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Doing More with Less in Financial Services

Feb 19, 2021

As in almost all businesses, the rule for financial services firms, including banks, insurance, and other financial products, is to do more with less, mainly less personnel.

Automate and Integrate

Also, as in almost all businesses, the key strategy being engaged is “digital transformation.” The challenge is to identify processes that can be shifted from human operators and instead be automated, handled by computer-driven systems to increase efficiency, reduce errors, and make human resources available for work requiring higher-order skills.

Integration is also part of the strategy. How can market data systems be more tightly integrated with accounts payable, contract management, procurement, and other systems. Chargebacks, in particular, are enjoying increased interest as financial managers seek to better define who is spending on what.

Can application programming interfaces (API) be obtained or created to get more systems talking productively to each other. Financial service companies are recognizing that more and more of their standard workflows are consistent enough to be routinized and automated. The result is much faster processing at much lower cost. Integration enables greater automation.

Another strategy enjoying wider adoption in the financial services community is the idea of outsourcing standard functions that don’t necessarily require intimate knowledge of the core business, but rather knowledge of the function being performed. One good example in the technology expense management (TEM) space is bill pay. More and more financial services companies are saving money by having their TEM partner pay their telecom bills, thus reducing the involvement and workload placed upon their own accounts payable departments and having them handled by telecom experts. This also simplifies periodic functions such as accrual files, chargeback files, month-end and year-end closing.

Procurement Controls

Workflow automation also delivers excellent savings and dramatically increased control when it comes to procurement of telecom equipment, circuits, and other services. Business rules are built into the workflow that limit procurement to specified products and services. These systems go so far as to suggest products based upon user profiles and demand challenge activities.

The automation also enforces requirements for approvals, allocations, and other internal controls, enabling “demand challenge” processes which actively ask the requestor if they’ve considered less expensive or more desirable choices. This once required the active participation of human analysts in a purely procurement process. Now, the automated version provides a more comprehensive selection of alternatives purely based on empirical indicators.

A tertiary value of these automated workflow processes is the preservation of institutional information and knowledge. Formerly, all the preferred selections, capacities, and other details often resident only in the minds of the analysts. To automate requires that this knowledge be digitized and transferred into systems, often using artificial intelligence (AI) to draw inferences that more closely specify superior selections. The departure of any given analyst no longer means the loss of valuable data.

Products are also being “profiled” to provide faster insight into what will and won’t likely be approved further down the line. Alternatives may be presented as well. Beyond replacing humans, these functions augment and improve the ability of the higher-level humans that remain.

The Need for Speed

Nowhere is the need for speed greater than on a trading floor. Traders are turning to Direct Exchange Connectivity for the kind of high-frequency, low-latency, rapid feeds that enable decisions in nanoseconds. Since these feeds are very expensive, they must be carefully and closely managed. Another current challenge is the stop/start transition of management of this connectivity from the telecom group to the IT group within many companies.

Elementally, the need to do more with less implies reductions in headcount which means fewer people to do the same or more work. This results in everyone and everything having to move faster. Automation moves far faster than any human possibly could. The challenge facing financial services companies and their TEM partners is to integrate more systems to automate more functions and workflows which will enable the ability to accomplish more results with fewer resources.

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