As automation continues to take over various industries across the world, more new technologies are popping up, and it’s penetrating in sectors that would have earlier seemed impossible. One prominent mention would be the introduction of artificial intelligence (AI) in the finance and banking sector that’s otherwise hugely dominated by manual labor. The automation market is estimated to have a 60% annual growth through 2020. By 2024, 50% of the organizations in production are estimated to be IoT enabled and thus automated.
What is finance automation?
Finance automation is the process of using robots and AI tools to automate specific finance jobs and tasks to make it easier, fast and cost-effective. Research from McKinsey & Company suggests that up to 45% of the activities that individuals usually perform can now be automated with the help of existing technologies. These facts align with one simple truth that finance automation isn’t only a plan for the future, but it’s already here and being used by many financial institutions. According to EY, 65% of finance leaders are prioritizing automation and looking at ways to utilize this in their organization. This isn’t done entirely with the motive to replace human jobs but to aid them and make them more efficient.
Where is automation used?
Automation is taking over the mundane and repetitive jobs, especially in the field of payroll and tax calculations. It’s also used in the KYC (Know your customer) process as a part of customer onboarding. Although the initial input of data is done manually, the rest of the identification process can be done by robotic process automation (RPA). Not just the KYC, but AI can also be used to prevent fraud, human error and data tampering. Live video verifications and blink checks are the places where AI combines with automation to give a secure and comfortable process to the customer, promoting customer due diligence and anti-money laundering procedures. Not only is KYC used in banking and financial sectors nowadays, but it’s also being adopted by real estate agents, law professionals, accountants and so forth.
Customer satisfaction is the key to company growth. When companies run neck to neck in a competition, good customer feedback or reaction is enough to break ground. This why organizations improvise more on their process, which includes their customers as a part of the chain. An average-sized financial institution allocates approximately $50 million to onboarding, and banks spend more than $500 million annually. Despite so much investment, customer onboarding continues to be a difficult scenario for these organizations. This is where automation comes as a savior. Without it, customer onboarding is a highly unstructured and tedious process, requiring a lot of guidelines to be followed, which often irritates customers. Because everything happens manually, validation and verification are time-consuming and prone to errors and frauds. But you can overcome these drawbacks by using an intelligent automation process which can finish the work of days in minutes.
Impact of finance automation
Many fear that automation will lead to the loss of jobs. This is contradicted by a lot of experts who believe that automation won’t lead to job losses but will help a company to grow. AI will turn out to be the future of the banking and fintech sector. They believe that if a company has to engage fewer employees in manual payroll and tax calculations, they can engage more people in building the actual strategy of the company. The employees can better read the automated predicted data, and decisions can be taken to move the organization forward.
According to Accenture, automation will eliminate up to 40% of the transactional accounting work in the finance department. It wouldn’t do justice if finance degree holders were made to crunch numbers on their calculators. Instead, using them for long-term planning and decision-making is a much better use of their talent.
The finance sector holds quite a few places in the list of most stressful jobs with 13-14 hours of commitment every day. This makes it even more important to eliminate mundane jobs. CFOs are extending their business and combining it with RPA, not just to streamline their processes but also to survive in the coming automated world. David Reilly, CTO at Bank of America, believes that:
Finance automation will change how we insure the property, loan money, invest money, deliver technology, write research reports, and what professionals in financial services do every day.