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Question
Explain the merits of automation in banking for improving the effectiveness of the banking industry in India.

Answer
Explain the merits of automation in banking for improving the effectiveness of the banking industry in India.  

Automation is engaging technology to do things for you so that you don’t have to do them yourself, thus reducing the level of human intervention. Automation has become a great tool almost in all industries due to the numerous advantages it offers, and the banking industry cannot afford to execute its duties without it.

We live in a digital age and hence, no institution of the global economy can be immune from automation and the advent of digital means of operations. Banks and financial institutions were among the first adopters of automation considering the humungous benefits that they get from embracing IT (Information Technology). the reason why banks and financial institutions rapidly embraced IT is that their operations when done manually take up a lot of time and effort from their staff as well making them do routine activities over and over again leading to loss of productivity and missing the chance to move up the value chain. On the other hand, automation reduces the redundancies in their operations and frees up staff that can be deployed for activities that are more productive. This is the reason why banks and financial institutions are among the largest users of IT. Further, many IT vendors have dedicated verticals to what are known as BFSI or Banking, Financial Services, and Insurance sectors for the large budgets that they have to implement IT solutions. This is why many IT companies target the BFSI sector more than any other sector as they have the potential for high value deals running into the billions of dollars as compared to the other sectors that are less rich.
Some Consequences of Automation
Moreover, banks can reduce the incidence of customers visiting the branch for even mundane things like withdrawing money and updating their statements as automation means that ATMs (Automated Teller Machines) and online statements make physical visits to the branch unnecessary. Indeed, many leading multinational banks actually charge for the physical visits as they encourage customers to bank online. of course, many of the old timers rue the loss of face-to-face contact and the doing away of personal relationships. However, such is the nature of the modern technology driven society that such considerations are usually secondary to the need to be efficient and efficacious. Given the need for profits and any means of reducing costs that are necessary in this uber-competitive business landscape, banks and financial institutions have found that automation greatly improves their bottom line and leads to synergies between their processes. Further, banks and financial institutions that have embraced automation have also found that they can concentrate of corporate banking and high Networth individuals for private banking by automating the routine processes in retail and commercial banking.
Synergies, Regulatory Requirements, and Lessening of Fraud
The third aspect why banks and financial institutions automate is that their core banking operations can be done in an improved manner when compared to the manual processing that takes up time, effort, and resources as well as leads to glitches and errors. The last point is very crucial as manual processing is person driven and considering that, humans have a tendency to err. Automation removes the human element and makes the processes error free and less prone to glitches. Moreover, the chances of fraud are minimized because of automation, which is a major benefit for banks and financial institutions that deal with large amounts of money and that too belonging to the customers whose hard earned assets they are managing. In addition, banks and financial institutions have realized that they can report regulatory and legal requirements to the regulators in a better way through automation as well as the fact that storing historical data and storing customer details for extended periods is made easier because of automation.

Improved Efficiency
•   Automation makes banking operations more efficient in processing transactions. There are benefits because you experience fast and efficient transactions and compliance. besides reduced risks of human error. For instance, you can make cash deposits and withdrawals using ATMs (Automated Teller Machines) fast and efficiently.
Lower Operation Costs
•   Bank automation can help reduce costs in the areas of hiring staff, training employees, purchasing office equipment, and paying for other physical office overhead expenses. This is because automation offers strong payment systems enabled by e-commerce and information systems. Without automation, banks would be made to hire many employees whose duties would be efficiently done by a single automation process. Also, without an established automation system, banks would be made to regularly invest funds in hiring and training staff.
Increased Productivity
•   Automation of banking business has helped increase productivity. This is because it eliminates the tedious, repetitive, and cumbersome tasks such as paperwork often associated with the banking process. In a mid-to-large banking business environment, automated business strategy would assist in simplifying processes, which could in turn increase productivity of each employee. For instance, withdrawals and deposits by 10 bank tellers at the counter could be simplified by having one ATM machine.
Improved Personalization
•   By automating banking business, banks are offered the tools they need to satisfy the specific needs and wants of specific customers. Increasing personalization boosts customer response and conversion rates and increases returns on marketing investment. For instance, banks that use email automatic responder software to respond to customers' specific requests promote timely replies that enable them to make more informed and timely decisions. Account inquiries can go  
Enhanced Flexibility
•   Automating banking business can help banks become more flexible so that they can adjust instantly to changing banking conditions within or outside the country. This is because automations can respond to any number of customers with various demands within or outside the country.
For example, automation may enable offshore banks to conclude transactions promptly online, particularly in unpredictable market conditions where your country has a tendency to restrict banking to a certain amount of money outside your country of residence. The offshore banks can also move your funds with greater ease and freedom online.

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