Top 5 financial services that are ripe for automation

AI and automation will enable financial services institutions to redefine their resourcing models, freeing up their best talent to focus on higher-value work

Artificial intelligence has the potential to reduce costs, increase operational efficiency, improve the customer experience and create bottom-line growth in the financial services sector 

Barely a day goes by without the launch of a new report extolling the potential benefits of artificial intelligence (AI) and automation in the financial services industry. These reports often refer to the potential for cost reduction, increased operational efficiency, improved customer experience and, ultimately, bottom-line growth. Indeed, analysts predict that AI will deliver a 22 percent reduction in operating costs (a saving of more than $1trn) across the global financial services industry by 2030 as business leaders look to transform both front and back-office functions.

Demand for AI is coming from both ends of the market: established banks are recognising the need to respond to huge sector-wide disruption and to develop more agile operations in order to compete, while smaller fintech firms are looking to AI and automation as a way to scale quickly while keeping costs down.

The scale of the opportunity is so vast that it can sometimes be a challenge for banks and insurance firms to know where to start or how to identify the process automations that will deliver most value. With that in mind, here are five processes within the financial services sector that are ripe for automation.

AI will become the catalyst for innovation, growth and genuine differentiation in the market: that’s where the real value of the technology lies


1 – Anti-money-laundering analysis
Currently, banks spend huge amounts of money resourcing teams of anti-money-laundering analysts to investigate post-transaction alerts. One bank Thoughtonomy recently spoke to had an anti-money-laundering bill of £1.2bn ($1.5bn) per annum. It employed more than 1,500 analysts and investigated 60,000 transaction alerts every month.

The challenge for analysts is that much of their time (up to 50 percent, according to our research) is taken up collating data on suspicious transactions rather than actually investigating them. Often, an analyst will need to collate data from five or six different systems before they can begin conducting any kind of analysis. This is hugely time-consuming, costly and tedious. In addition, banks have a significantly high turnover of analysts – up to 25 percent per annum, in some instances. This compounds the existing cost with an additional cost of hiring and training.

Using a virtual workforce, banks can substantially reduce the time taken to investigate transactions. Virtual workers have the capacity to collate the various pieces of required information at machine speed, meaning analysts can focus on value-adding activity and, ultimately, process many more transactions. Given that virtual workers work 24 hours a day and up to five times quicker than a traditional worker, we estimate 15-fold productivity gains in this area.


2 – Know Your Customer checks
As with anti-money-laundering analysis, financial firms have to conduct lengthy background checks on their clients. These are currently completed by large teams of Know Your Customer (KYC) analysts and are often structured and repetitive in nature – for example, checking sanctions reports, government databases and other key regulatory sources. Just like anti-money-laundering checking, banks have historically thrown people at the KYC problem, but as the regulatory grip begins to loosen, they now have the opportunity to review the efficiency of these processes.

Using a multi-skilled virtual workforce, banks can automate a large percentage of the KYC process. Virtual workers are able to access systems and applications in the same way as humans do, reading documents and data sources and making rules-based decisions accordingly. Banks are able to set rules so that if certain criteria are not met or a case seems sensitive or unusual, virtual workers can flag this to a second-line KYC analyst to review in more detail. What’s more, banks can drastically increase the frequency with which they conduct repeat KYC checks, allowing virtual workers to execute on a periodic, out-of-hours basis.


3 – Claims processing
Typically, insurers will have teams of people reviewing claims and making subjective decisions on whether or not to pay out. As the process is typically manual, the time to complete trend analysis against previous, similar claims is often exhaustive, and therefore rarely gets completed. This increases the possibility of fraud and ultimately damages insurers’ bottom lines.

By employing a virtual workforce, insurers can significantly increase the number of claims they are able to process, while also identifying fraud at a much more granular level. Virtual workers are able to extract information from claimant documents and compare this data with previously submitted claims. They are then able to identify any irregular activity and flag anomalies to relevant parties where appropriate. When the claim is a valid one, virtual workers can cross-reference against procurement contracts in order to prioritise the order of payment based on the agreed rebates.


4 – Policy quote generation
If a customer is looking to get a quote for car, home or phone insurance, they typically need to fill out multiple forms in order to provide information to their chosen insurance prospect. This takes time and effort, and often customers will drop out half way through the process – a lost sales opportunity for the insurer.

One of our clients is using virtual workers to make the process a much simpler one. Instead of re-typing information from their policy document into a quoting system, our client allows customers to send existing policy documents directly to a team of virtual workers, which can then extract the relevant information and process a quote. If the quote is more competitive than the existing policy, a new policy is generated immediately, seizing the opportunity while the client is still paying attention. If the quote is more expensive, the information is directed to an internal marketing intelligence team. The result is a much smoother and more painless customer experience, a lower cost to serve and a greater level of insight into market competitiveness.   


5 – Shared services
Finally, when virtual workers aren’t interacting with the end clients or ensuring that regulatory compliance is upheld, they keep themselves busy with the tedious back-office tasks that are such a drain on staff productivity and morale. Basic processes such as financial reconciliations, employee on-boarding, periodic screening, reporting, data re-entry and mid-term adjustments are just a few of the processes that virtual workers manage across the back office.

What’s more, because virtual workers are multi-skilled and agnostic to the processes they execute, they can work across the entire business, completely breaking down the siloed functions that still exist in many financial organisations.