Automation Maturity Index.
Research Report Part 1.
Written in collaboration with Longitude,
A Financial Times company.
The Best Versus The Rest
Defining automation excellence in financial services.
What does mature automation mean for a modern financial services company? What defines the companies that have gained significant business benefits from automation, and those that have not?
These are two of the big questions we explore in the Appian Automation Maturity Index program. In this, the first in a three-part series, we learn how the best-performing firms are transforming business models and core operations through a seamless blend of human expertise, robotic process automation (RPA), artificial intelligence (AI) and supporting technologies.
Imagine two large banks that have the same problem: to comply with regulations, they need to collect and maintain specific sets of information about their clients, but their datasets have thousands of missing fields.
Bank A creates an app that continuously scans the database for missing data and automatically sends the client a request for information when it finds a gap. The app then deciphers the client’s response and updates the database, flagging anything unusual or complex for the client services team.
Bank B, meanwhile, tasks its client services team with contacting clients for the missing information and manually entering the responses into the database. The process is slow, and coordination is complex. Some clients receive second requests, despite having already responded. Typos and other errors are made during the data-entry process. Multiple customer service metrics deteriorate as the team struggles to manage its workload.
Differences Run Deep
In this example, based on a real case, Bank A has taken one of literally thousands of opportunities that financial services firms have available, to use automation to increase speed, accuracy, quality, and efficiency while reducing the industry’s inherent complexity. Even this single opportunity type — filling gaps in a dataset — can be applied to numerous categories, including counterparty, risk, product, and market data.
Its approach contrasts dramatically with the slow, cumbersome approach taken by Bank B, which exposes the business to multiple risks and harms client relationships.
But the difference between Bank A and Bank B is not just about a specific digital competence or process mastery. A clear finding of this research program is that automation excellence in financial services has become far broader than any single technology or methodology. Instead, it is about the ability to seamlessly blend the strengths of people, RPA, AI, supporting technologies, databases, and systems. It is about bringing these strengths together into a unified workflow that benefits customers and employees, while enhancing the management of risk, compliance, data, change, and business strategy.
The pandemic has driven what were progressive nice-to-haves into current must-haves and non-negotiables.
Stuart Muirhead Managing Director, Head of Wholesale Middle Office, HSBC
Urgent Progress and New Momentum
We are living through a dramatic increase in the rate at which automation is advancing across financial services. The trend was already in full swing before 2020, but the Covid-19 pandemic created intense urgency to accelerate progress. This in turn has created momentum behind automation initiatives, making it central to current and future competitiveness in financial services.
“If we had not had the pandemic, change would have happened, but far more slowly,” says Stuart Muirhead, Managing Director, Head of Wholesale Middle Office, at HSBC. “People sometimes only consider what is truly possible when our current approach becomes impossible. So the pandemic has driven what were progressive nice-to-haves into current must-haves and non-negotiables.”
This surge in the pace of development means we need to better understand the direction of evolving best practice and develop new tools to measure the impact of automation investments. In response, this research program sets out to understand and define the key factors behind contemporary automation maturity and excellence in financial services.
Here, we explore the differences between firms at various stages of development that we identified in our survey of senior executives from all corners of the banking and asset management industries (see “Research methodology” for full details of the survey sample).
To highlight these trends, we have analyzed the survey results for three distinct groups:
Leaders: Respondents who say their organization is an industry leader in automation, including innovative and/or sophisticated automation solutions (20% of the sample).
Laggards: Respondents who say that most of their organization’s automation efforts/investments have failed to add value (15% of the sample).
Mainstream: Respondents who did not fall into either the Leader or Laggard group (65% of the sample).
We found striking differences between the Leader and Laggard groups — differences that extend across a broad range of organizational attributes and capabilities.
For example, the Leader and Laggard groups correlate strongly to company size. The majority (86%) of those with more than $10bn annual revenue are Leaders; none are in the Laggard group. Similarly, some 60% of those with less than $500m annual revenue are Laggards, and none made the Leader group.
The world’s largest financial services firms are leading the shift toward automation, and the gains they are making can help us understand why.
It Goes Beyond Cost Savings
The Leaders are seeing major business benefits from their automation investments, with almost all of them reporting some significant cost savings and increased competitiveness. Just 7% of the Laggards say the same for each.
Automation has led to significant cost savings at my organization.
We have gained a significant competitive edge from the automation of our processes.
The moment you shift your emphasis from cost to strategy, the entire company gets behind you.
Sathish Muthukrishnan Chief Information, Data and Digital Officer, Ally
Many of the Mainstream respondents (67%) are also achieving some degree of cost saving from automation, but only 49% are able to use automation to add a competitive advantage. This suggests it is more difficult to achieve than cost savings, and is something that develops further along the maturity curve.
Overcoming that challenge is often about keeping business strategy central to the automation agenda. “The moment you shift your emphasis from cost to strategy, the entire company gets behind you,” says Sathish Muthukrishnan, Chief Information, Data and Digital Officer at Ally, a digital financial services company with one of the largest automotive finance businesses in the US market.
“You don't start with technology, either,” he says. “You need to find processes that will enable your internal customers — your employees — and processes that add real value for your external customers. If you focus on use cases like that, and build on successes there, then automation takes on a life of its own, and that is when you start building a competitive advantage.”
Many Mainstream respondents are stuck in the piloting stage, while the majority of Leaders have already scaled-up their use of their RPA.
One Enterprise, One Strategy
Today, automation-mature organizations face few limits to the scope and scale of the opportunities available to them. These span every business function and department, encompassing everything from simple data entry tasks to end-to-end management of highly complex procedures.
But they need to be careful. When different functions and departments become aware of the opportunities, there is the risk that many separate automation efforts bloom like wildflowers across the organization — without any centralized coordination. This can lead to wasted resources and a proliferation of systems and platforms, while preventing truly end-to-end process automation that span multiple departments.
The Leaders in our survey overwhelmingly favor an enterprise-wide automation strategy and have an established center of excellence to create efficiencies, ensure consistency, and coordinate automation efforts globally. The Laggards have neither in place, and, perhaps as a result, struggle to assess the priorities of their automation projects.
Leaders have an enterprise-wide strategy and center of excellence in place; Laggards struggle to prioritise automation projects.
“We take an enterprise-wide view on automation,” says Muirhead. “But as a global bank, automating in a consistent way is both a challenge and an opportunity. The businesses I cover spans 70 jurisdictions – including multiple products across global markets, investment and commercial banking – each with local demands, rules, and regulations. That creates complexity, but we also have the chance to understand how automation works in more diverse contexts — through client demand and feedback from all these markets around the world — and that helps us to be more competitive market by market.”
In Part 2 of this series, we explore how the Leaders are building new levels of speed and agility with their automation capabilities, while delivering key benefits for customers and employees.
In Part 3, we explore some of the hallmarks of firms with mature automation capabilities, including the future foundations of automation excellence, and the impact of unifying workflow platforms, low code and AI.
Go to our interactive benchmarking tool to see how your own organization compares against leading organizations on the Appian Automation Maturity Index.
We surveyed 500 senior banking and asset management executives from around the world about the drivers, challenges, and opportunities on the path to automation maturity.
The results underpin the Appian Automation Maturity Index, which is designed to help financial services firms assess their progress towards automation excellence.
You can use our interactive tool to benchmark your own organization.
The 500 respondents were from nine countries, four sub-industries, three levels of seniority, and a wide range of company sizes. They spanned both technology- and business-focused professionals, including those involved in management, strategy, operations, BPM, finance, IT, data science, sales, risk, legal, regulatory, and specialist automation roles. To qualify for the survey, respondents must have made some specific investments in automation.
Respondents are from a range of sub-industries, spanning buy-side and sell-side organizations.
All nine regions have advanced financial centres but a range of economic and regulatory differences.
Only senior executives qualified for the survey, with the majority (55%) being c-suite and direct reports.
Respondents came from companies of all sizes - 86% of those with more than $10bn annual revenue are in the Leader group.
This research program has been produced by Appian in collaboration with Longitude, a Financial Times company.