AI and Intelligent Automation is Key for Banks to Help Navigate Inflationary Stormy Weather

Six months ago preparing for SIBOS, the biggest elephant in the room for what’s keeping bankers up at night was probably sanctions. How Western governments have ratcheted up sanctions against Russians and Russian businesses will still be a big topic of SIBOS but another issue is waded into the debate, namely inflation.

At last year’s SIBOS, inflation was in low single digits and untroubled markets. Today, inflation is at a 40 year high in many countries and on track to be even higher before the year is out. 

The corporate customers of banks are now adding price variability into the challenges they face. This affects everything they buy and sell, including raw materials, components, services and finished products and services.

Top of the list of strategies for how businesses respond to inflationary pressures is how businesses double down on squeezing even greater efficiencies out of their production and supply lines. 

The corporate and treasury functions of banks need to be aligned with this strategy too. Delays to payments and cash flows are never good news but are especially intolerable in the current economic climate. 

And, of course, the expansion of sanctions does not help. It is estimated that there are now 5,581 sanctions currently in place against Russians and Russian businesses (Source: Statista) and banks need to carefully navigate these when they onboard customers and process payments. This will create a regulatory burden that will be long lasting even if the invasion ends soon. 

Clearly, information technology solutions that can automate exceptions linked to sanctions will be critical. But, how banks are able to ensure a higher percentage of straight through processes for all international payments will be even more essential when businesses are combating inflationary costs and need swifter payment and settlements. 

As their corporate customers are hit by severe price variability and supply chain stresses linked to energy price rises and the aftereffects of the pandemic, banks need to do as much as they can to build out a service backbone that simplifies servicing of business accounts. The goal has to be to minimise unnecessary delays that add further stresses onto the already stressed business operations of their corporate clients. 

As you might expect AI and intelligent automation can play a crucial role here. Banks will be increasingly leaning on solutions that use natural language processing to monitor inquiry channels and auto respond much faster or route the request to the right skilled person. The goal is to dramatically reduce duplicate requests and have fewer employees reading and responding to emails and instead processing answers. The secret sauce to success will be how intelligent the bank’s AI is in routing inquiries and communications to automatically reply instantly, create cases to get a job complicated by some exception done faster or immediately triage to a team or individual with the resources and skills to sort the issue out. 

SIBOS can sometimes be about talking about future solutions. Today’s perfect storm of inflationary pressures, supply chain stresses and geopolitical complications cannot wait. The good news is many banks have streamlined and automated inquiry management and other processes in their trade and treasury services to increase straight through processing to 80% and higher of all payments. The availability of low code solutions means that the creation of these new service backbones to support corporate customers can be realised much faster than before and help ride out the current storms.