Intelligent automation predicted to add $512bn to financial services by 2020

A report produced by Capgemini’s Digital Transformation Institute indicates that the financial services industry could expect to add up to $512bn to global revenues by 2020 through ‘intelligent automation’ – a combination of robotics process automation (RPA), artificial intelligence (AI) and business process optimization.

The report, ‘Growth in the machine: How financial services can move intelligent automation from cost play to growth strategy,’ demonstrates the breadth of opportunity for the financial services sector in embracing these technologies.

To date, automation technologies such as RPA have been implemented by the financial services industry to drive down costs and create efficiencies. The Capgemini report estimates that when RPA is deployed, a business can realize a 10%-25% increase in cost savings, potentially scaling to 30%-50% percent with AI-enhanced RPA.

“A lot of things will happen in automation in the next couple of years,” said Jenny Dahlström, deputy head of business support and development, and head of robotic implementation for Handelsbanken Capital Markets. “RPA is just one tool in the toolbox. We will also use AI-based tools and process optimization techniques for automation in the financial market.”

Automation as a revenue generator

Financial services companies are taking automation directly to their customers, using it as a revenue generator rather than just a cost saver. The report found that, on average, more than one third (35%) of financial services firms have seen a 2%-5% increase in topline growth from automation, with faster time-to-market and improved cross-selling efforts being the key factors that influence gains.

Meanwhile, 64% of organizations from across different segments have seen improvement in customer satisfaction by more than 60% through intelligent automation.

A growing number of financial services firms are considering deploying the technology on the front line. The report finds that more than half (55%) are focused on increasing customer satisfaction through automation, while 45% see growing revenue as a key objective.

Adoption remains low

In addition to the benefits offered by intelligent automation, the report suggests a further reason why financial services organizations are exploring the technology is the growing threat from non-traditional players.

It found that nearly half (45%) of organizations believe that big technology companies such as Amazon and Alphabet will be their competitors in the next five years.

However, adoption of intelligent automation has been slow. Only 10% of companies have implemented the technology to scale, with the majority struggling with business, technology and people challenges.

Hundreds of billions of dollars in automation-generated revenue is up for grabs in the coming years

The report reveals that only around one in four organizations has the technological maturity to implement cognitive automation technologies comprising machine learning, computer vision and biometrics. Most organizations still have RPA, or – at best – Natural Language Processing (NLP), forming the backbone of their automation initiatives.

Anirban Bose, member of the Group Executive Board and head of Capgemini’s Financial Services Global Business Unit, said: “The most visionary financial services firms have leaders with a sophisticated view of the potential impact automation can have throughout their business. And they are already reaping the rewards.

“Hundreds of billions of dollars in automation-generated revenue is up for grabs in the coming years. Only those companies that deploy this technology in a way that looks beyond cost-cutting and focuses on creating value for customers and shareholders will be able to win in the marketplace.”

The case for automation

The study finds several factors that are preventing organizations from moving beyond proof-of-concept to actually deploying intelligent automation. These challenges span the business organization, technology infrastructure and talent.

Around four in 10 organizations (43%) are struggling to establish a clear business case for automation. Many organizations are also finding it difficult to persuade leadership to commit to a cohesive intelligent automation strategy (41%).

The role of humans in processes will dramatically change and focus on things that humans are much better at

Almost half of businesses (48%) said they struggle to find the right resources to implement intelligent automation effectively. Also, 46% said that the lack of an adequate data management strategy hampers progress as AI-based automation algorithms require the right data at sufficient volumes.

“In my opinion, the evolution of automation in financial services will be very similar to the automotive industry revolution in the 70s and 80s,” said Jose Ordinas Lewis, head of the Robotic Automation Center at Swiss Re. “The role of humans in processes will dramatically change and focus on things that humans are much better at – in terms of design and problem-solving – and leaving the repetitive rules-based stuff to the robots. Though it won’t happen in two years, I also know it’s not going to take 20 years.”

A copy of the report can be downloaded here.