How Automation is Impacting the Finance Industry

How Automation is Impacting the Finance Industry


Automation is leading the charge in this revolutionary transformation of the financial sector. The banking industry has seen a significant transformation recently due to the introduction of AI in FinTech, advanced algorithms and cutting-edge technology that are redefining conventional methods. Automation has become a powerful force transforming how financial institutions function, handle data, and reach essential judgments. The use of computers in finance has grown significantly, ranging from automated risk assessment and fraud detection to algorithmic trading and robo-advisors. Fintech App Development company has been using automation for the development or creation of new technology. In addition to improving efficiency and simplifying procedures, this paradigm change generates essential concerns about the potential effects of a future in which finance is more mechanized. Here is your Fintech Guide on Automation and its significant and wide-ranging influence on the banking sector in this age of digital innovation, changing it in previously unthinkable ways. This blog will tell you in less than 5 minutes how automation is transforming the financial sector worldwide.

What is Finance Automation?

The use of technology to minimize human interaction in critical financial tasks such as bank reconciliation, expense management, and bookkeeping is known as finance automation. 

Banking automation streamlines tasks using Blockchain, RPA, OCR, and AI, ensuring precision and efficiency like other industries.

Who Is Gaining From This Kind of Automation Already?

The tendency of automation is not new. Several industries are already using it to enhance both internal and external procedures. Here are a few instances of how automation is used in the financial sector to increase process efficiency for finance teams and their clients. 

1. Banking

The banking industry automates all financial processes, from accounting to record-keeping, by implementing different automated instruments and software. 

The area of loan applications is one important one. Here, banks are adopting RPA (robotic process automation) more and more to get data from loan applicants quickly (typically using chatbots). Automated processes can also be used to examine credit history and validate IDs. 

2. Insurance

The insurance sector has also used finance automation to cut expenses and improve the effectiveness of its financial operations. For instance, a lot of insurance providers use automated claims handling. 

In these situations, optical character recognition (OCR) can recognize and interpret handwritten claim submissions. In other cases, claimants’ information is gathered by insurance chatbots, which then assist them with the submission procedure. 

3. Accounting

Accounting departments can use chatbots to help taxpayers navigate the tax return process, providing answers to queries and reducing the possibility of filing false returns. Chatbots may also be used in more prominent companies to answer inquiries from other departments about payroll, dates of payments, costs, and outstanding bills. Consequently, 54% of auditors reported that technologies like AI and machine learning helped them better understand client services. 

Automation in Finance: 5 Customer Service Use Cases

AI automation is becoming more and more crucial for customer support teams in the banking industry as self-service becomes more prevalent. Chatbots are among the most beneficial tools. 

One of the simplest methods for companies to reply to consumer inquiries, categorize problems, and route or escalate concerns is when a chatbot can lead users through an easy-to-use process. Use cases for chatbots in the financial sector include everything from reminding customers to pay their bills or checking their balance to answering crucial account inquiries. 

The examples below illustrate some instances where automated chatbots can benefit customer care or customer-facing staff in the financial industry. 

1. Reimbursement Requests

A client may ask a business for repayment for several reasons. It could sometimes be for costs paid by the business, as in the event of a health insurance claim. 

Payment and reimbursement requests can have their repetitive activities automated using chatbots. Teams may use bots to gather relevant data instead of manually entering details, facilitating transactions far more quickly than it would take a person. It also implies that clients won’t have to wait in a queue to address their concerns with an objective team member. 

Customers may follow the progress of their automatic refund requests in real-time and receive updates.

2. Account Questions

Customers will always have many queries regarding their accounts, ranging from balance inquiries to payment confirmations and transaction histories. What if you had to handle every request by hand?

In the banking business, automation can help you reduce the number of calls or emails your customer support team receives by giving your clients access to a self-service portal or chatbot for more straightforward account inquiries.

3. Urgent Account Requests

Account inquiries might occasionally be urgent and must be attended to immediately. Regretfully, a member of your customer account team might only sometimes be available to accept these kinds of requests right away. Finance automation, however, could offer these clients the assistance they want.

However, when automation cannot address the problems, your tool may be configured to identify urgent requests and forward them to the relevant party, avoiding waiting periods and other formalities. In this manner, your clients may get timely support.

4. Fraud Detection

Money security is crucial. Identity theft comprises 61% of reported fraud losses in banks. An organization’s capacity to identify and stop scams will increase by automating its fraud detection and client protection services.

Bots can be used to set up automated notifications for fraudulent behavior or questionable transactions, allowing users to take immediate action. These bots can create a behavior profile and identify spending habits based on previous interactions with customers. With this information, anything unusual may be reported right away. 

AI-powered KYC systems can also accomplish face recognition, fingerprint matching, identity and document verification, and more. AI-based chatbots prevent security breaches and monitor fraud in real-time by adhering to data protection standards.

5. Feedback

Consumer feedback is essential since it demonstrates how your business may advance and better position itself. You may ask for and collect feedback from your consumers via automated surveys, saving you the trouble of finding and speaking with each of them. 

In this dynamic and uncertain environment, having in-app feedback may assist in refining customer services and provide consumers with better value. Feedback systems that rely on chatbots can automate tasks and centralize them into a single process.

Why Finance Organizations are Switching to Automation

Is automation coming to finance, or is it already here? There are various reasons why financial institutions are moving toward automation these days. 

1. Cost-Saving

Automation cuts costs and boosts cash flow. Deloitte: RPA in finance can save 25-80% on operational expenses.

2. Efficiency 

Many financial operations are streamlined via automation, reducing the time they would otherwise take. Therefore, operational productivity and efficiency increase due to financial automation. According to Accenture’s analysis, 60–75% of agent time might be freed up by automating 80% of financial processes.

3. Ease of Use

The most excellent automated financial systems typically include simple, easy-to-use interfaces that make them simple to set up and use. Thanks to user-friendly platforms, your bots may be up and operating in minutes without needing a development team or programming expertise; stated differently, there’s no need to squander time on protracted onboarding procedures or comprehensive training.

4. Accuracy

Error elimination is nearly impossible when dealing with humans. Fortunately, automated systems are not affected by this flaw. In the banking sector, automation may help you reduce mistakes and enhance the dependability and accuracy of your financial reporting. Intelligent automation improves cash flow estimates in certain businesses by 85–95%. 

5. Proactivity

Chatbots and other automated systems can be available online and at all times. They can proactively manage their operations, whether spotting possible security breaches or handling reimbursement requests even when agents are occupied or unavailable.

6. Potential Concerns 

Similar to most emerging technologies, some have expressed pessimism over automation in the banking sector. Its perceived security hazards, rigidity, and worries about replacing human-led interactions with machine-based ones are the significant causes of worry.

7. Security of Financial Data

Automation that lacks human input is susceptible to cyber manipulation and breaches because it lacks a backup plan. Since financial data is among the most sensitive by nature, there are concerns about using automation technology to handle it. 

8. Inflexibility

Automation may greatly aid in fostering a more agile approach to financial procedures. Yet, a worry impeding widespread adoption is the belief that automation makes these processes less amenable to modification without requiring new equipment.

9. Upfront Investments

The expenditure of time and money is another major issue. Non-out-of-the-box automated solutions come with higher setup and training expenses. For certain companies, the return on investment from automation must be more evident to support these upfront costs. 

10. Replacing Human Interactions

Sometimes, people worry about automation because they think technology will completely replace human-led tasks. Although there are many advantages to automated financial operations, an excessive dependence on this technology may eventually lead to issues. This technology will be more susceptible to cyberattacks without human input, and because it will provide worse user experiences, it may have a lower return on investment. 

In light of this, utilizing automated technology in conjunction with human input will be its most advantageous use.

How is Automation Changing The Industry?

In addition to the previously listed advantages, automation changes how teams and finance experts operate within financial institutions. As technology advances, responsibilities are beginning to change as well. Teams now need to decide how to collaborate with automated procedures. 

As a result, finance professionals are discovering that their function is shifting away from transactional tasks and toward data interpretation and insight-generating. Financial customer care teams are seeing a similar transition in their function, moving away from administrative tasks like gathering issue information, soliciting feedback, and troubleshooting routing issues and toward more value-added activities.

According to Deloitte, to optimize client experiences, financial businesses must balance operations led by automation and humans, even while innovation in the field continues. Possessing both abilities guarantees the appropriate degree of security and adaptability for the clientele while aiding in future-proofing. 


Is Automation the Future of Finance?

These days, digital wallets app development company are searching increasingly for creative methods to satisfy rising consumer demands and stay current.  Consumers are expecting higher and higher standards of service. Corporate and individual expectations drive finance automation, so firms are confident in its benefits. 

Teams are already discovering they can reduce financial stress and save time by automating key activities like payroll, accounts payable, tax compliance, accounting, invoicing and receivables, payroll, and expenditure management. 

But for consumers, chatbots that use AI automation guarantee consistent and reliable financial advice and information. As a consequence, operations become more efficient, which improves client retention. Finance automation is growing despite concerns. The trend suggests a future where finance processes become primarily automated, impacting human interactions.

To conclude,

We help founders/CXOs in Finance/BFSI/NBFC sector companies make use of Tech stacks to automate their repeated tasks using AI/ML.

You can set up a free consultation/discovery call with our tech team to find out about automation opportunities in your current business environment.

Feel free to write to us at Consultation call. Our most experienced business team will reach out to you to schedule a call.

Comments are closed.