Mobile payments are eliminating the need for cash, online banking offers fast and easy convenience and banks are incorporating customer-facing front-end operations with digital solutions.
But aside from these flashy new technologies, many executives don’t realize that the largest opportunity for digital transformation is actually behind the scenes—beginning with the back office. In order to transform customer-facing systems and processes, issuers need equally effective and integrated back-office operations, driven by technology and automation.
The current problem is obvious. Banking technology, which drives a lot of payment services and card issuance, is a very traditional, slow-moving industry. Back-office systems reflect this and lack the technological innovation of digital core platforms. Current manual processes and human labor, like financial reviews and processing customer requests, lead to errors, put a significant drag on resources, foster IT issues and lack efficiency. Not to mention, the staff and concentration required to sort through large amounts of data is costly and risky in itself.
These manual processes, down to the actual paperwork, is costing thousands, if not millions of dollars, per year. Human capital costs have reached an all-time high, and not just in monetary value. With most back-office operations still stuck on legacy platforms that are not equipped to deal with the amount of information or data the modern finance industry demands, innovation is stagnant.
Too many processes within banks are still relying on pencil and paper. The manual process is costly and slow, leading to inconsistency and a high error rate that banks cannot afford. Important data can often be tainted by misspellings, duplicated records and other inaccuracies, slowing efficiency and costing banks their customers and valuable time. By incorporating a digital platform in the back office, banks can increase automation by digitizing workflow and automating decision making.
Incorporating next-generation technology into digital platforms can also save both time and money with the ability to sort through payments and financial data. By connecting humans, machines and analytics through the latest technology on-the-spot human decision making is incorporated into integrated platforms, helping prevent systems from experiencing manually user-operated errors or a repeated IT issue.
Embedding artificial intelligence into core banking platforms also provides the ability to quickly react to market changes. By gathering and analyzing large amounts of data in real-time, banks can sort through more data than ever before, giving them the ability to provide individualized customer reports and gain an in-depth understanding of each customer’s individual habits. With AI, banks can now quickly detect fraud, predict which customers are likely to cancel services and gain a more in-depth understanding of key clients.
The modern back-office structure is not always reliable, often falling short of what is required to be done in a certain amount of time and lacking in efficiency. Executives need to construct a new core to back-office structure, where automation, processing and analytics are compiled into one integrated system and process to fundamentally change how work gets done.