Artificial intelligence (AI) and machine learning (ML) are now with us, and not just within businesses. Consumers at large are well aware of their capabilities and are using them, whether directly or indirectly, when they interact with their preferred product and service providers.
The capabilities and the functionality which AI/ML offers, are changing the face of how we deal with and view those companies.
It’s not often we can make guaranteed predictions but I think it’s safe to say the use of AI/ML will grow exponentially in 2024, alongside the expectation that both businesses and consumers will have digital interactions with the companies we use as a matter of course.
It seems ludicrous therefore, that in our industry, which has some of the most sophisticated digital technology around, there are still so many processes which remain paper-based –perpetuating inefficiencies and exposing businesses to risk.
Business and consumer expectations are simply not going to tolerate the second- or third-rate service which comes with paper-based processes, and they will view those companies in a negative light.
Which is why we should be aiming for an end to paper-based processes in financial services in 2024.
Why have processes not progressed?
It is easy to see why the processes that remain have not been updated by the businesses which run them. Typically, they are back-office processes and for most businesses, investment in new technology and updating systems goes into the front end, which is revenue generating. Back-office processing often develops organically, and is tolerated while it still functions. The old adage ‘if it ain’t broke don’t try to fix it’ also springs to mind.
Except, in an environment where digital solutions are rapidly becoming the norm, alongside expectations for slick, same-day service, we can argue that slow, inefficient, costly paper-based systems are looking well and truly broken.
There is a regulatory aspect to this also. Consumer Duty insists that the products and services that consumers receive should ensure “no foreseeable harm”. It is difficult to argue, for example, that processes which slow down the transfer or processing of business – potentially keeping investors in unsuitable products or out of the markets – are not causing foreseeable harm. In particular, when compared to others in the industry, using digital solutions, who do things swiftly and with the end consumer firmly in mind. The regulator’s view on this will remain to be seen but I can see them taking a dim view of such processes.
Back-office improvements
The same can be said about re-keying of information and data. Few if any staff should have to re-key data – particularly for some of the most common and vital processes. The risks from errors are well known – let alone the inefficiencies and costs to businesses.
A major problem which has developed in a competitive market is that many systems do not talk to each other, not even for these essential processes. Individual companies have spent a lot of money connecting their systems to others where individual business cases show a commercial need, but this can leave other companies out in the cold.
A healthy functioning market needs those essential processes covered. Back-office staff should not have to rekey details and data between one system and another simply to get their everyday work done. Imagine the time and costs saved if everything worked digitally, and for what value-added tasks that time could be better used.
Likewise, how many work hours could be taken out of a provider’s resource budget by having a digital system for a process which now is undertaken manually by sometimes large teams of staff.
In a rapidly developing technological environment, where expectations are becoming higher, all companies are going to come under the spotlight and we can expect that businesses and clients will vote with their feet if they persistently meet with slow, unsatisfactory service.
Fortunately, the market leaders are already addressing these issues and implementing the tech and services needed – and expected – of them.
There is good business sense to this: Greater efficiencies mean reduced costs; improved overall service means better and stickier relationships with customers; and a focus on customer service in the back-office means a better reputation for the companies concerned, leading to renewed business from advice firms and others.
I believe there are exciting times ahead for those in our industry with the vision to ensure their business processes are aligned with the right digital solutions.
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