Using automation to adapt to the unexpected with agility

Since the COVID-19 crisis, financial institutions have discovered a new benefit to integrated automation technology: the agility and resiliency to manage the unexpected.

Organizations with greater technological maturity adapted to business in the “new normal” pretty quickly. Entire financial departments transitioned to remote work in a matter of days without losing access to files or delaying important tasks or deadlines.

The sudden transition to remote work was imperative for business continuity, but it wasn’t always the most pressing issue at that time. Financial leaders needed to focus on navigating a crisis that was impacting lives and economies on a global scale, and keeping back-end processes humming was only a small part of a much bigger picture.

What can we learn from the COVID experience?

Lesson 1: This is just the beginning

The pandemic was a sudden, unforeseen circumstance that challenged the business. It won’t be the last.

Reconciliation is a perfect example. In many institutions, reconciliation is still managed by spreadsheets and highlighters. The process is time- and labor-intensive, location-bound and difficult to scale. Automation speeds up recurring reconciliation tasks related to data management, transaction matching and certification, enabling staff to focus on exception management. Automated systems match transactions more accurately than humans and can maintain tighter internal controls, even virtually.

Automation can release organizations from finite limits, like human capacity, working hours and even geographic location. By automating reconciliation, financial leaders can ease the burden on back-office staff and protect business continuity and enhance overall resiliency.

Lesson 2: One change leads to another

The pandemic pushed consumers toward payment trends many had only been dabbling in, like digital wallet and person-to-person payments. This is great news for financial institutions – if they can manage the growth in transaction volume and data sources.

Fiserv’s 2020 Expectations & Experiences: Consumer Payments survey found 53 percent of banking consumers used mobile banking in the past 30 days, up from 47 percent the previous year. Using the same parameters, 26 percent used a digital wallet, up from 15 percent, and 69 percent paid at least one bill using direct debit (ACH), up from 52 percent.

According to Early Warning Services, LLC, the network operator of Zelle, 519 million transactions were sent through the network during the first six months of 2020, a 63 percent increase in transaction volume over the prior year.

To turn this opportunity to their advantage, financial institutions need an infrastructure that supports growth. For reconciliation, that includes the ability to process rising transactional volumes quickly, with minimal write-offs and strong internal controls. The treasury, finance and accounting departments also need the ability to manage more data sources.

Lesson 3: Inaction is expensive

Regardless of an institution’s digital maturity, it has to collect data (likely from multiple systems) and aggregate, review and audit it. The institution also must determine how this will be done and who will do it.

Most financial institutions recognize the need to evolve in the marketplace through products, services and even branding. Evolution is also needed inside the organization so financial institutions can fulfill their promises in a rapidly changing market.

During the pandemic, departments with manual and labor-intensive processes found it difficult and even risky to perform routine tasks. Issues arose surrounding accessing, printing and disposing of financial information in people’s homes; how information will eventually be re-centralized into the system; and how visible remote processes will be during audits down the road.

Financial institutions that choose to “do nothing” to modernize their back office must consider the costs related to productivity, talent retention, write-offs, printing, file storage, real estate and more. Automatic data loading, enrichment, routing and escalation are more efficient than manual processes and physical locations.

The “old” reasons to automate are valid: efficiency, error reduction, fewer write-offs and easier auditability. In today’s environment, benefits like scalability, agility and resilience may trump all. Automation can help financial leaders prepare for and survive whatever’s next.

 Danny Baker is vice president, market strategy, at Fiserv.

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