The Pandemic Has Turbocharged Automation Adoption in Finance

The financial sector has responded to the Covid-19 outbreak with speed, decisiveness, and a willingness to embrace new technological capabilities to meet changing demands. From high street banks using bots to automate digital loan applications, to asset management firms increasingly automating back and middle office functions, a wave of new technologies is sweeping the financial services sector. Danilo McGarry, Head of Automation at Alter Domus brings us up to speed.

Covid-19 has quickly become the single most impactful development in history with regards to the adoption of new technologies in the wider financial services industry. Added to robotics, machine learning and big data analytics, automation is a key component of this wave. “In the asset management space, the prevalent mode of thinking is that organisations really must automate as quickly and as comprehensively as possible to survive, with many firms now thinking that it’s actually a case of ‘automate or die,’” says Danilo McGarry, Head of Automation at Alter Domus.

The Great Lockdown enabled automation to thrive

Prior to the onset of the pandemic, the financial sector was already making significant progress towards greater adoption of automation technology. However, the depth, breadth and speed with which the pandemic has pervasively changed the way financial organisations operate has massively expedited integration strategies in recent months. According to a recent Forrester report, “the world has seen more digital transformation in the past months than in the preceding five years.” Meanwhile, a PwC survey with CFOs indicates that 40 percent of financial services firms intend to “accelerate automation and new ways of working” as a result of the pandemic.

With the Great Lockdown earlier this year, its lingering aftermath, and the ongoing restrictions on international travel worldwide, remote work has quickly become the new norm. In light of this reality, financial organisations have quickly sought ways to plug new bottlenecks in how they operate. “The solution for many of these challenges has been to expedite adoption of technologies that automate core and value-added processes,” says McGarry. “Financial services firms have quickly realised that automation is the answer to many of the operational problems that Covid has created, including back and middle office workflows, improved regulatory compliance efficiency, and enabling full remote onboarding.”

The pandemic accelerated automation’s role for two reasons

While Covid has indeed been a trigger that increased automation adoption, there is a more specific development that enabled it to thrive. What the pandemic really did was allow organisations that already had automation technology in place to see how robust the technology really is. While firms’ human workers were adjusting to working from home, automated processes were functioning as expected at full capacity in the background. This showed financial service leaders the true power of automation as a singularly effective means to bolster business continuity planning.

Additionally, as CEOs and CFOs analysed their original financial predictions made in January for the 2020 calendar year, they saw that very few other strategies and tools would enable them to hit their end-of-year targets. If executed properly, automation delivers quick returns and subsequently generates a snowball effect on productivity, cost savings, and operational efficiency that lasts for years.

Tomorrow’s world is already here

With so many functions within financial organisations that are ripe for automation – especially operational protocols, data management, security measures, and regulatory compliance – the industry has naturally been able to benefit in particular from advances in automation technology. Companies have begun realising that the decisions they make today will shape many aspects of business and the future workplace. Experts believe that this is not only true for the remainder of the pandemic but is likely to remain true for years to come.

Before the pandemic, there was a slow but steady rise in remote work and other related trends, but COVID-19 has brought the future of work into the present day. According to a PwC survey, financial institutions reported that 29 percent of their employees worked from home at least one day a week pre-pandemic but that they expect this figure to jump to 69 percent after Covid. Many financial organisations see a range of benefits, including potentially higher productivity, lower overhead costs, and greater employee retention. Speaking about returning Barclays Bank’s work-from-home employees to offices after the pandemic, CEO Jes Staley said that “the notion of putting 7,000 people in a building may be a thing of the past.” With similar sentiments, Morgan Stanley CEO James Morgan has said that the bank would “need much less real estate” in future, with a nod to a continuation to a work-from-home setup for employees.

With more financial sector professionals working from home rather than in an office, companies are keen to enable them to be as productive as possible. This is where automation can come in, removing repetitive and time-consuming tasks from employees’ workloads and streamlining much of the core operational workflow. And with 60 percent of financial services organisations considering making work-from-home permanent, automation can play a role in improving employee engagement and contribute to enhanced performance.

Covid and automation: Speeding up the inevitable

The financial industry was already on its way to greater automation integration before Covid. However, the sudden upheaval that the pandemic has caused has forced organisations to think and act fast to respond and chart a best route forward. Automation is the inevitable solution that so many financial institutions and firms have turned to for its practicality, effectiveness on employee and overall organisational productivity, and, not least, its impact as a significant cost-cutting measure. And while it has only increased in importance for financial services since the pandemic began, developers will create more advanced automation capabilities in the coming years. As and when automation addresses increasingly complex tasks that now require humans to complete them, its importance to financial organisations can only increase further.

This article was originally published in Sensus Magazine. Download the latest issue below.