Innovation Through Automation

Posted February 22, 2018 by Shaun McKenna

The next generation of automation has enormous potential to radically change the way financial services organisations operate.

The financial services industry is facing significant challenges: evolving customer expectations, complex and ever-changing regulation, downward pressure on margins driving an increasing focus on efficiency, and heightened risk from a number of fronts, including cyber threats.

Technology has – and will continue to – play an important part in helping firms to respond to these challenges. In recent years, we’ve seen most firms focus much of their investment on customer-interfacing technologies. What they are coming to realise is that to really shift the needle, they need to also radically transform their back office.

This is where automation comes in.

From an operational perspective, the next generation of process automation will have an increasingly dramatic impact on the productivity, effectiveness, and sustainability of financial services organisations the world over. The Founder and Executive Chairman of the World Economic Forum Professor Klaus Schwab has called this the "Fourth Industrial Revolution."

This describes how the simultaneous emergence of a raft of new technologies is changing our lives and society at an unprecedented pace. In the case of financial services, these technologies include artificial intelligence, machine learning, blockchain, open APIs, the Internet of Things, big data, cognitive analytics and, in more specific cases, driverless cars, and new health technologies. These are all underpinned by accelerating computing power, more ubiquitous, faster broadband, mobile networks, and the Cloud.

Automation enables financial services firms to fundamentally change the way they operate: from the way they engage and service customers to the way decisions are made, knowledge is acquired, products are produced, and processes are managed.

It also holds the key to enormous economic gains. At a macro level, McKinsey predicts that the current wave of automation has the potential to deliver between 0.8% and 1.4% productivity growth. This is more than the steam engine (0.3%), early robotics (0.4%), and IT (0.6%).

The investment in automation can be significant – but so too can the returns. A great case in point is the introduction of SuperStream in Australia, which standardised and automated the processing of superannuation data and payments. The total investment to date in SuperStream has been significant – an estimated Aus $1.5 billion over the 2012 to 2018 financial years – however, it is already bearing results. According to the Australian Tax Office's SuperStream Program Benefits Report, estimates of realised efficiencies are in the realm of Aus $800 million per year, resulting in estimated savings for members of around Aus $2.4 billion savings per annum.

The report makes for compelling reading.

Of course, it’s not enough to simply automate existing processes. The financial services industry is rife with complex and inefficient processes. Follow any transaction from start to finish and more often than not you’ll find yourself taking a long and laborious journey that meanders through a myriad of internal fiefdoms. Automate these processes and you’ll get some gains. But to get the full potential of automation, first take the opportunity to rethink and streamline processes and then automate wherever possible.

Adapted from Innovation through Automation, which I presented at ADVANCE 2018.

Shaun McKenna
Head of Relationship Management
DST Systems, Australia

The views expressed in this publication are solely those of the author and do not necessarily reflect the position or policy of DST Systems, Inc. or its affiliates, subsidiaries, joint ventures, officers, directors, or management.

Featured Insights
  • Growth From the Inside Out - Mastering the Complexity of Operational Excellence in Financial Services
    Learn More
  • Robotic Process Automation
    Learn More
  • Without Data, It Simply Won't Work
    Learn More

Subscribe for more info
Want to stay up to date? Subscribe to our communications to access the latest content.

Take your business to the next level