We live in a digital age and hence, no institution of the global economy can be immune from automation and the advent of digital means of operations. Banks and financial institutions were among the first adopters of automation considering the humungous benefits that they get from embracing IT (Information Technology). the reason why banks and financial institutions rapidly embraced IT is that their operations when done manually take up a lot of time and effort from their staff as well making them do routine activities over and over again leading to loss of productivity and missing the chance to move up the value chain. On the other hand, automation reduces the redundancies in their operations and frees up staff that can be deployed for activities that are more productive. This is the reason why banks and financial institutions are among the largest users of IT. Further, many IT vendors have dedicated verticals to what are known as BFSI or Banking, Financial Services, and Insurance sectors for the large budgets that they have to implement IT solutions. This is why many IT companies target the BFSI sector more than any other sector as they have the potential for high value deals running into the billions of dollars as compared to the other sectors that are less rich.
Some Consequences of Automation
Moreover, banks can reduce the incidence of customers visiting the branch for even mundane things like withdrawing money and updating their statements as automation means that ATMs (Automated Teller Machines) and online statements make physical visits to the branch unnecessary. Indeed, many leading multinational banks actually charge for the physical visits as they encourage customers to bank online. of course, many of the old timers rue the loss of face-to-face contact and the doing away of personal relationships. However, such is the nature of the modern technology driven society that such considerations are usually secondary to the need to be efficient and efficacious. Given the need for profits and any means of reducing costs that are necessary in this uber-competitive business landscape, banks and financial institutions have found that automation greatly improves their bottom line and leads to synergies between their processes. Further, banks and financial institutions that have embraced automation have also found that they can concentrate of corporate banking and high Networth individuals for private banking by automating the routine processes in retail and commercial banking.
Synergies, Regulatory Requirements, and Lessening of Fraud
The third aspect why banks and financial institutions automate is that their core banking operations can be done in an improved manner when compared to the manual processing that takes up time, effort, and resources as well as leads to glitches and errors. The last point is very crucial as manual processing is person driven and considering that, humans have a tendency to err. Automation removes the human element and makes the processes error free and less prone to glitches. Moreover, the chances of fraud are minimized because of automation, which is a major benefit for banks and financial institutions that deal with large amounts of money and that too belonging to the customers whose hard earned assets they are managing. In addition, banks and financial institutions have realized that they can report regulatory and legal requirements to the regulators in a better way through automation as well as the fact that storing historical data and storing customer details for extended periods is made easier because of automation.
Finally, banks and financial institutions have also automated their operations because of the convenience aspect to their customers who in this 24/7 breathless world might not have the time to physically visit the branch to transact. After all, if you can remember the last time you visited a bank instead of online banking, chances are that it would have been in the past where you either needed to verify your documents or had to visit your personal banker.