Banking Automation: Streamlining the Industry Using Fintech

Automation can help banks reduce costs, improve customer satisfaction, and increase efficiency. It can also help them manage risk and compliance

Photo of Canary Wharf, London, at night, showing the banks.

Automation is everywhere you look these days, from supermarkets to warehouses to automobiles. This prominent trend shows no sign of abating anytime soon. However, some sectors remain behind others when it comes to adopting automated technologies. Banking is one such segment, but there’s now evidence to suggest that this could be about to change. 

What do we mean by automation?

There are a lot of ways to define automation, but broadly the term applies to any technological application where human input is minimised through design.

Over the years, automation has evolved from a basic level, which took simple tasks and automated them, all the way to advanced automation powered by Artificial Intelligence (AI).

finanIn general, automated solutions work to increase productivity and efficiency within businesses and often reduce costs associated with human capital. 

Why has the banking sector been slow to adopt automation?

The banking sector has been built on a number of long-standing, tried and tested processes and protocols, which have been continually fortified and refined over time. This is one explanation as to why the sector has been so slow in adopting new, automated methods within its operations.

Additionally, many major financial institutions have spent decades building their own internal legacy computer systems, which are often incompatible with modern automated solutions. 

When combined, these two issues have caused a significant lag in the banking sector concerning the adoption of automated technologies. This lag has created a market opportunity that a number of fintech providers have been able to exploit in recent years.

Offering a more responsive and tech-first user experience, many fintech providers are leveraging the power of automation to better meet the banking needs of their customers. However, there is still time for the banking sector to start bridging this gap.

Does automation have a place in the banking sector? 

The opportunity for automation to play a role within banking can be transformational.

To achieve this, legacy organisations must learn from their more tech-savvy, smaller counterparts. If used effectively, automated financial solutions can greatly improve the experience of banking customers, both on a personal and business level. So, what exactly does this change look like, and how far away are we from seeing it become a reality?

The small business credit lending process is a good place to start, where not much has changed since the 1980s. Over that period, the world has greatly transformed, but the methods used to assess creditworthiness have remained somewhat static.

For the most part, banks assess data related to businesses’ accounting and banking records and credit scores. For many businesses, especially the newer and less established ones, this antiquated approach is having a detrimental effect. In fact, it’s often cited as a contributor to the huge funding gap between SMBs and their larger counterparts. 

How can automation benefit the banking sector?

By adopting more automated technologies, lenders in the banking sector can begin to assess more comprehensive information when making credit decisions. Notably, new methods exist, which enable additional data sets to be evaluated to build a more accurate financial depiction of a business’s overall position. This data can come from sources like external market attributes, economic indicators, demographic data and exogenous shocks. 

By leveraging additional data sets through new methods of financial automation, banks are now in a position to respond more effectively to small businesses, including those in emerging and evolving markets where there is a lack of conventional sources of information. 

Small business owners can improve operational efficiencies and accelerate their growth efforts with more ways to access funding facilitated by alternative data and automated processes. In doing so, legacy oriented financial institutions can now better equip themselves in protecting against new, nimbler tech-based disruptors.


About the Author:

Ron Benegbi

Ron Benegbi is the Founder and CEO of Uplinq Financial Technologies.

Ron is a senior technology executive with over 25 years of experience successfully building and scaling organisations in Enterprise B2B and SaaS. He recently founded his fifth start-up, Uplinq.

Ron boasts an established track record of scaling companies at an accelerated pace and on a global level. Notably, he was able to take one of his previous companies from ideation to $100M in just five years. 

Through his previous experience in the small business banking segment, Ron realised that traditional data sources like accounting, banking and credit scores do not provide sufficient and accurate insights into the financial performance of small businesses. 

This led Ron to found Uplinq, a North American based fintech startup that leverages both alternative and traditional data sources to simplify the credit decisioning process for lenders servicing SMBs. Accordingly, Ron and Uplinq are well-positioned to help lenders address the needs of traditional SMBs, whilst better supporting the underserved, unbanked, minority and immigrant population.