In the current market environment, credit unions face an unprecedented set of challenges. Our Amazon Age has conditioned members to transact whenever and however they want, and to expect immediate gratification. The pandemic has re-written all the rules regarding employment, with people re-examining their career and life goals, with employees wanting to work remotely, and with increased difficulty in recruiting, compensating and retaining qualified staff to meet higher market expectations. In addition to banks, credit unions are now facing a new generation of FinTech competitors offering a broad range of services and a high degree of convenience, and without the overhead that burdens brick & mortar institutions.

There has never been a time in which operational excellence is more important, in terms of the success and survival of credit unions. This has given rise to a compelling set of reasons why intelligent process automation is the pathway to increasing profitability, building member loyalty, and gaining advantage over existing and future competitors.

If the challenges have never been greater, and the solution is self-evident, what’s preventing credit unions from leveraging the power of process automation to solve their most pressing business challenges – from personalizing engagement to automating service and streamlining operations?

There are several reasons why so many credit unions are failing to apply process automation effectively, or at all. One basic reason is that they lack an understanding of what type of process automation is most appropriate for specific applications. Robotic Process Automation (RPA), a technology that has been available for some time, is a good example of this.

The underlying objective of RPA is to replicate human steps; recording what a user does, and then performing those same tasks in the same order, using different input data. This type of so-called “swivel” activity involves capturing data from one system, then swiveling your chair to enter that data into another system. The first generation of RPA product has served as an effective technology for automating highly repetitive tasks with minimal IT support.

The major shortcoming of RPA, however, has been that the technology’s simplistic approach to decisioning has made it unsuitable for complex tasks, or for scaling any function. Similar to business process reengineering, orchestration difficulties grow as the volume of RPA bots increase. Another shortcoming is that as the user interface of systems changes, re-recording of data is required, and exception handling requires programming expertise. Notably, regulators are seeking an understanding of why decisions are made, and audit trails often do not exist with RPA implementations.

In summary, RPA is limited to user interface-based automation that records exactly what a user does; and credit unions should not expect it to deliver any more than that.

Credit unions seeking to move beyond the limitations of RPA must first start with a clear articulation of the function they intend to automate. Key performance metrics and a feedback loop need to be identified, both to measure outcomes and understand whatever modifications will be required to achieve the targeted metrics. Additionally, a workflow engine must be available, in addition to whatever data is relevant to the function.

The primary capability necessary for credit unions to move beyond the limitations of RPA is an effective case management platform, which allows for all relevant information to be easily captured and located in one place. There is no need to move from one system to another, or to deal with different APIs, because the case platform eliminates those steps. The case platform also allows for tasks and workflows to be defined, for all actions to be tracked, and for reports to be generated that facilitate informed decision-making. With case management, functions can be automated from intake through resolution, with complete documentation.

One example of how case management can be applied effectively to automate decision-making involves resolution of member disputes. Regardless of how the dispute-related information is received, whether directly or through a third party, at some point it will need to be dispositioned by the credit union’s operations staff.

Using a case management platform, here is how the automated resolution process would proceed:

What’s important to understand in this simple example involving dispute resolution is that case platform-based automation can be applied by credit unions to a broad range of essential operational applications, including financial fraud mitigation, AML and regulatory compliance, loan processing, onboarding, and KYC, and addressing contact center service requests.

Perhaps more importantly, case platform-based automation can be applied to operational applications involving a significantly higher degree of complexity. This is possible because all essential case-related data resides in a single system, allowing Artificial Intelligence and Machine Learning techniques to be applied; addressing whatever level of decisioning and workflow automation is required.

A growing number of credit unions understand the limitations of RPA, and appreciate the advantages of a case platform to deliver automated solutions. However, they are often discouraged from taking steps to implement an intelligent automation strategy based on their perceptions of the time, expense and disruption that might be involved in any transition. This tendency to remain with “the devil that you know” is understandable, but may also be the reason why those institutions will end up on the losing end of the digital transformation in financial services.

There are viable ways for credit unions to manage the inherent risks involved in any transition to automation of key operational functions. Given the current staffing challenges and limited internal resources, many credit unions have explored partnerships with organizations offering case management platforms, as initial step toward intelligent automation of key operational functions.

Those institutions that have succeeded in partnering with case platform providers understood that:

Whether a credit union partners with a qualified solutions partner to implement intelligent automation, or undertakes that task internally, operational excellence should be an enterprise level priority. “Back office” functions are no longer table stakes. They are now the keys to improved productivity, cost savings, member satisfaction and loyalty, and to competitive advantage.

– by N. Venu Gopal
Chairman
Quinte Financial Technologies

Source: This article was originally published in “Credit Union Business” on December 13, 2022