Automation is the next stage of evolution for the financial services back office. Why? We know it can improve productivity by 50% (HBR), and we also know that 60% of customer dissatisfaction originates in the back office (Capgemini).
Let’s look at the benefits of automation in a back office, and talk about examples.
- What is automation? The use of software tools to automatically perform specific tasks. Automation is sometimes artificially intelligent (i.e. it can act somewhat independently, and even learn more over time) or not (where the software does what it’s told and that’s it). You may also see the term ‘robotics process automation’ which, at least for our purposes today, is the same thing.
The benefits of an automated, electronic back office workflow
Fundamentally, automation in the back office is about creating digital workflows that require little-to-no human intervention. Of course, given that people’s money is involved there will always have to be human supervision, but the actual task – like data entry or document management – can be performed and repeated by a computer.
So, from a benefits standpoint, financial services businesses tend to turn to automation for speed, accuracy and to allow their actual staff to work on more value-adding activities.
But let’s lay out some of the benefits in full.
Computers are, at least when it comes to the tasks we’re talking about today, much faster than humans. They can scan information, compare, swap, transfer, add or subtract, in fractions of a second – and then repeat this same task over and over and over with no loss in speed. Any AI that can self-learn may even get faster.
So, activities that may have taken hours, days or weeks before can suddenly be achieved in minutes and seconds.
One of the great benefits of computers is that they can increase their speed without decreasing their quality of output. If they are just repeating a task, data entry being a fabulous go-to example, they can just keep doing it and doing it and they’ll generally always get it right.
When it comes to industries like wealth management, accounting, FX or stock trading, accuracy really matters. Being able to hand important (but menial) tasks to a computer that won’t tire or put the decimal in the wrong place can greatly decrease the chance that your back office will make an error.
Computers generally create very clear audit trails. Most tools, no matter what task they are automating, will usually note what they are doing and apply the appropriate reference numbers. Many will also leave behind a history (i.e. document or Excel sheet version histories). This creates a very compliance-friendly back office, where activities can be tracked and traced quite consistently.
4. Human value
Finally, when financial staff do not need to spend the time and effort undertaking menial, repetitive tasks themselves, they can focus their efforts on other, more important activities.
You see, automation isn’t about human replacement, but human enablement. If various tools are entering or migrating data, scanning and auditing databases, updating details or sending information to clients, and so on, then all of the hours that staff would normally spend on those activities can be spent elsewhere – on tasks like product or service improvement, strategy, etc.
The role of online payments in automating the back office
We recognise it may seem odd at first that an online payments provider like POLi is talking about digital transformation in the back office from an automation point of view. But, online payments play a huge role in cutting down menial tasks.
We’ll use ourselves as an example.
For context: How POLi works in financial services
Our payments system can be used in the financial services industry to make sending or receiving payments quicker, with less reliance on third-parties like credit card companies, electronic wallets and cash transfer apps.
If you have money to transfer to a client’s account, or they have fees to pay, both parties can quickly send money directly from their online banking account to the banking account of the other party.
This transfer is performed by the secure POLi portal, and takes place in seconds. Paying with POLi can even be added as a button on electronic invoices, to send to suppliers, who can then pay straight from the invoice.
So where is the automation here?
With regular payments, the sending party must input the correct details and remember to fill out any reference numbers, codes and particulars. The receiver must note any incoming payment, references and all, and make sure to add it correctly to the database.
This takes time, and introduces the chance for human error.
With an online payment system like POLi, all of this is done for you. The sender just clicks the Pay Now button, logs into their bank account via the POLi portal, and clicks accept. Dollar totals, references, codes – it’s all added automatically and accurately at both ends.
When it comes time to reconcile cash flow with payments made, the data will be uniform, correct, and already in your database.
- Learn more: “8 reasons financial services need online payment options”
Other types of financial services back office automation
Offering an online payments option to clients and suppliers is a great way to get into automating quickly and simply. But, there’s a lot more to it – in fact, as much as 42% of financial activities in the back office can be automated (McKinsey).
Imagine a world where your back office can do some of these tasks with little-to-no human intervention, and extraordinary consistency:
- Generating and validating invoices.
- Completing audits of client and supplier databases hunting for errors (i.e. duplicate supplier payments).
- Extracting business/transaction data from scanned documents and automatically validating them against company records.
- Managing documents, where they are stored, version histories, creating backups.
- Quickly and efficiently migrating data and creating database backups/contingencies.
- Performing know-your-customer checks and automating the client onboarding process.
- Monitoring business processes looking for inefficiencies, bottlenecks, red flags.
- Generating reports on business performance and KPIs.
How to started in back office automation
For online payments, you’ll need to look to offer a few different options. Customers tend to want variety when it comes to payments, so they can choose the platform they trust or enjoy most. POLi is a great start, but to see the wider gamut of options look into some of the payment gateways available in New Zealand and the payment types they support.
- Learn more: “Definitive guide to payment gateways”
To automate processes other than payments and reconciliation, you’ll need to explore different third-party vendors.
Even just Googling “<your industry> workflow automation NZ” will give you a raft of options to choose from.
Just remember not to rush into any relationship if it will fundamentally transform the way you work, even if it’s a popular brand, because you need to ensure that it’s right for your needs. It’s better to pick a few different vendors, compare them, and consult product/service experts within your company to get their opinion. Compliance and security personnel should also be involved in any contract negotiations, to ensure you will meet all of your obligations.