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Enabling Process through Technology

Ranjini Augustine
Consulting Technical Manager

Technology, the Enabler of Business Process

The banking industry's technology spend is forecasted to reach an estimated $735.8 billion by 2023.Software investment continues to grow in the banking sector, with an annual growth rate of at least 7.8% through 2022. Globally, the banking sector spends an average of 4.7 percent to 9.4 percent of operating income on IT.

So, how are business processes helping with IT spend?

Every technology change in the banking sector involves the underlying business processes and the people who drive them. The goal is to look at the two critical standpoints:

  1. Process and technology modernization
  2. Technology-enabled assistance for streamlined operations.

A Journey of Studying Processes

After working in banks for over ten years, I joined the consulting team in Oracle. I have had the opportunity to work with banks located in different geographies, which implement various Oracle systems. I am a part of the Business Process Consulting (BPC) team who has had the opportunity to work with some of the leading banks and helped them improve their operational efficiency without compromising on safety and security.

Our Business Process Consulting (BPC) approach is simple, we:

  • Understand our bank and its business
  • Study “As-Is” state, how transactions are processed
  • Map pain-points to process improvement, research & recommend new & capable system / technology
  • Define efficient future state processes.

We have had various success stories. The BPC team provided a few sample recommendations, as listed below. These have helped banks achieve:

1. Enhanced Customer Experience:

  • By reducing no. of forms to be filled by customers
  • Reducing processing time and increasing accuracy without exposing the bank to additional risks
  • Encouraging usage of alternate channels by customers for various transactions to process transactions seamlessly

2. Increased Operations Efficiency

  • Automating processing of transactions and growing STP rates. We have helped the bank achieve over 80% STP rate on payments transactions
  • By consolidating operations to a central unit thus increasing economies of scale and reducing processing time
  • Reducing the number of steps taken to perform complex transactions. We have helped a bank reduce its steps in trade transaction processing by 60% without compromising on safety or security
  • Reducing handoffs without compromising on safety
  • Spotting duplicate data entry in multiple systems and consolidating into a single platform

3. Cost Control & profit

  • Replacing physical customer advice with electronic advice
  • Using system functionalities for record-keeping and audit trails
  • Reducing paperwork and using technology more efficiently

Applying Technology to Processes – a quick look

According to Forbes' What's going on in the banking 2020 study', the top five technologies for 2020 are Digital account opening, P2P payments, video collaboration/marketing, cloud computing, and application programming interfaces (APIs). Almost all banking areas have seen technology enabling process efficiency.

Customer Onboarding - Let us look at alternate channels such as online, mobile, and tab banking. Reducing customer traffic in branches and diverting team efforts towards more productive tasks are of prime importance to banks. The focus is more on speedy, accurate, and safe delivery of services through alternate channels. For instance, 'customer onboarding', traditionally a branch forte, is now looking towards channels, enabled by technology. The integration capabilities of the alternate channels with a robust core banking solution drive this process efficiently. The Oracle Banking Digital Experience platform, for instance, makes seamless customer onboarding possible and is pre-integrated with Oracle’s core banking solution and the account origination system.

Payments - In the payments sector, the clearing network has taken an impactful shift. With the introduction of instant payment networks, faster or instant payments are taking precedence over 'D+n' days of wait. The instant transfer is a game-changer in banks now. Technology connecting banks via shared servers are helping in this critical change. The immediate payment services are weaning off customers from old-fashioned cheques or long days of wait. The likes of Faster Payments in the U.K., IMPS in India, and SEPA Inst. are cases in point. These are error-free, quick, and safe methods of effecting payments, enabled by technology. Even the time-consuming cross border payments have seen a facelift with the introduction of SWIFTgpi that allows quick settlement of cross border payments and efficient tracking of payments moving through complex payment chains. Oracle Banking Payments Management system, a streamlined payment processor, comes with a robust exception queue management system and payment dashboards and is compatible with the latest changes introduced by SWIFT, such as SWIFTgpi, SWIFT MX, etc.

Loan origination and Servicing: Online banking channels are now gearing up to process new loan requests and cater to service requests. The banks are providing upload facilities for documents and accepting digital signatures, facial recognition, and biometrics to authenticate a new client. Loan services such as loan simulations, inquiries, instalment information, and loan repayment facilities are services offered via channels by banks. This is reducing customer traffic in branches significantly. An excellent back end loan processor integrated with the alternate channels is making this possible. Oracle Banking Digital Experience, coupled with Oracle’s Loan Origination system pre-integrated with the Oracle’s core banking solution, helps corporate and retail customers to originate loans and handle service requests effortlessly.

Trade Finance- Channels process simple transactions such as servicing of accounts and inquiries as well as complex ones such as cross border payments, loans, trade, and treasury operations. For trade finance transactions, banks have enabled online initiation of trade requests such as the issuance of import LC, amendment requests, issuance for bank guarantees, their amendments, export bills, International Bills of Exchange (i-BoE), electronic bank guarantees, electronic LCs, and trade-related payment requests. Trade portals, SWIFT TSU, and other external systems are already in the market to seamlessly process trade finance related requests efficiently. Banks accept digital signatures to authenticate requests and documents. Oracle Banking Trade Finance Process Management is one such robust application that integrates smoothly with external channels to process trade-related transactions. Lately, there is a focus on blockchain in a big way to use digital ledgers to enable paperless trade processing. Banks are participating through blockchain platforms to facilitate trade transactions between buyers, sellers, and their banks. These platforms transmit trade documents between the buyer, supplier, and their participating banks. For instance, Oracle has introduced a Blockchain Adapter, which enables the Oracle Core Banking solution to interface with the blockchain systems and process trade-related transactions. Liquidation of import bills under LC, using buyer’s credit, is a case in point.

Inquiry Handling: Robotic Process Automation is the buzzword now, bringing with it, cost efficiency and accuracy. RPA is the catalyst for large-scale automation of repetitive tasks in banking. RPA aims to engage with customers in real-time, offer responses and alternatives, ensures straight-through processing, and adheres to compliance requirements. McKinsey ‘foresees the second wave of automation and AI in the next couple of years, where machines & software bots will execute 10% to 25% of tasks across a myriad of bank functions, expanding the overall capacity and allowing the workforce to focus on higher-value tasks and projects’.

Regulatory Checks: We cannot ignore the role of Artificial Intelligence in banking – predictive analytics, chatbots, emotion, and cognitive reading and response, biometrics. The potential of AI in banking is vast, and banks have started using AI to perform some of the critical functions in banking, such as fraud detection & KYC checks. AI is here to stay.

APIs: Open Banking is the next big surprise. Opening customer data in a safe environment, with the customer's consent, and allowing third parties to access financial information through APIs, to offer better deals, is sweeping the financial sector in recent times. Oracle banking API assists banks in being PSD2 & open banking compliant - the latest initiative in the European financial market. The paradigm shift from conservative banking to a more liberal but safer and customer friendly approach brings with it varied technology and service choices for the customers. Open banking needs to be entwined with cloud computing. Banks that wish to capitalize on open banking will need to adopt strategic cloud solutions to make it useful, and Oracle helps with the same.

Conclusion

Banking has seen a significant shift from being branch oriented to now channel oriented. Speed, efficiency, accuracy, and safety are the core values that bankers seek from technology solutions. Customers are well informed, and thanks to competition, the services offered by banks are of very high quality and safety. Fintechs have entered the financial market and are shaping the future in a substantial way.

Oracle is at the forefront providing latest technology solutions, which gives the Business Process Consulting team an opportunity to work with banks closely to:

  • Implement the latest in technology
  • Improve their process efficiency
  • Smoothen their change management initiatives

The team has been successful with some of the best banks globally and is ever ready to work with those who are futuristic.

Oracle is geared to provide you these services to overcome the challenges faced today and drive the latest transformations for core banking system modernization, including cloud-based solutions and digital initiatives.

To learn more, feel free to message me to explore more, or have a conversation.

For more information, please visit:
Oracle Financial Services: oracle.com/financial-services

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