, intelligent automation works alongside humans, supplementing their expertise rather than replacing it. For example, areas like fraud and underwriting are becoming increasingly automated in repetitive and known scenarios, while more complicated cases are escalated to personnel for further analysis.

Supplier Contracts
Auditing invoices for errors and evaluating vendor contracts might be the last place a banker would look to establish a quick win. However, our benchmarks suggest they can be a critical stepping-stone to bottom-line opportunities. Existing vendor contracts often include inconsistent clauses and undetected errors (such as applications of new pricing tiers missed, etc.). Eventually, minor errors can creep into the run rate that adds up over the years to significant dollar discrepancies. With extensive due diligence or someone in the know, it’s possible to find a six to seven figure lift, simply by collecting intelligence on the prevailing market rates, the available range of functionality and reasonable expectations for performance levels.

While the financial services industry has been keeping operations running uninterrupted, there is no time like the present to optimize operating processes. Accomplishing a few results early  on can free up resources and support long-term gains. Executives should take the time now to optimize operating model structures in order to brace for what comes next. Looking into the increasingly digital future, consumers will continue to expect banks to reinvent and build up their operating models to greater heights.