Why Back-Office Automation is the Secret to Better Banking
The financial services industry isn’t necessarily synonymous with digital innovation, so most people would be surprised to know that digital banking in the US was actually introduced in New York in the early 80s (known as home banking back then). While it’s true these early efforts never took off with consumers (mass market adoption of online banking wouldn’t happen until after Y2K fears passed), they illustrate that financial institutions were among the first organizations to embrace digital relationships with their customers.
In some ways, it is this early commitment to digital relationships that has caused some of the challenges financial institutions are facing today as they struggle to innovate at the same pace as fintechs and digital natives like Amazon and Zillow. Why?
- Banks have amassed huge data sets across the lifetime of the customer relationship
- Customer data is often captured and resides in different business units within the bank (e.g., checking/savings, mortgages, investments)
- Back offices have complex processes that span many business units, further increasing and complicating data continuity
- Heavy regulation adds complexity to back-office processes and the data burden
- Ongoing reliance on core banking systems dating back to the 60s makes it difficult to easily implement modern technologies
While this is an overly simplistic view, it highlights some of the hurdles banks have to overcome as they aspire to full digitization and recognizes the largely ignored back office as a lynchpin in their efforts.
The back office may not be the first place that comes to mind when discussing what banks need to improve to deliver a stellar front-office customer experience. But banks realize that the front office and back office are inextricably linked in the delivery of customer experience excellence. And as 74% of bank operations leaders say that customer experience is their top strategic priority, it is imperative that banks address their back-office issues.
First up, processes
The average retail bank today has between 300 and 800 back-office processes to manage and monitor. This explains why so many banks continue to fail to deliver the customer experience consumers expect:
- 57% of consumers say opening a bank account should take no longer than one hour
- 47% of consumers say a mortgage application should take no longer than one day
Hundreds of manual, disconnected, paper-based processes and siloed data sources prevent banks from bringing new offerings quickly to market, delay customer response times, and result in disjointed experiences and unhappy customers. It’s easy to see why optimizing the back office through automation plays a critical role in determining a financial institution’s long-term success.
Where to start?
The sheer volume of processes, number of business units, and level of complexity can be overwhelming when embarking on a back-office automation project. But the good news is, there’s a way to approach automation systematically, leveraging web and mobile low-code solutions as an attainable first step along the path to digitization.
Low-code platforms allow industry leaders to digitize key back-office operations via enterprise-class web and mobile apps customized to individual business processes that eliminate manual data collection, automate critical workflows, and analyze data for faster, better informed decisions.
With this approach, customers can achieve measurable impact in weeks with little to no IT support needed.
As financial institutions continue to automate their back offices, it’s clear that flexible, low-code platforms will play a key role in their digital transformation.
