Process Optimization in the Digital Age: A Financial Services Industry Perspective

As the digital revolution sweeps across the financial services and insurance industry and new technology-based startups rock traditional business models, it is not surprising that the transformation imperative today has changed decisively towards speed, agility, simplicity, and value. A focus on customer experience is now the first port-of-call and customer and colleague experience is the pivot around which all business and technology solutions must be designed.

At the heart of the transformation is the need to fundamentally digitize and optimize business processes thus enabling better customer experience, lower cost-to-serve and faster speed-to-launch of new products.

Disruptive technologies like artificial intelligence and robotic process automation are playing a key role in enabling process optimization for the financial industry. Standalone digital banks are being set-up to reduce the dependence on complex legacy systems and minimize the overall cost-to-serve. Component-based micro-services architecture enabled by application programming interfaces (APIs) are helping the industry to move away from the monolithic legacy of applications, whilst Agile methodology is facilitating faster delivery of transformation projects in smaller, iterative chunks.

 

 

 Current process optimization programs

Although many financial institutions have embraced the need to digitize and optimize their processes, there are cracks appearing in how banks are choosing to run these process digitization and operational excellence initiatives, leading to a lack of needle-moving change in KPIs and benefits delivered. There are several reasons for this:

• Process optimization in silos: we find a lot of siloed initiatives running in parallel around customer experience improvement, lean/process optimization, RPA discovery projects, and operations excellence projects – causing considerable confusion around approaches, value levers, benefits, and KPIs impacted. There seems to be a dichotomy between the “old thinking” of process/operations excellence and the “new thinking” of digital, whilst in reality, they are both working towards the same objectives. What is missing is a complementary approach that maximizes value.
• The product-process-platform disconnect: there is a glaring lack of connect in the business processes between banking product suites on one side and technology platforms on the other. Process transformation projects have to take an ecosystem view of product-process-platforms to ensure alignment and success.
• RPA as the silver bullet doesn’t work: while artificial intelligence and robotic process automation (RPA)  have fundamentally changed how banks optimize processes, where banks are getting these wrong is using RPA as a silver bullet to fix process issues in cases where the underlying cause of process inefficiencies could be different and require a whole other dose of treatment. This has triggered a growing number of failed RPA projects leading to a lack of confidence in these initiatives.
• Value linkage is key: whichever lens is applied to the digitization of processes, it is critical to link this to value and operational levers as well as KPIs that can be tracked. A fair number of process optimization projects lose momentum over time due to the lack of a clear definition of value outcomes upfront.

 

Our approach to process optimization

At Infosys Consulting, we have defined a holistic approach towards process digitization initiatives, focusing on the following pillars, all considered in conjunction:

• Operating model: changes required across the business and operating model to ensure alignment to new digital ecosystems.
• Product-process-platform alignment: changes across products and platforms to make them more process-centric.
• Process optimization: multiple levers applied including improving customer experience, simplification, re-ordering of processes where appropriate, digitizing / automation and relocation.
• Intelligent automation: use of RPA to drive automation, only where relevant.
• Agile approach: an agile culture, mindset and philosophy across the ecosystem and not just the delivery model.

 

The key is to cover multiple aspects of process optimization that incorporate all levers in light of customer experience imperatives and AI/RPA techniques along with a better interlocking within the existing product-process-platform axis. A holistic approach to process optimization must encompass the following objectives:

1. Simplify: eliminate process steps that do not add value
2. Re-order: small changes to the order of process-steps that would generate value
3. Streamline: identify ways to reduce variability in the process
4. Automate: use RPA to eliminate manual activities
5. Globalize/Relocate: shift processes to shared services /offshore center

 

 

The benefits of this ecosystem approach include a unified vision to process digitization initiatives, geared towards a common goal with a better synergy of optimization levers, a stronger linkage to value, and finally a more effective and efficient team.