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How Indian banks can drive automation in corporate banking

Banks should prioritise their processes for automation based on the level of human intervention, understand their processes thoroughly and put employees at the centre of their automation efforts

This article can also be found in the Premium Editorial Download: CW Asia-Pacific: CW APAC April 2023 – Trend Watch: Business applications

For a while now, banks in India have relied on manual processes to serve their corporate clients, but that is starting to change as more customers now expect to be served through digital platforms.

In 2021, ICICI Bank unveiled a corporate banking platform that delivers a comprehensive set of digital capabilities for businesses and their entire ecosystem, including employees, dealers and suppliers.

Last year, Kotak Mahindra Bank also launched the Kotak FYN enterprise portal for business banking and corporate clients, enabling customers to carry out trade and services transactions.

Many such platforms leverage robotic process automation (RPA), machine learning (ML) and application programming interfaces (APIs) to automate processes, but behind the scenes, banks are still facing challenges, such as dealing with a painful number of integration points and the high cost of maintaining legacy systems.

Against this backdrop, banks in India will have to start embracing the “second epoch of digital technologies”, such as conversational artificial intelligence (AI), process intelligence and blockchain – all underpinned by enterprise-wide automation, according to Pushpa Marwal, an analyst in Forrester’s financial services practice.

Speaking at the Forrester Technology & Innovation APAC 2022 conference, Marwal said doing so would help corporate banks escape the “digital sameness” of technologies such as RPA, which have reached a saturation point, enabling them to create “breakaway differentiation” and drive growth.

To help banks prioritise processes for automation, Forrester has developed a heat map of 53 corporate banking processes, which are classified into three categories: hot, warm and cool.

Marwal said processes that are deemed hot tend to be repetitive workflows that are ripe for automation. “Forward-looking corporate banks are working to automate these processes, as part of digital transformation, to improve employee experience, turnaround time and security, and to save costs,” she added.

An example of a hot process is trade financing. By applying optical character recognition and RPA technology, Marwal said, banks can expect to reduce or eliminate the manual intervention that exists in trade financing today.

Marwal said India’s Yes Bank, for example, has integrated RPA to facilitate document and data sharing, as well as export and import services, reducing payment turnaround time by 80%.

“Similarly, there are other technologies such as facial recognition that can help banks to run more efficient KYC workflows,” she added, referring to know-your-customer processes that are required to verify a client’s identity.

“KYC is where banks spend most of their time when onboarding clients, who often face frustration when interacting with banks,” said Marwal. “And relationship managers are often stuck coordinating with customers, so there’s definitely a lot of scope for banks to invest in these processes to turn around their customer experience.”

Then, there are the warm processes, which lend themselves to hybrid automation where additional process mapping and automation programming are needed before they can be considered for automation.

Marwal said this is because warm processes frequently involve multiple process stages that depend on people to execute or complete, such as fee management.

“Most corporate banks in India still calculate and reconcile fee charges manually in an Excel file in a very outdated manner that’s prone to error,” she said, adding that this is because corporate banks often customise their fees for different customers in anticipation of better business.

“In this case, automation can alleviate most, if not all, of the manual work, and can free up your back-office staff for more productive tasks.”

Lastly, processes deemed as cool tend to be heavily human-driven, Marwal said, and banks that plan to automate such processes will have to work extensively on process stability.

“These processes require a significant amount of human engagement to start, coordinate and complete. Hence, corporate banks should keep these at the bottom of their automation priority list in their automation strategies,” she added.

Examples of cool processes include customer enquiry and dispute resolution processes. Marwal said Indian corporate banking customers are used to having in-person interactions with their relationship managers, but this is also because existing technology solutions, such as chatbots, are not good enough to handle and resolve customer issues.

“So, until banks figure out how they can handle customer queries via online channels, they cannot really say they have automated those processes, and if they want to automate, they have to create very simple solutions that are good as in-person interactions. Automation of processes in this category will play a role in banking technology strategies in the future, but now is not the time.”

Success factors

Identifying candidate processes for automation is just the first step of a bank’s automation journey. To succeed, they will need to avoid pitfalls, such as not understanding a process thoroughly before automating it, partly because most processes in banks are poorly documented. “Banks have to fix this, and hopefully avoid this problem by starting to understand the underlying process profile, both in the front and back office,” Marwal said.

The next logical step for banks is to critically analyse, improve and stabilise processes before considering them for automation. “Many banks don’t really do that, and they fail to realise even modest savings, and in many cases, they miss out on opportunities to improve process outcomes, quality and even cycle times.”

Banks should also automate processes that deliver the most returns when automated, whether it is improving customer confidence or saving costs. If they try to automate a faulty or non-viable process, then they can expect “awful outcomes”, Marwal said.

Lastly, employees should be at the centre of any automation effort as they interact the most with automation as much as customers do.

“It’s important that we deploy automation without frustrating employees,” Marwal said. “Don’t keep them in the dark – keep them involved because they will tell you where the pain points and inefficiencies are.”

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