Banks, Insurance firms and other financial service organizations across the world are sprinting ahead with “Digital Transformation” as a core strategy for the future with an aim to improve revenues and profit margins. In the Operations and back-office units, the outcomes of digital transformation are typically measured in terms of transaction speed, accuracy, and reduction in headcounts. Cognitive Automation, a convergence of RPA, AI/ML, API, BlockChain and Analytics, is disrupting the transformation journey of the financial industry and is setting the stage for incredible transaction throughput scalability.

Money Matters

In today’s highly competitive environment, banks have little time to react to the reality of reducing margins from intensive paper-based processes, rising costs of due diligence and strict compliance and regulatory requirements. The pressure to shorten transaction turnaround times while ensuring risk mitigation is very high. With the ever-increasing complexity of transactions in a globalized world, making money profitably has become challenging!

Technology today has risen to the challenge put forth by this market complexity.

Disruption Greets Necessity

A true upheaval has taken place in the innovation and commercial availability of five key technologies that support Cognitive Automation.

Signs of matured underlying technologies:
  1. Robotic Process Automation: RPA has become resilient and stable to the point that “bot mobility”, i.e. cross-task-deployability of RPA bots, is a performance measure of automation
  2. Artificial Intelligence/Machine learning (AI/ML): Fine-grained models applicable to the financial industry, particularly aimed at productivity improvements are published every hour by ML engineers across the world reducing complex tasks such as contract review to a few minutes job
  3. Application Programming Interfaces (API): With the explosion of APIs, firms have begun to use “API Gateways” as management consoles and orchestration services. Furthermore, API technology is at the heart of plans for the Open Banking initiatives promoted by European Commission.
  4. Blockchain: Banks are partnering with Fintech firms for innovation and are racing to shared-trust-digital-networks to increase network effect and peer influence
  5. Data analytics: Institutions are applying big data technologies to harvest millions of records of data systematically with the intent to discover useful information, and support decision-making. Data visualization, data mining, predictive analytics are common terms today!

Together the above technologies provide a huge synergistic possibility of Cognitive Automation.

Cognitive automation helps transcend, rather than merely automate, business processes by applying the requisite technologies at every opportunity and scale. For instance, banks have replaced routine lending with more innovative and customized deals rather than plain-vanilla-loans, which have been commoditized. Such business model adaptation is made possible by the cognitive symphony of credit-scoring-models!

A striking example of back-office automation is seen in Trade Finance Operations. Banks can issue or advise-upon Letters of Credit in a matter of minutes thanks to RPA, AI/ML technologies which support Operations SME’s by extracting relevant information and perform the most frequent transaction-viability-checks as per ICC (International Chamber of Commerce) guidelines. Cognitive Automation has allowed vertically integrated operations units with steep hierarchies to shrink and turn lean.

Cognitive Automation’s Promise

Financial institutions have, by and large, adopted basic digitization which is hygiene in today’s information economy with complex eco-systems that change rapidly. Cognitive automation ultimately promises two types of benefits – amplifying profit margins and allowing for better use of an SME’s time. The true rewards, however, lie ahead for those who can push the boundaries of cognitive automation by integrating core business logic.

In response to the promise and pressure, financial institutions across the world actively partner with technology firms to develop and test POCs (Proof-of-concept) and to build prototype solutions for their business functions needing automation. The ubiquity of a “POC-first-approach” among successful organizations is helping the technology firms equally – by providing a test-bed for the technology & concept. This partnership of core industry and tech firms is enabling the rapid validation of Cognitive Automation across functionalities. Also, the un-automatable functions continue to reveal technology limitations which sow the seeds in preparing for future automation necessities.

The landscape is changing so quickly that even people inside the technology industry are struggling to catch their breath!

Alright, what’s next?

Cognitive Automation is now a proven and competitive eco-system with fast-developing technologies that will upend any back-office and operations function with possible inefficiency. Technology firms continue to lead the way as excellent partners, helping core industry navigate the challenges of automation.

The locus of disruption is now beginning to shift towards two new aspects – problem solving of higher-order and improved interface of the organization with the customer. The day is not far when a voice conversation with a virtual assistant or chatbot could be used to issue a draft International Trade Guarantee to an institutional customer.

Competition from born-digital players continues to propel innovation and increasing international competition is creating entirely new business models. Surely, the massive market disruption has begun.