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Adapt your cloud and automation strategy to win at digital banking

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Hispanic woman checking finances at restaurant Banks are working with customers and employees in new ways, and leading banks of all sizes are using the power of digital banking to move ahead of competitors.

A growing number of customers across markets want to do all their banking online, and they see a bank’s remote access as its digital doors that determine which services are available. That means a bank’s workforce needs to be ready to support customers in new ways. But it also means that banks need a robust and stable digital infrastructure that is ready to support new demands.

Most banks have been investing in digitization, but now the motivations for that shift have reached a new level. “The pandemic has accelerated the need for cloud technologies, because you have a remote workforce and you have remote customers. So, you have less tolerance for things like on-premise maintenance and other activities that are necessary for legacy environments,” said Grant Thornton Business Advisory Services Principal Rich Sittema.

Vivek Rodrigues“Historically, the business case for digital transformation needed to stand by itself. But there's a premium to move faster now, and so the focus on speed has shifted.”

– Vivek Rodrigues,
Senior Manager,
Grant Thornton Transformation
As banks progress in their digital transformations, they can use automation to save time and reduce the risk and instability of relying on remote workers to complete repetitive tasks. Manual tasks are often office-centric, since people need access to paper records, or need multiple large screens to duplicate or reconfigure detailed information. Now, banks understand that every office-centric task can be a risk, and there’s even more reason to automate that work.

“Historically, the business case for digital transformation needed to stand by itself. But there's a premium to move faster now, and so the focus on speed has shifted,” said Grant Thornton Digital Transformation and Management Senior Manager Vivek Rodrigues.

But what’s the right approach to the cloud and automation components of digital transformation?

Always the right approach Richard Sittema“From a cloud technology and automation standpoint, everything should tie back to your customer strategy.”

– Richard Sittema,
Principal,
Grant Thornton Transformation
“Your runway to get digital capabilities in place might not be as long as it was in the past,” Rodrigues said. “But a comprehensive approach is always best – even if you're rushing to catch up, that doesn't change the fact that you need to think about it holistically.” Banks should think about their digital transformations with a decision-making framework that will help them see the role of cloud technology and automation.

“From a cloud technology and automation standpoint, everything should tie back to your customer strategy,” Sittema said.

In the current climate, banks should re-evaluate the way their IT capabilities, cost structure and organization support and aligns with their:

  1. Customer strategy and segmentation
  2. Enterprise growth strategy, including specific objectives for enhancing revenue, efficiency and workforce productivity
  3. Changing regulatory compliance, privacy and security requirements

With an updated customer and enterprise growth strategy in place, banks can use their decision-making framework to identify gaps where IT doesn’t align with these objectives. This provides inputs into updating IT strategies and digital transformation roadmaps, prioritizes spending and organizes specific projects for execution.

The priority of cloud migration Cloud migration is an important early part of a bank’s digital transformation. Given the increased importance of remote access, the relatively simpler cost structure and flexibility and the immediate time to market, it makes sense for banks to focus their automation and other transformation investments leveraging cloud solutions wherever possible.

Given the current environment, banks should re-evaluate their cloud migrations in terms of three factors:

  1. Cybersecurity
    “With a remote workforce and remote customers, the cybersecurity risk is massive,” Sittema said. “That's the risk that really moved up the priority list.” With a larger percentage of remote workers and customers, cybersecurity also becomes a more important part of internal audit plans.
  2. Infrastructure partners
    Banks also need to evaluate the stability and ongoing viability of their business partners. Sittema explained, “If you have, for example, a small to midsize network infrastructure partner that manages your network or does other work for your IT organization, will they be around in a year? Mid-market banks across the spectrum are looking at the long-term viability of their IT business partners right now.” Even if a partner seems stable, evaluate whether they will be able to support the capabilities you want to develop going forward.
  3. Vendor plans
    Recent events have pushed a wide range of companies toward cloud-based solutions – including software vendors. That means you might not get to decide when some solutions move to the cloud. “When I look at the robotics vendors, they all have cloud offerings and they are increasingly starting to steer clients toward them,” Rodrigues said. “Some vendors are incentivizing clients. In fact, we just did a vendor selection where the vendor basically said, ‘We will give you the cloud for the same price.’ At that point, it becomes a no-brainer because you don't need to worry about the hardware, you don't need to have as many people on-premise in your data centers, and you can outsource some of that for better resilience.”

Cloud migration is an important enabler for automation, but automation often has the clearest and quickest returns, making it an important point to reach on your transformation journey.

The returns for intelligent automation “When it comes to robotic process automation and intelligent automation, the C-suite in banking is asking a very simple question now: ‘What am I not automating that I should be automating?’” Sittema said. Rodrigues agreed that “the focus on having a digital workforce for some key repetitive tasks is starting to become more important for a lot of the senior leaders and the C-suite executives we talk to.”

To achieve short-term success while supporting long-term goals, it’s important to take a structured approach to automation that includes evaluating three important factors for banks:

  1. Tasks that are candidates for automation
    Automation should be planned strategically, but that doesn’t mean it can’t achieve quick wins with smaller solutions. Rodrigues recalled one healthcare company that wanted to track highly critical purchase orders. “They wanted to make sure that vendors received those orders, so they had two people who would follow up with the vendors if there was no acknowledgement in 72 hours. We have a bot doing that now.” The new solution can provide a quick and complete return on its relatively low cost.
  2. Data to digitize
    One critical stepping stone to automation, and other digital transformation goals, is the task of digitizing information. Fortunately, automation can actually help with this work. For example, Rodrigues said, “Even in this day and age, a lot of invoices come in as a PDF. We've implemented a solution with an optical character recognition engine that extracts the information off the invoice and enters it into their ERP system. Before the solution, one client had someone managing the flow into the system and then routing it to account payable processors who did the typing. So, that’s reduced two roles – while improving accuracy and speed.”
  3. Infrastructure to support the system
    As solutions grow and infrastructure demands shift amidst cloud migration, banks need to make sure that their automations reside in the right place to enable speed, processing volume, data access, security and other needs. These factors can inform infrastructure development needs, but they can also affect the process of selecting which tasks will yield the best return on automation.

Apart from providing efficiency returns, automation can also be an important part of a bank’s strategy. “A lot of executives have started asking ‘What are my competitors doing, and what are the automation use cases that I need to pursue just to play catch up – versus what can give me a clear advantage?’” Sittema said.

Not just a nice-to-have Digital banking has become the primary means of access for many banking customers. Now, banks need to reprioritize digital options within their business models.

“I think banks have been tasked with quickly leveraging digital and mobile banking and cloud analytics to grow deposits and scale their operations,” Sittema said. But the quick changes have come with a risk. “While cloud does help to optimize IT resources in banking, it also creates additional risk – and that’s especially true when cloud happens too fast. Many banks are making the shift to cloud hosting in a hurry, without enough due diligence around vendors, integrations, configurations, security and other issues.”

Digital transformation is here to stay, and it needs to be planned well, because that’s how banks will win their business in the future. “This trend will continue well after the pandemic is over,” Sittema said.

Contacts:

Richard Sittema Richard Sittema
Principal, Transformation
T +1 216 858 3685


Vivek Rodrigues Vivek Rodrigues
Senior Manager, Transformation
T +1 212 542 9980