As you well know, the Financial Services and Insurance (FSI) industries are responding to the current economic environment.  Increasing efficiency by improving operations and reducing costs, while re-inventing the customer experience are just a few of the business imperatives forcing companies within the industry to transform during these challenging times.

At the same time, a dramatic increase in accessible technology that enables organizations to become more efficient by eliminating manual and redundant tasks, is causing disruption in an industry not always seen as being the most cutting edge. By using automation and machine learning, possibly in the form of “virtual workers” such as robotic process automation (or RPA), tasks that once took hours of administrative drudgery can now be performed in seconds without human intervention. 

 

Not only is FSI facing these pressures, but the finance function is as well. The leaders of today are pleading with CFOs to increase automation in order to enhance decision-making abilities and drive toward the success of tomorrow. Yet, according to a recent McKinsey report[1], only 13% of CFOs and other business executives said their finance organization is using automation.

The leaders of today are pleading with CFOs to increase automation in order to enhance decision-making abilities and drive toward the success of tomorrow

Starting Your Automation Journey

The cost-savings, decrease in errors, and compliance implications from adopting automation for your organization are huge. Automation presents companies with enticing opportunities to improve output and quality of service while eliminating some peripheral positions, resulting in long-term cost savings that offset any front-end automation investments. Research indicates that within finance teams, up to 80% of time spent is on manual, repeatable tasks[2]. With automation, enhanced with machine learning, the reduction of labor spent on things such as processing transactions, auditing, and monitoring compliance will dramatically free up resources to deliver data-driven decision support. More importantly, it will free you up to spend more time as a strategic leader for the organization.

 

Get more Efficiency

Whatever a company's intentions may be, the benefits of automation are undeniable. However, automating important business processes is rarely as easy as plug and play; it comes with organizational nuances that can't be ignored. Traditionally, technology choices have fallen to the hands of procurement or IT. However, CFOs that are in-the-know understand that technology impacts their subordinates, their team’s efficiency, and their department’s bottom line. Attempts at automation can spark enough confusion and fear to counteract any positive results. With that in mind, here are four considerations for shaping your automation strategy:

1. Know What to Automate

The best use cases for automation are those that rank low on complexity and high on headcount when put through a suitability analysis. Examples of things suitable for automation would be monitoring compliance and identifying high-risk transactions – both of these have a repetitive nature, several repeatable steps, and currently take up a lot of human resources. As the complexity level goes up, and tasks and responsibilities reside with fewer from specialized employees, the suitability for automation declines.

 

Identifying the tasks most appropriate for automation will provide a greater likelihood that the upfront investment will quickly be eliminated by the return generated through reduced/repurposed headcount, increased production, and reduced errors. Attempting to automate processes that are too complex can have just the opposite effect – be cautious!

 

2. Develop a Business Case

To ensure automation will provide the expected value to the organization, the savvy CFO will take the use cases that have been identified as candidates for automation and develop a business case. Automation projects can have large upfront costs, so careful assessment and building out a quantifiable model will help understand if the ROI is palatable.

 

To determine if a specific process will provide the desired benefit, you will need to consider the process from several angles:

 

  • What are all the steps in the process?
  • Which steps in the process occur with most frequency?
  • What is the average time the process takes, start to finish?
  • What is the total time, or percentage of time, spent doing the step considered for automation?

This will provide you an estimate of how much time the process takes and calculated costs to use as a baseline. Starting with measuring current baselines of process time and costs and then modeling out expected outcomes will give you the ability to make the best selection based on data-backed analysis.

 

Partnering with an experienced team that understands both your industry and how the finance function is changing can ensure the right automation is configured to best meet organizational needs. 

3. Don’t Skimp on the Sample Size

To automate, particularly when machine learning is involved, you must have a comprehensive set of data upon which to create the rules of automation and enable the machine to “learn”. As many scenarios as possible need to be introduced into the algorithms to ensure that there is an “If A, then B” rule that addresses each. Not investing enough time and effort into collecting data that will serve as an adequate sample is likely to result in faulty outcomes. What good is an automated process if it only works on some of the scenarios? Not only does that put human capital back into the process, but it introduces doubt into the automation initiatives.

 

4. Get Alignment

Alignment ensures that all stakeholders and project resources are aligned on the future state and outcomes. As a change driver, one of your critical success factors will be ensuring alignment across the organization. Bringing together impacted stakeholders, clearly laying out the business opportunities, defining and communicating measurement criteria, and laying out expected outcomes will be key to the success rate. RPA can be daunting and cause consternation – by clearly laying out the framework and identifying key gains and risks along with assurance of future organization will help ensure participation and acceptance.

 

5. Set a Realistic Timeline

As with any technology roll-out, a thorough plan of attack with date-based milestones is essential to keep the project on track. Part of this planning process includes identifying key stakeholder groups — those affected by the automation and various connected processes — and sharing expectations for how the changes will play out in the short term and further down the road. While it's common for companies to set aggressive goals for the launch, it's important to remember that automation doesn't happen in a vacuum. The timing may be impacted by any number of other initiatives, such as technology platform changes or acquisitions or divestitures that compete for resources and could alter the automation plan itself. For nearly every large enterprise — and many smaller companies, as well — automation is an inevitability, as speed, precision, and flexibility are requisites for success.

 

When companies automate manual and repetitive processes, they are able to increase efficiency and minimize mistakes, all while reducing costs. Beyond those benefits, a much needed benefit to FSI, and CFOs everywhere, is the decrease in time to get from data to insight. This transformation is what will lead to the strategic decision support tools of the future. For more information contact Steve Hersh.


1 https://www.mckinsey.com/business-functions/operations/our-insights/new-technology-new-rules-reimagining-the-modern-finance-workforce

2 https://www.forbes.com/sites/workday/2019/12/12/automation-and-machine-learning-transforming-the-office-of-the-cfo/#b14640c131f7

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