The Digital Workforce Re-defining Banking & Financial services Operations

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1 The Digital Workforce Re-defining Banking & Financial services Operations

2 Table of Contents 1 Digital Workforce Digital Workforce The Context Digital Workforce State of Practice 3 2 The Opportunity for Banks and Financial Services Firms The Potential in Banking and Financial Services The Business Case for a Digital Workforce Look Beyond Cost Optimization This is real! Some Use Cases 8

3 1 Digital Workforce 1.1 Digital Workforce The Context Banking and Financial Services organizations are under significant pressure due to stringent regulatory requirements, increased cost of operations, continuous evolving technology landscape, and increased entry of FinTech players. Some of the major challenges encountered are in reducing IT costs and supporting decreasing margins. Overcoming these, will help in improving speed, volume, quality of information provided, and be focused on delivery. There are various internal and external factors that influence the transition to digital workforce like continuously evolving & shifting customer expectations, political upheaval, faster new entrants, regulatory and technology disruption globally. The question is no longer about the transformation in this industry, but, it s more about how quick, the Banks can embrace the change and deliver strong business results, in a dynamic environment. 47% of jobs have the potential to be automated The key to future success, will be in mastering the ability to interpret the signals of change in this disruptive environment and tactically focus on being operationally lean and agile in responding to market conditions. We anticipate the greatest potential challenges arising on the people side, notably the possible displacement of human labor (with 47% of jobs having the potential to be automated) and growth in inequality (with a 10% supply and demand gap between skilled and non-skilled workers by 2020) and longer-term existential threats being posed by Artificial Intelligence including Robotic led process automation. The pace of disruptive technological innovation has gone from linear to parabolic in recent years. Artificial Intelligence and Robotic led process automation, have been impacting all industries and have moved beyond routine tasks into the arena of cognitive problem solving was the 6th consecutive record year for adaption of robots worldwide. Knowledge work employment would be witnessing significant changes, owing to the advancements in machine learning, computing technology and voice & face recognition user interfaces. Here comes the promise of the Digital Workforce. Non-invasive automation technologies like robotic process automation, machine learning promises the ability to quickly configure robots that can mimic human tasks, without the need of heavy integration effort of digital transformation approaches, at a marginal cost. We call these robots as Digital Full Time Employees(FTE) that are an integral part of the workforce (in the sense that they represent the available work execution capacity) that is rapidly scalable, with higher accuracy, with round the clock utilization, and present a good near term solution for optimized Operations, leading to true digital transformation. The impact of the Digital workforce and what this means for operations performance, customer digital experience, future state operating models including operations staff, and operations leadership is probably the most important conversation in the hallways of global firms. Several Banks and Financial Services firms have embarked on the journey towards establishing a Digital workforce, but most of the organizations are far from realizing business value. Digital Workforce State of Practice 1.2 Digital Workforce The Current State of Practice While a Digital Workforce holds immense promise, this is yet to be realized. Organizations globally are in various stages of their digital journey; and it is difficult to separate the noise from reality, given the significant amount of publicity around automation by various players in the automation space be it tool vendors, consultants or service providers. Banks have long been rewarded for their steady, conservative approach that does not get impacted either to time or latest trends. Today, the same approach is a hindrance, rather than an asset. It s no exaggeration to say that digital technology poses a greater threat to banks, than to any other industry. Simply put, sticking with the traditional way of doing business is no longer an option for banks. In recent times, banks have become more responsive and relevant in daily lives of customers. Using digital technologies, banks have been providing more enriching, and engaging customer experience. Publicly available information on successful automation use cases and information on effective approaches to undertaking the journey is scattered and difficult to interpret. A recently published research by Horses for Sources (HfS), sponsored by Hexaware, was undertaken as a survey of senior stakeholders, across industries globally, to get at the real state of automation practice. Some extracts from this survey by HfS are reproduced below, that shed light on the key drivers and state of practice when it comes to automation execution and creation of a digital workforce:

4 The key driver for organizations in re-defining their operations, is to drive down cost More than 81% and 8% respondents stated that investing in AI technologies and in process automation and robotics, are mission critical Organizations are also considering a range of technologies that make up the Digital Workforce continuum. Organizations are actively evaluating or are already piloting Digital Workforce So clearly there is a significant momentum being generated around these disruptive technologies and the promise of the Digital Workforce is beginning to come to the forefront of discussions in several global enterprises. 2 The Opportunity for Banks and Financial Services Firms 2.1 The Potential in Banking and Financial Services Banking and Financial services have been one of the first adopters in areas including robot advisors, robot-analysts, automated trading, anomaly detection, and credit risk checking, all of which have arguably made the banking and financial services sector more efficient, inclusive and user-friendly. Banks need to go digital to empower their employees, helping them to work smarter and driving gains in efficiency and productivity. Strategies for creating the digital workplace include driving engagement and enablement to improve productivity and employee experience, as well as expanding the use of analytics across the bank.

5 Banks are adopting RPA to address the following: Speed of processing Enhanced accuracy High Availability Reduce cost Robust traceability High Flexibility Ease of deployment Healthy ROI and shorter payback Hexaware has developed a scientific model to determine the level of RPA automation across processes, with varying levels of complexity and variability of input. A summary of our view on the level of automation achievable across multiple functions across Commercial Banking, Consumer Banking and Mortgage industry is presented by way of the continuums below: Figure 1: RPA Potential in Corporate Banking Figure 2 : RPA Potential in Consumer Banking

6 Figure 3 : RPA Potential in Mortgage 2.2 The Business Case for a Digital Workforce Look Beyond Cost Optimization Often the key driver to automation decisions is cost optimization. However, this is just the tip of the iceberg. The real intangible benefits makes a more compelling proposition for organizations to consider jumping onto the Digital Workforce bandwagon. Following are some key benefits which Digital Workforce offers: The robots work 24X7 for you, with the highest accuracy, at the lowest cost. They can complete task by themselves or finish the one initiated by humans Robots are highly scalable - you can add more bots on a click, during the peak hours of your business Robotic Process Automation also generates full audit trails for each process to help you achieve process compliance and reduce business as well as regulatory risk The digital workforce is located within your IT infrastructure, enabling conformance to your information security policies and control You can realize the impact of RPA from the day you adopt it, for example you can see the processing cost reducing by 30-70% or the turnaround time reducing from days to hours or minutes. Regulatory Compliance has always been a key focus area in the Banking space. The reporting and compliance requirements can only be expected to become more stringent over the next three years. In such times, the Digital Workforce will be the key to drive operations towards excellence. Further, automation tools can go a long way in improving Customer Delight. These tools can work side-by-side humans and complete a lot of tasks in parallel thereby reducing the overall time taken to get back to the customer. BOTs can reduce the average handling time for customer requests by almost 45-50% with the same accuracy levels or even better than humans. The virtual assistants and chatbots implementation enable an instantaneous 100% reduction in the lead time between the customer calling the contact center and getting to talk to the customer service representatives. The Digital Workforce is a relentless one working 24X7 with your existing set of technology and applications. In that sense, BOTs continue to respond / transact even during holidays and off-hours. This further enhances end-user experience and adds value to the Banking firm.

7 2.3 This is real! Some Use Cases Below are some sample Use Cases that highlight benefits accrued post implementation of RPA in critical functions in Banks. By the very nature of these critical functions, any delay in meeting the deadlines in these functions will not only have a P&L impact but will also lead to serious reputation / regulatory setbacks for the organization. Payment investigation: A leading Global bank optimized their payment investigation process, resulting in 47% TCO savings, using robotic process automation (107 human FTEs moving to a target state of 59 human FTEs + 16 BOTs) Reconciliation: Hexaware helped a global reconciliation utility resulting in 46% in TCO, through an extensive diagnosis exercise carried out by Hexaware; The analysis was carried out across the utility s global locations(137 human FTEs moving to a target state of 79 human FTEs + 35 BOTs)ique engagement model that accelerates benefits, while transferring risk of the automation journey to Hexaware DMS enables the customers leverage Hexaware s indepth domain knowledge, implement RPA in complex technology landscapes involving multiple platforms and legacy systems, which is a typical scenario in global Banks and Capital Markets firms. Further, Hexaware insulates the client from the risk of implementation and guarantees benefits upfront.

8 About Hexaware Hexaware is one of the leading, global providers of IT, Application, Infrastructure, BPO and Digital services. Our business philosophy of Shrink IT, Grow Digital allows customers to significantly shrink commodity IT spend while partnering with them to embrace digitalization. The Company focuses on key domains such as Banking, Financial Services, Capital Market, Healthcare, Insurance, Manufacturing, Retail, Education, Telecom, Travel, Transportation and Logistics. Hexaware focuses on delivering business results and leveraging technology solutions by specializing in services like; Application support, development and maintenance, Enterprise Solutions, Human Capital Management, Business Intelligence & Analytics, Digital Assurance (Testing), Infrastructure Management Services, Digital and Business Process Services. Founded in 1990, Hexaware has a well-established global delivery model armed with proprietary tools and methodologies, skilled human capital and SEI CMMI-Level 5 certification. For additional information logon to: NA Headquarters Metro 101, Suite 600,101 Wood Avenue South, Iselin, New Jersey Tel: Fax: India Headquarters 152, Sector 3 Millennium Business Park A Block, TTC Industrial Area Mahape, Navi Mumbai Tel : Fax : EU Headquarters Level 19, 40 Bank Street, Canary Wharf, London - E14 5NR Tel: Fax: APAC Headquarters 180 Cecil Street, #11-02, Bangkok Bank Building, Singapore Tel : Fax : Safe Harbor Statement Certain statements in this press release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Hexaware has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. marketing@hexaware.com