5 Reasons why banks are automating document and data processing - at speed
Financial services is transforming into one of the most data-driven sectors, with banks and building societies holding more customer information and market insights than ever before. As a result, decision makers are moving to put banking technology and big data at the top of the agenda.
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. Intelligent document and data processing can simplify customer journeys, make product offerings more effective and efficient, at the same time creating new revenue streams.
However, in many organisations, there are budgetary issues blocking those opportunities. For others, it’s simply a lack of support and/or understanding across the business.
One of the great advantages that traditional banks have over challengers is the enormous amounts of customer data they hold. Mortgage applications alone generate mountains of data to satisfy back-end processes.
But this information overload isn’t always accessible. Data isn’t always in a form that can be accessed; nor is it verified for its integrity. Much of the data mountain is unstructured and unuseable.
Being able to automatically interpret customer documents for intelligent insights, whether bank statements or payslips, unlocks valuable data for banks.
Intelligent document processing uses a set of technologies - from artificial intelligence and machine learning to optical character recognition and natural language processing. 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.
From there, financial institutions can develop products to meet the needs of retail, SME and private banking customers. They can make better pricing decisions. They can reduce complexity for the customer through a more seamless and transparent online experience, enabling financial wellbeing conversations.
Data also 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.
With waves of social distancing restrictions in the UK, lockdowns and millions working from home, we’ve seen a revolution in consumer engagement.
It started with a mass flight to digital channels in both retail and commercial banking, accompanied by skyrocketing download rates for apps.
“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 nee
d 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 UK customers’ calls for safety and convenience. Cashless payments and international payments have become part of the norm.
In an era of mass cybersecurity breaches, this 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.
Banks and building societies have substantial and ever-changing regulatory obligations to adhere to. They have layers of stakeholder approvals to secure before onboarding any new capabilities.
Yet there is still a huge opportunity for banks to improve their ability to meet regulatory compliance quickly and easily – through automated document processing 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. An organisation could conceivably set up automated document processes 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.”
According to Phillipou, from the financial institution’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 thirdly, they need 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 and building societies can start to issue mortgages 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.
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. Banks can also minimise bottlenecks in their processing centres and redeploy back-office resources into other areas for greater impact.
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, with no manual intervention. The goal is to achieve better speed, accuracy, reliability and scalability.
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.
There is no question that banks must be data driven if they want to provide better and more timely financial products and services; and if they want to take advantage of opportunities as they arise.
As Phillipou says, “From our side, as a technology partner, we’re seeing far more requests for solutions to meet these needs today.”
At the same time, they need to drive productivity and efficiencies across the business, while reducing operational risk. Reprioritisation of intelligent document processing needs to happen today.
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.
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