How innovative can challenger banks be? Are they missing out on the benefits that intelligent automation can bring? The time to act is now. 

Greater attention being paid to user experience, as well as increased flexibility offered by challenger banks has appealed to many end customers in recent years. However, despite experiencing such growth (and consequent rise in transactions), only a handful of them have really considered intelligent automation as a serious opportunity for investment. Maybe the general perception is that these solutions offer limited value to challenger businesses due to their relative lack of scale? Or perhaps there are other priorities in their pipeline given the company’s growth profile? The big issue for challenger banks is whether they can continue to grow organically and remain competitive without intelligent automation.

I recently opened an account with such a challenger bank and even the basic KYC and acceptance procedures are designed to attract. A simple upload of a live photo and driving licence and away we go! This was a breath of fresh air when compared to the clunky process of a traditional bank which often require multiple forms of ID, proof of address etc. It is easy to see who the winner is here, in what is a fairly small but ultimately one of the few extended interactions we will ever have with our bank.

Now, challenger banks are innovative.This innovation is a key attribute to their success, and it’s clearly driving demand into their businesses. However, the key to challenger banks getting the “nitro boost” they need is to address the one key factor that so often affects new businesses - trust! This is particularly important within financial institutions, as we effectively hand over our life savings and monthly salaries to our banks. Building a trusting relationship means focusing on each customer individually, ensuring each and every customer engagement brings value, speed and a game changing experience.

This is where intelligent automation comes in:

Delivery value – Economies of scale have played a big role in automation, particularly concerning the big banks with huge operational inefficiencies embedded within. However, smaller challenger banks may well find that pound for pound it drives more value out of automation, as their back office activity has often remained onshore. Driving operational costs down means they can continue to grow their business whilst keeping prices low for their customers; it’s a win-win.

Delivery speed – On one hand, speed of deployment should be outstanding and should eradicate the need to sieve through masses of corporate hierarchy, legacy systems and offshored processes. This would mean quicker and more effective deployment, leading to earlier payback and a greater return on investment. On the other hand, process speed and execution on customer engagements should improve vastly as process inefficiencies are cut out due to automation; it’s a no brainer.

Service Differentiation – Ultimately, huge transaction numbers will always come with huge volumes of so-called ‘non-value-add’ business tasks. There is no denying that these business tasks need to be done, but why use your most valuable resources to perform them? Shift the non-value-add tasks to the robots and free up your employees to increase their value add time. This would allow them to focus on the growth generating activities that they have not had the time and space to do previously - developing new & innovative products, providing unique services and winning new customers through outstanding customer care.

Some challenger banks have explored intelligent automation before, but struggled to find a suitable entry point that made immediate financial sense. The recent rise of ‘Robots as a Service’ offerings among leading providers such as CGI is a call out to such businesses. Now, the costly infrastructure behind the bots no longer needs to sit in-house - businesses can almost create individual business cases per robot. They also have the ability to see the financial and operational benefits behind each investment. Historically speaking, larger banks have tended to move quicker on exploring automation, but struggled through their adoption journeys. Challenger banks could now seize the opportunity to close the market gap further, through automating intelligently.

What are your thoughts on intelligent automation for challenger banks? Get in touch or leave a comment below.

About this author

Picture of Kelvin Kwok

Kelvin Kwok

Intelligent Automation Lead - Banking & Financial Markets

Kelvin is Lead Consultant for Intelligent Automation within CGI UK’s Banking & Financial Markets team, delivering innovative automation solutions into corporate organisations. He has over 10 years of experience in strategy, transformation and commercial finance within retail, telecommunications and financial services sectors, in the capacity ...

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