The current business environment is evolving and each sector, including the banking sector, needs to redefine and reshape its way of conducting business operations. With the digitization of all aspects of human touch points, the banking sector can’t stand aloof. As customer expectations are increasing, with the existing paradigms, banks can’t operate in silos.

Focusing on operational costs, governance, and control are key parameters of sustainable growth for banks. Business Process Management plays a crucial role in helping the banking sector overcome challenges. These initiatives can provide immediate measures for risk mitigation while also improving profitability in the banking sector.

According to a report by McKinsey, anywhere from 10% to 25% of banking tasks will be automated to provide ample time for bank employees to focus on more value-driven tasks.

Five Major Challenges Traditional Banks Face:

  • Resistant mindset 
  • Misalignment of processes 
  • Incompatibility between systems 
  • Risk and compliance reporting 
  • Lack of automation strategy 

The focus on following legacy systems and the fear of accepting change via technology brings up bigger constraints for the acceptance of BPA in the banking sector.

The banking sector also faces challenges from fintech and non-traditional competitors, who have a better reach to target customers because of their digitized approach.

It is clear that the market will respond to those players who connect better with the customers, and the digitization of business processes is the key to that. 

So, the banking sector can reclaim its market share from its competitors only if it has an edge over others. Therefore, the best way to take advantage of the opportunities is to use business process management.

Banking sectors can use BPM to leverage their opportunities in the following areas:

1.Quick Loan Approval & Processing

Approval of loans is a time-consuming process for banks, involving extensive manual bandwidth. In digital banking, these operations must be automated with BPM. Banks can automate simple business operations with process builders to ensure a smooth loan processing system without manual intervention. Additionally, banks can handle a massive volume of loan requests without compromising on quality and accuracy.

2. Better Customer Experience

Customers are the core of any business's success, and the banking sector is not detached from it. According to a report by McKinsey, solving customers’ pain points and developing a business model around them can lead to a plethora of opportunities.

Therefore, having a loyal customer base can synergize business operations, and a business process automation system can help with it. Now, registering new customers and verifying their details need not be routed to employees. 

All these processes can be automated with business workflow automation via websites, smartphones, or third-party platforms. It adds value to the overall customer experience by automating the end-to-end client management process, and staff is directed towards more productive tasks. 

3. Optimization of Key Business Operations

Banks need to speed up their operations for crucial tasks like accounting reconciliation, KYC validations, updating of customer data, and maintaining data on overdraft transactions. Using intelligent business process automation, banks can smartly handle their crucial operations with a workflow automation platform.

4. Faster Debit or Credit Card Approvals

Extracting data from multiple sources and verifying details is a mandatory process for receiving requests and approving debit and credit cards. When resorting to manual operations, the whole process can be tedious and open to errors, inconsistencies, and anomalies. Therefore, using business process automation software can provide a reliable solution to the system with assured accuracy and reduced cost of operations.

5. Risks and Regulatory Compliance

Business process automation can play a significant role in risk management and regulatory compliance for the banking sector. 

Updation of data and regulatory policies must be at the forefront of priorities for banks, along with focusing on anti-fraud checks and anti-money laundering checks that can be automated with a business process automation system. 

6. Faster and Accurate Decision-Making Process

Banks need to resort to BPM to smooth their decision-making processes which can be done with an effective workflow management system. With digital banking, accurate decision-making resonates with banks’ ability to protect their turf against advanced competitors. 

The following steps can help banks successfully automate their processes in phases:

  • Identifying the complex processes in the entire banking system is the first step to making a room for automation. The highly repetitive tasks and processes, usually labor-intensive must be identified and routed for automation.
  • All stakeholders must be involved in choosing the specific tasks in the processes that need to be automated. This is because their approval and trust in automating processes is important for the success of the workflow automation platform.
  • Opting for intelligent business process automation is the next step. The selection of process automation software must be done on basis of specific goals and processes that require automation for optimized efficiency.
  • Automation should always be put in place in phases to avoid inconsistencies and anomalies.
  • Analyze automation tasks to see if everything works according to specifications. If there is any room for improvement, then go ahead with it, allowing better results.

Conclusion

Enhancing digitization, customer requirements, and regulatory compliance create a challenging environment for the banking sector. Therefore, BPM is the only solution for banks to improve efficiency, cut operational costs, optimize workflows and create strict control over all key operations.

To maintain relevancy in coming times, business process automation tools will play an important role, and banks that automate their key operations will be able to hold reins in the competitive market landscape.

About Author

Ramakrishna Kalahasthi, responsible for maintaining effective relationship governance, safeguarding the organization’s assets, and optimizing long-term value for the company, its partners, and customers.

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