Why Automation Maturity is the New Divide in Financial Services

Why Automation Maturity is the New Divide in Financial Services

By Mike Heffner (pictured), Vice President – Solutions and Industry Go to Market, Appian

The financial services industry is accelerating the pace of change. At a macro level those changes started over past years with the competitive advent of new technologies and operating models as manifested by significant growth and investment of Fintechs. The recent Covid-19 pandemic has added another burning platform to those trends and there likely is no going back. The shifts are clear but so are the questions about how to win in this new reality.

Defining automation maturity in financial services

A recent study produced in collaboration with the Financial Times, called the Appian Automation Maturity Index, looked at the state of automation excellence in the sector through a survey of 500 global C-level executives. The initial results have helped define 10 distinct dimensions of automation excellence, and reveal a gap between those achieving the most success from their automation – faster customer onboarding, for instance – and those furthest away from those benefits.

According to the research, financial institutions – banks, asset managers and investment firms – can be categorised into Leaders (using sophisticated automation), Laggards (who are failing to gain value from automation), and the Mainstream (everyone else). Almost all Leaders derive cost savings and competitive advantage from their automation investments.

Hallmarks of a Leader

In the data, Leaders stand head and shoulders above everyone else. For example, almost all (96%) of Leaders report having an enterprise-wide automation strategy, while the majority of Laggards (81%) struggle to prioritise automation projects. The majority of Leaders (70%) have scaled up their use of robotic process automation (RPA), yet many of the Mainstream respondents (44%) are stuck in the pilot phase of implementation. That could be explained by organisation size and strength of investment, but it’s not the whole picture.

Crucially, almost all (98%) Leaders say they get significant cost savings from their automation, compared to just 7% of Laggards, showing that automation is still a driving force on banking’s bottom line.

The automation maturity curve

Strategy is a prominent common denominator amongst institutions, wherever they are on the automation maturity curve. Looking at the Mainstream group in the research, we see that 67% of people are achieving some degree of cost savings from automation, while only 49% are able to use automation to add a competitive advantage. It’s clear that, for some, automation enables growth in one area but not necessarily in others. That lack of an enterprise-wide automation strategy contributes to much of what we’re seeing in the research.

Complete automation holds the key

While the research shows there’s no single route to automation excellence, it also shows that the most unified, complete views of automation across the institution bring about the greatest benefits. Leaders demonstrate an ability to seamlessly integrate people, AI, RPA, workflows, databases, and systems. Orchestration across a unified workflow lies behind most of the benefits – for the customer experience, for employee satisfaction, and for the future of the enterprise – as well as supporting risk, compliance and change management, and business strategy.

Imagine this scenario. There are two banks, each looking to maintain their datasets and update missing information to comply with regulation. ‘Bank A’ creates an app that continually scans for missing information, automatically requests it from customers, deciphers customer responses and flags any unusual entries for the customer services team to investigate further. Bank B asks the customer services team to manually identify missing data, chase customers, and enter the data by hand, risking errors in the process.

This is a real example we’ve seen, where automation can make a real difference to a business by introducing speed, accuracy and efficiency. It reduces the workload of valued customer-facing staff, while resulting in better quality outputs that help meet the increasing demands of compliance. What’s more, automation can help drive better mobile services – currently a hotly-contested battleground for heritage players competing with digital native startups. It will also help to roll out services quicker and enable instant decisions on issues such as credit.

Essentially, the more “complete” an organisation is in their automation efforts, the higher the degree of success in leveraging competitive advantage and cost savings.