Read: Transforming Back Office Operations with Intelligent Automation

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Transforming Back-Office Operations with Intelligent Automation at Financial Firms

New advances in intelligent, back-office automation technologies are reshaping the operational landscape of modern financial firms. Through the deployment of intelligent automation and sophisticated artificial intelligence (AI) techniques, these firms are achieving new results in efficiency, compliance, risk mitigation, and success.

“As artificial intelligence continues its ascent, captivating global imagination, and reshaping industries, the financial sector stands on the brink of transformative change,” says Forrester in a May 2024 article. “This goes beyond merely keeping up with technological progress; it’s about ensuring that companies strategically invest in technologies offering real benefits, customized to their specific business needs and goals.”

But the complexity of today’s back-off technology landscape makes selecting the right technologies difficult, let alone adopting and implementing the right solutions. Additional challenges include managing internal organizational change in terms of both familiarity with new tools and disruptions of ingrained employee practices. Regardless, all these steps are necessary to overcome legacy systems, manual processes, and data silos that contribute to inefficiencies, errors, and difficulties with compliance.

This article explores the different ways in which financial firms can leverage new intelligence automation technologies to streamline their back-office operations and enhance their overall performance. Here we consider the top technologies being adopted by financial firms and share steps firms can adopt to implement them successfully.

The Current State of Back-Office Operations

For many financial firms, existing back-office operations are characterized by disconnected systems and legacy processes, which are largely manual and error-prone. Often these inefficiencies can lead to regulatory compliance issues, increased risk exposure, and reduced profitability.

Common, problematic technologies and systems include:

  • Legacy software: Outdated platforms can be inflexible and costly, leading to inefficiencies and hampering the integration of new technologies.
  • Manual processes: Reliance on manual processes in data entry, knowledge management, and other areas not only increases the risk of human error but also consumes valuable time that could be better utilized elsewhere.
  • Disparate systems: Isolated systems, data storage, and digital platforms jeopardize teams’ abilities to consolidate resources, achieve universal communications, and get the greatest value from their institutional knowledge.
  • Paper-based documentation: Maintaining paper records is cumbersome, prone to errors, and lacks the scalability of digital solutions.
  • Non-integrated tools: Applications that do not communicate effectively with each other create bottlenecks, reducing overall productivity and increasing the likelihood of discrepancies.

These traditional back-office operations cannot keep pace with evolving best practices and customer expectations—but also, regulatory requirements and reporting standards. New regulations such as the Digital Operational Resilience Act (DORA) in the European Union have further increased the pressure on financial firms to modernize processes and systems.

Opportunities with Intelligent Automation

Intelligent automation technologies can provide firms with the tools to efficiently manage their operations and achieve greater levels of success in terms of efficiency, compliance, security, and business. Indeed, over half (52%) of executives at financial firms save at least $100,000 annually from automation, The Financial Brand reports; also, financial firms that have automated over 80% of their operations have realized increased revenue, digital transformation, and better customer experiences as a result.

Intelligent automation refers to the use of traditional automation technologies such s robotic process automation (RPA) and natural language processing (NLP); but also, new industry-specific technologies, such as AI-driven financial tools. These emerging technologies are powered by generative AI and other new AI algorithms, enabling businesses to automate more sophisticated processes.

Intelligent Automation Technologies Driving Back-Office Innovation

Now, firms are adopting cutting-edge automation technologies tailored to their needs in terms of client services, data management, security, regulatory compliance, and business goals. The following innovative automation technologies are helping firms become more agile, adaptable, and secure moving forward:

Intelligent Process Automation (IPA)

Intelligent Process Automation (IPA) integrates AI and machine learning with traditional automation to not only automate routine tasks but also to adapt and optimize them based on real-time data. At financial firms, IPA can be utilized for automating complex workflows such as compliance checks, fraud detection, and customer onboarding processes. Benefits include enhanced operational efficiency, reduced risk of human error, and significant cost savings, ultimately leading to increased profitability and improved customer satisfaction.

Workload Automation (WLA)

Workload Automation (WLA) involves the centralized coordination and execution of tasks and processes across an organization’s entire IT environment. Financial firms can leverage WLA to streamline critical back-office operations such as batch processing, data movement, and end-of-day reporting. The benefits of WLA include reduced operational costs, improved accuracy, and enhanced reliability of IT workflows, ensuring seamless and efficient execution of complex financial processes.

Intelligent Document Processing (IDP)

Intelligent Document Processing (IDP) leverages AI and machine learning to automatically capture, extract, and process data from a myriad of document types, including invoices, contracts, and compliance forms. At financial firms, IDP can streamline the handling of high volumes of paperwork, reducing manual labor and minimizing errors. The benefits of IDP include enhanced data accuracy, faster processing times, and improved regulatory compliance, ultimately leading to significant cost savings and operational efficiency.

Cognitive Automation

Cognitive automation, which “works with unstructured data, such as emails, voice messages, [and] videos” can “scan an invoice to find the right amounts to pay, identify the payee, and even detect inconsistencies, which could be an alert to fraud,” as TechTarget describes.  Potential benefits of cognitive automation to financial firms include enhanced fraud detection, improved processing accuracy, and significant reductions in manual labor and operational costs.

Integration Platform as a Service (iPaaS)

Integration Platform as a Service (iPaaS) enables seamless integration across diverse applications, data sources, and services within financial firms. By providing a unified platform for connecting disparate systems, iPaaS allows financial institutions to streamline data exchange and enhance interoperability, leading to more efficient operations. The benefits include improved data accuracy, accelerated time-to-market for new services, and a significant reduction in integration complexities and costs.

Financial firms are already making headway on technology adoption in these areas. For example, 27% of financial firms already use intelligent document processing, and 33% use AI-driven intelligent process automation, CIO reports. Together, intelligent automation technologies are becoming pivotal in enabling financial firms to stay competitive and responsive as business evolves.

Five Steps Implementing Intelligent Automation

Transitioning to intelligent automation presents challenges for financial firms, especially with entrenched legacy systems and ingrained employee behavior. Outdated systems often lack the flexibility to integrate with modern automation tools, causing disruptions and increased costs. Additionally, long-standing employees may resist change due to comfort with traditional workflows, making it crucial for firms to adopt comprehensive change management strategies.

Despite these challenges, the journey towards intelligent automation holds immense promise for forward-thinking financial firms. By following a structured approach, these institutions can seamlessly transition to innovative technologies and achieve long-term success.

1. Assess Technological Needs and Opportunities

Financial firms should begin by conducting a thorough analysis of their existing processes to identify inefficiencies and areas that could benefit from automation. For example, firms can evaluate the current state of document management to determine if Intelligent Document Processing (IDP) could streamline operations and reduce manual errors. Additionally, it’s essential to consider the scalability and integration capabilities of potential automation tools to ensure they align with long-term business goals.

2. Identify and Evaluate the Right Technologies

Financial firms should begin by benchmarking each intelligent automation technology against industry best practices and competitive standards to understand their potential impact. For example, when considering Intelligent Process Automation (IPA), firms should assess the technology’s ability to integrate with their existing IT infrastructure and its performance in automating compliance checks and fraud detection. Additionally, conducting pilot implementations on a small scale allows firms to evaluate the technology’s effectiveness and gather data to support a broader rollout, ensuring a strategic and informed approach to adoption.

3. Prepare the Organization for Technology Adoption

Financial firms should focus on comprehensive training and upskilling programs to ensure employees are adept at utilizing new technologies like Intelligent Document Processing (IDP). It’s crucial to foster a culture of innovation by encouraging an open dialogue about the benefits and potential impacts of automation on daily operations. Additionally, assigning dedicated teams to oversee the integration of these technologies will help mitigate resistance and facilitate a smoother transition.

4. Execute Change Management Strategies

Financial firms should implement a structured change management plan that focuses on clear communication, employee involvement, and continuous support. For instance, when integrating Intelligent Document Processing (IDP), firms should establish a transparent communication strategy to highlight the benefits of the new technology and address any concerns. Engaging employees early in the process through workshops and feedback sessions can foster a sense of ownership and ease the transition, ensuring smoother adoption and long-term success.

5. Support and Sustain Ongoing Success

Financial firms can establish continuous monitoring and improvement frameworks to maintain employee confidence and operational success. For instance, utilizing Intelligent Process Automation (IPA), firms can regularly review and analyze performance metrics to identify areas for optimization and innovation. Additionally, fostering an environment of continuous learning and development will enable employees to stay updated with the latest advancements, ensuring sustained efficiency and competitiveness.

A Smarter, More Secure Financial Services Industry

Intelligent automation across the financial services sector will ultimately lead to a smarter, more secure industry by enhancing operational efficiency and accuracy across environments and organizations. As firms continue to adopt these advanced technologies, they will not only meet the evolving demands of the market but also fortify their infrastructures against emerging threats, ensuring a more robust and trusting business environment.

Option One Technologies Provides Solutions for Financial Firms

Get the greatest value from technology at your financial firm. Contact Option One Technologies today and begin improving your back-office processes with intelligent automation solutions.