5 Reasons why banks urgently need Intelligent Document Processing
Finally - banking technology and big data are high on the agenda for financial services C-suites.
As big data becomes a fact of life for both consumers and banks, it introduces new avenues for creating revenue streams. Banking leaders recognise that the capability to extract and use data held within their business operations - and to automate document processes in their value chain, give tremendous competitive advantage.
However, in many organisations, there are barriers blocking those opportunities. Sometimes it’s budgetary constraints; other times, it’s simply a lack of support and/or understanding across the business.
Here are 5 pressing reasons to re-prioritise intelligent document processing (IDP) in your digital transformation program, and knock down those barriers one by one.
1. Big data in banking is a major, unmissable opportunity
As challenger banks continue to disrupt the financial services landscape, traditional banks have one great advantage – the enormous amounts of data they hold relating to their customer bases and segments. Loan applications alone generate mountains of data to satisfy back-end processes. But this data isn’t always in a form that can be accessed; nor is it verified for its integrity.
Being able to automatically interpret customer documents for intelligent insights unlocks valuable data for banks, which can then be fed into other areas of the business, or into applications. From there, financial institutions can develop products to meet the needs of retail, SME and commercial customers and dissolve their pain points; they can improve the customer experience and enable financial wellbeing conversations between consumers and the industry.
Data powers personalisation, opening up communication with customers about products at the right time, in a way that makes sense to individuals. Customer data becomes a source to shape strategy.
IDP uses a set of technologies - from artificial intelligence (AI) and machine learning (ML) to optical character recognition (OCR) and natural language processing (NLP). These enable financial institutions to capture, classify, and extract data stored in documents, turning unstructured and semi-structured data into a structured format.
Intelligent automation technology can then be applied to the extracted data for enhanced validation and to automatically enter it into existing applications. Advanced analytics allow for reporting and insights in real time from multiple sources, so organisations can consume, analyse and execute on the insights, feeding into the bank’s value proposition.
2. The COVID effect: new expectations from end consumers
With social distancing restrictions, lockdowns and a mass work-from-home movement in many markets, we’ve seen a revolution in consumer engagement.
It started with a mass flight to digital channels across both retail and commercial banking, accompanied by skyrocketing download rates for apps, especially in the early months of the pandemic.
“The banks are now reprioritising their digital transformation programs,” says Sandstone Technology CEO Michael Phillipou.
“18 months ago, a bank may have had a roadmap of three years of programs they were going to be addressing. Now they realise they need to accelerate that investment, reprioritise some of those programs, and bring in new priorities to ensure they’ve got market-leading digital value propositions.” “This speed and agility is something we’ve never seen before,” Phillipou says.
Overnight, digital solutions have been developed to meet customers’ need for safety and convenience, and cashless payments and international payments have became de rigueur.
“We also suddenly saw a demand for instant gratification,” says Phillipou. “Getting answers quickly and being able to communicate with your bank, either by self service or by a banker on the other side, are now expected as a matter of course.”
Note that in an environment of increasing cybersecurity breaches, new banking technology needs to be balanced with compliance, information security and risk management. “If payment systems were to go down, that would have a catastrophic effect economically and destroy trust in institutions,” Phillipou says.
3. Digital lending solutions will always have heavy compliance obligations
Banks have a conservative profile and rightly so. They have substantial and ever-changing regulatory obligations to adhere to, and layers of stakeholder approvals to secure before onboarding any new capabilities.
“As such, established banks generally aren’t technology leaders,” Phillipou says.
However there is a huge opportunity for banks to improve their ability to meet regulatory compliance quickly and easily – through automated IDP products like Sandstone’s DiVA (Digital Intelligent Verification Assistant) technology.
DiVA gives customers proven and auditable regulatory compliance through an inbuilt rules engine with no code configuration required. And because DiVA is Software as a Service, it’s fast to implement. A bank could conceivably set up IDP across their business in a matter of weeks.
“This is what banking technology will look like across the board in the future,” Phillipou says.
“Cloud native, cloud based, API first, containerised, with microservices – all of these together enable fast deployment and fast realisation of benefits. Being consumption based, the product can be switched on and off quickly.”
4. The drive for efficiency gains across the board
According to Phillipou, from the bank’s perspective, every board is being asked to do three things. The first is to increase their return on capital, and that means growing their assets, their lending books and liability books.
The second: they need to do more with less, by reducing their cost-to-income ratio. And finally, number three is to comply with all regulations and avoid fines.
“With regards to the second point, this is absolutely an efficiency play,” Phillipou says. “The right digital lending solution will result in reduced time to process loans, and that’s the main use case our clients are using our capability for. Intelligent document processing is a key component of that.”
With intelligent automation, banks can start to issue loans out to consumers at a much greater speed than they could have otherwise. Personal information can be redacted, documents can be rotated and interpreted and indexed. And with more accuracy in the way they process information, and little or no re-keying of information, the error rate with clients is far lower.
As the process becomes more efficient for organisations, they can redeploy those back-office resources into other areas where they can gain a greater impact. It’s about cost savings for clients and a better consumer experience with fewer pain points.
Ultimately banks are working towards the idea of straight through processing (STP): totally electronic processing of financial transactions from the point of first 'deal' to final settlement, involving no manual intervention. The goal is to achieve better speed, accuracy, reliability and scalability.
5. The open banking future relies on good, big data in banking
The staged introduction of open banking and the opening of APIs to third parties has been another impetus for change, helping shift industry focus onto the importance of data integrity and accessibility.
Banks need to be able to seize the opportunities this presents. That includes opening ‘marketplaces’ to help build out their own product set and look at new revenue streams for the business. These might include anything from re-selling to financial insights for retail and business banking.
As Phillipou says, “From our side, as a technology partner, we’re seeing far more requests for solutions to meet these needs today.”
There is no question that banks must be data driven if they want to provide better financial products and services to meet customers’ needs and expectations; and if they want to take advantage of opportunities as they arise.
At the same time, they need to drive productivity and efficiencies across the business, while reducing operational risk. The time has come to adapt and do it quickly.
Introducing Sandstone's Digital Intelligent Verification Assistant | DiVA
Sandstone's Digital Intelligent Verification Assistant (DiVA) takes full advantage of the power of AI to automate your origination assessment, all while supporting regulatory compliance. DiVA makes verification simple and fast, freeing up resources, reducing human error and ensuring a frictionless and more transparent customer experience.
DiVA automates everything from indexing and interpreting information to identifying missing data, verifying data, redacting and extracting information and presenting it in a logical flow format for assessors.
You can analyse bank statements, payslips and transaction information easily, turning them into machine-readable data. Use your admin console to set rules that match your internal data and policy rules.
And you can deploy and test new features quickly and safely as we introduce them into the platform as part of our ongoing research and development program.