How Smart Automation Can Help Solve Banking’s Tech Talent Shortage

Consumers expect seamless digital banking. Competition for IT workers is intense. Cost pressures are unrelenting. How can banks and credit unions balance these competing pressures? One way is by using automation to free up resources to better enable innovation and digital transformation.
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It’s no secret that today’s financial institutions face multiple challenges. As we progress through 2022, these include the increasing likelihood of a recession, which is driving banking organizations to seek opportunities to reduce costs, with many signaling the need for hiring freezes and even layoffs in the months to come.

Yet despite an anticipated softening of the broader labor market, a significant tech skills gap remains. The tech job unemployment rate is just 2.0%, with nearly 4 million posted jobs for tech positions over the past 12 months, according to Comp TIA’s “Workforce and Learning Trends” report. This is likely to continue, as the growth rate for tech jobs is projected to rise twice as fast as overall U.S. employment through 2032. In fact, three in four HR professionals surveyed expect it will take longer than it already does to fill open job over the next 12 months, Comp TIA noted.

And although more than three-quarters of corporate CEOs say the ability to hire and retain talent is the most critical factor in achieving growth, just 31% expect talent shortages to ease this year, according to a PWC Pulse survey.

What Banks Are Worried About:

Only about a third of all CEOs think the talent shortage is going to let up soon.

Indeed, a survey published by TalentLMS found that 72% of polled IT workers were considering quitting their jobs in 2022, underscoring that the shortage of tech talent isn’t disappearing anytime soon.

Challenges of Siloed Legacy Systems

It’s clear that for many organizations, the capabilities of in-house tech departments are not sufficient to meet the increasing challenges of stretched resources, expanding workloads and overworked employees. With tech staff stretched thin just doing the basic job of keeping bank systems running, they have precious little time for projects related to growth and innovation.

The tech talent gap isn’t the only challenge faced by financial institutions. Many are shackled to an increasingly complex technology stack, even as they prioritize efficiency and productivity. Twice as many global execs are focusing on enhancing productivity through technology and automation now versus 2016.

Meanwhile, legacy processes are walled off inside operational silos that don’t speak to each other, limiting organizations’ ability to extract and transfer data across the enterprise, let alone understand customers’ needs and behaviors.

The Problem As It Exists Now:

Many banks are shackled to an increasingly complex technology stack, even as they prioritize efficiency and productivity.

Compounding this issue is increasing competition from fintechs and challenger banks, which are capitalizing on changes in consumer behavior and the broad shift toward digital banking. To maintain par in providing customers with a compelling and convenient digital experience, incumbent banks are rapidly bringing on new systems and employing emerging technologies like artificial intelligence, machine learning and data analysis. But these systems must be able to integrate and communicate with legacy systems effectively to provide customers with a seamless digital experience without adding manual tasks.

To illustrate the scope of the customer experience gap between banks and fintechs, a recent study conducted by The Harris Poll revealed that over 40% of financial consumers would choose a new institution if their current provider was unable to offer a compelling digital banking experience. Moreover, nearly 60% of the survey’s respondents said their local credit union or bank’s digital offerings were not acceptable.

Workload Automation Can Help Banks Get Ahead

To keep pace with innovation while aiming to retain IT staff, financial institutions are employing smart automation in their operations. Workload automation can alleviate the workforce crises they face by strengthening both the customer and employee experience, as well as driving innovation and productivity.

Modern workload automation systems offer financial services organizations several advantages over the old way of running processes. These include well-documented benefits like faster processing, cost reduction and the elimination of errors caused by manual, human-based processes.

Automation also helps companies organize to normalize and transfer data across multiple, diverse systems, integrate with outside, third-party systems and reduce the need to maintain expensive, specialized skillsets in-house.

Financial institutions can retain skilled talent, by elevating their responsibilities beyond the mundane while keeping critical knowledge within the organization. That’s because institutional knowledge is maintained within the automation system. Staff only needs to know how to activate the automated process rather than understanding each step within a complex set of workflows.

In customer- or member-facing applications like digital banking and teller-line technology, automation helps banks to achieve better digital transformation to meet the evolving needs of their customers and compete more effectively with digital-native fintechs and challenger banks.

In the back office, workload automation serves as an effective bridge across diverse on-premises, cloud-hosted and hybrid environments. It helps strengthen compliance and security and improve business continuity. Workload automation also enables institutions to gain operational resilience through self-healing routines when applications or systems are disrupted without warning.

How Innovators Use Automation to Solve Business Issues

Many financial institutions begin their workload automation journey in the core system, where they can reduce costs and achieve outstanding return on investment through lights-out processing. Workload automation enables financial institutions to forgo manual interventions when processing transactions like ACH posting, mortgage servicing, online and mobile banking payments, remote deposit capture and peer-to-peer payments, eliminating the need for a third shift.

As an example, Open Technology Solutions, a credit union service organization that serves the technology needs of its three large credit union owners, implemented workload automation in its core processing platform with a goal of eliminating around-the-clock staffing. Following deployment of its leading automation tool, Open Technology Solutions was able to redeploy 11 operations staff in new, higher-value strategic roles.

Once core processes are automated, the benefits of workload automation can begin, as almost any banking process can be automated.

For example, automation can help support the addition of new digital capabilities to meet the evolving financial needs of younger consumers, who value ready access to online and mobile banking, along with frictionless loan applications, deposit account opening and new customer onboarding processes. Workload process optimization is a key tool enabling banks and credit unions to offer streamlined, digitized banking services to their tech-savvy customers.

Payment processing is another area ripe for automation. Whether it’s accounts payables processing, a typically manual, paper-based operation, or payments-related actions such as remote deposit capture, Check 21 and ACH processing, all can benefit greatly from automation-fueled efficiency. Every financial institution runs these processes daily, yet they typically use complex, time-consuming batch processes instead of a streamlined and optimized process.

Prime Opportunity:

If your bank is looking for the best function to automate next, it could be payments processing.

Another opportunity can be found in mortgage servicing and payment processing, where workload automation can both improve the borrower experience as well as save significant processing time in the back office. For example, by automating critical daily and monthly mortgage processes, Achieva Credit Union, based in Dunedin, Fla., has seen daily processing 60 times faster, and accelerated monthly processing by up to 24 times.

“The time savings has been absolutely phenomenal,” says Joseph Spangenberg, Senior Application Administrator at Achieva Credit Union, which has $2.5 billion in assets. “Our daily payment sweep is running between five and seven minutes now, which is down from five hours. And our month-end processing, which previously took an entire workday for the mortgage team, now takes just 20 to 30 minutes. This has produced the biggest time savings we’ve had from any implementation project.”

Financial institutions are also seeing significant returns from automating functions like business intelligence and reporting, document imaging and storage and other areas. And automation also strengthens compliance and security, enabling institutions to adeptly oversee security privileges anywhere across the organization and easily keep records for auditing to satisfy compliance requirements.

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