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 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), this fact serves to illustrate that financial institutions were among the first industries 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 facing financial institutions today as they struggle to innovate at the same pace as Fintechs and digital natives like Amazon and Zillow. Why?
- Banks have amassed massive 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, mortgage, investments)
- Banking back offices have complex processes that span many business units, further increasing and complicating data continuity
- Banks are heavily regulated, adding complexity to back office processes and the data burden
- Banks still rely on core banking systems dating back to the 60s, making it difficult to easily implement modern technologies
While this is an overly simplistic view, it highlights a few of the hurdles banks face as they aspire to full digitization and begins to shine a spotlight on the (largely) ignored back office as a lynchpin to the banks’ 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 customer experience. But banks have embraced the fact that the front office and back office are inextricably intertwined in the pursuit of customer experience excellence. In fact, 74% of bank operations leaders say that customer experience is their top strategic priority1.
We recently explored digitization and the back office in Banking on Automation for a Better Back Office, and over the next few weeks, we’ll dive deeper into the challenges we highlighted and how they are playing out as banks look to the back office as the next frontier in their digital transformation efforts.
First up, processes.
The average retail bank today has between 300 and 800 back-office processes to manage and monitor2. This explains why so many banks continue to fail to deliver the customer experience consumers expect:
- 57% of consumers said opening a bank account should take no longer than one hour3
- 47% said a mortgage application should take no longer than one day4
These hundreds of manual, disconnected, paper-based processes and siloed data sources leave financial institutions unable to bring new offerings to market quickly, 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-range success.
Where to start?
The sheer volume of process, business units, and complexity is overwhelming when embarking on a back office automation project. 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 digitization path.
Platforms like TrackVia allow industry leaders to digitize key back office operations via enterprise-class web and mobile apps customized to their individual business processes that eliminate manual data collection, automate critical workflows, and analyze data to make faster, better informed decisions.
With this approach we’ve seen customers achieve measurable impact in weeks with little to no IT support needed. Read how Stearns Lending was able to standardize, simplify, and automate product-related processes to reduce its asset sales cycle times and increase productivity in its post-closing processes.
Stay tuned to our blog in the coming weeks as we’ll examine the role data integrity and accessibility factor into digital transformation efforts and how leading financial institutions are leveraging platforms like TrackVia to tame the data beast.
12018 North America Banking Operation Survey, Accenture
2Backing up the Digital Front: Digitizing the Banking Back Office, CapGemini Consulting
39 tech challenges facing banks, American Banker
49 tech challenges facing banks, American Banker