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10 reasons why automation is good for financial service providers

The topic of automation is top of the minds of many businesses across the UK. In fact, Experian research shows 2 in 5 businesses plan to automate many of their current processes this year, specifically investing in advanced analytics, such as AI, to make this happen.

However, this doesn’t come without challenges. Even the definition of what automation is can vary between businesses and sectors. But for me, it is the use of software to automatically make intelligent business choices. It is distinct from a decision support system because the software can make decisions instead of just offering information to humans who then make decisions. Decision automation makes choices based on pre-determined logic.

Automated decision making can slot into your current processes and has the power to transform the way you do business. Here’s a more detailed look at the benefits:

1. It can give you a competitive advantage - Automation allows you to streamline validation processes and give customers a faster decision. You can also react far more quickly to changes.

2. It allows you to optimise performance - Automatically controlling critical tasks removes the risk of human error and helps you avoid losses. Then there are all the benefits you get from using advanced analytics: better data quality, new data sources and improved scoring techniques.

3. It lets you build better customer relationships - You can improve targeting by using triggers to offer relevant products or services. You can improve retention and drive extra sales with new customer relationship methodologies, such as rewarding good customers at risk of switching to a competitor with risk-based pricing.

4. It facilitates better digital channels - Digital portals need to offer customers up-to-date balances, relevant marketing offers, easy application processes and transparency of information: all of which would be impossible to support without automation. Add a chat facility and you have a complete online service.

5. It guarantees consistent decision making - Automating core decision points eliminate the risk of bias, improving fairness, reducing confusion around individual decisions and shortening training cycles. Advanced techniques can also identify bias in the data. 

6. It helps you better manage risk - Automation means each new loan operation adheres to your risk appetite and strategy and removes subjective interpretation. You can be more responsive, rapidly implementing changes to credit and fraud policies to avoid repeated problems and losses.  

7. It improves workflow - With fewer manual processes, workflows are more streamlined and efficient. Processing straightforward applications or propositions automatically means underwriters are freed up to focus on more complex lending scenarios.

8. It improves underwriting - Automated underwriting typically gives organisations an improved process flow; better customer service levels; faster broker and agency communications; faster, more accurate tracking, consistent decisions; faster time to decision and time to cash; and improved margins.

9. It reduces paper processes - Using a data-driven rules engine is an excellent step towards a paperless way of working. Electronic applications can negate the need for paper and are linked to an underwriting rules engine, meaning all mandatory fields are completed and there are no issues with interpreting handwriting.

10. It facilitates product development - From a more strategic perspective, automation also has longer-term benefits that are often overlooked. Firstly, analysis of bottlenecks and data-quality issues can help identify deficiencies in current product design. In a similar way, high reject areas can be used to understand potential niche groups that could become valuable customers in the long term.

What these benefits all add up to is something far more valuable: competitive advantage. Automation allows you to work faster and more efficiently, improving customer satisfaction and experience. It means you can rapidly implement changes to offer more competitive terms, improve margins with dynamic risk-based pricing, and take a pro-active approach to customer management throughout the life cycle.

Automation is the future – helped by the development of cloud based access which allows you to bring together all your applications and decisioning needs into a single place. As a result, you can make more sense of your data and unify your business processes, be more accurate, more efficient and armed with an ability to act on previously unseen insight.

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David Bernard

David Bernard

Managing Director, Decisioning Software

Experian

Member since

07 Jun

Location

London

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This post is from a series of posts in the group:

Innovation in Financial Services

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