The impacts of automation programs

worker typing on laptop about impacts of automation programs for banks and insurance companies
worker typing on laptop about impacts of automation programs for banks and insurance companies
worker typing on laptop about impacts of automation programs for banks and insurance companies

As part of its Fully Automated Enterprise series, American Banker recently published another report on automation programs highlighting the importance of “getting it right” for the future of banks and insurance companies.

3 out of 4 banking and insurance stakeholders plan to implement new automation technologies in the next year, with a focus on data integration, leveraging AI and machine learning and application integration.

The high number of organizations planning to implement automation technologies was particularly interesting in the current economic environment in which many of our clients have paused investments amid lower budgets.

Another key finding of the report was that single-point solutions that automate only a part of a business process continue to be the dominant preference. Single point automation solutions offer many advantages and can be the building blocks for end to end automation programs. They are popular with banks and insurance companies because they offer quick returns on investment and provide the opportunity for managers and executives to demonstrate and showcase success.

In my blog, Seven best practices for automation programs, I highlighted the problems and challenges with large scale automation programs that quickly grow into large and costly programs where the results are not always clear. Many executives quickly question the ROI and face significant pressure to justify the “spend” particularly in tough economic environments.

Cost pressures continue to be one the primary factors for driving automation programs. The need to reduce costs in the front, middle and back office in the current economic environment that has recently experienced high rates of inflation can be particularly challenging. The majority of the cost savings typically come in the form of staffing and resource reductions.

While cost savings have been the primary driver, it is also important to embrace revenue acceleration and realization as a potential key benefit driver. In some organizations, millions of dollars are delayed or even worse lost due to poor onboarding (customer and products) processes that result in delayed revenue or customer abandonment due to the delays. The revenue is literally blocked by poor processes resulting in customer dissatisfaction and lost revenue that will likely never be recovered. Automation can also reduce revenue leakage due to data issues when the accounts were established and during the ongoing maintenance process.

The American Banker survey also revealed that while survey respondents expect changes to staffing numbers due to automation, they also anticipate changes to the makeup of their workforce.

71% of respondents say automation will change the composition of their organization’s workforce to at least a moderate extent.

The changes in workforce composition will continue to drive the need for companies to reskill and upskill employees to survive in the new highly automated world. This combined with the demand for companies to be more digital will be disruptive for employees who have experienced massive change in both their personal and work lives in the past three years. In our business insights article, we highlight the prediction from the World Economic Forum that approximately 1 billion jobs are likely to be transformed by technology in the next decade. This link provides useful definitions of reskilling vs upskilling as well as case studies from top companies. It also contains a downloadable guide for upskilling and reskilling.

Increased automation and digital environments will only increase forcing the workforces of banks and insurance companies to constantly change and evolve over time. Recent concerns and problems with highly disruptive AI tools and technologies like Chat GPT have created the need for highly regulated companies like banks and insurance companies to create governance structures that manage the new risks that have resulted from this disruptive technology that is only expanding exponentially with each passing day. My colleague, Glen Cathey, recently published useful guidelines for employees using AI responsibly. Banks and insurance companies must balance the benefits of automation and digital tools with the risks and impacts to their workforce and ultimately customers.

We can help you meet the demands of these automation programs by designing comprehensive and effective playbooks, identifying impacted areas, enhancing processes, and providing technology solutions. We have led large-scale Business and Technology automation programs as well as individual automation projects across the Financial Services Industry.

Let’s talk. We welcome the opportunity to partner with you on major strategic and operational initiatives, providing a variety of solutions to meet your business needs.

Celerity leadership: Jack Leach, Celerity's Senior Client Partner of Financial Services

Jack Leach leads our Banking and Financial Services practice. His consulting experience includes consulting leadership roles with leading firms like Deloitte where he brings a unique combination of industry and consulting experience working for and with top banks and financial institutions within the US, Canada, and Europe. During Jack’s career, he has worked in more than 25 different banks and financial service institutions.

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