OPEX is paramount in financial services, supporting improvements in efficiency, productivity, risk management and innovation

9 ways OPEX can transform financial services

By: Michael Hill
06/20/2024

Operational excellence (OPEX) is paramount in financial services, supporting improvements in efficiency, productivity, risk management and innovation. Spanning operations, technology and culture, OPEX has the power to transform financial institutions that face immense pressures in today’s environment.

The drive towards OPEX in financial institutions is creating a golden opportunity to streamline processes, enhance data-driven decisions and build robust technology stacks.

OPEX is evolving in financial services

The OPEX landscape has evolved significantly in the financial sector in the last couple of years, says Nao Anthony, senior manager OPEX at Commonwealth Bank and PEX Network Advisory Board member. “The financial services industry is facing significant challenges due to exponentially growing technology capabilities. What used to be a predictable challenge of ‘keeping costs low’ utilizing conventional automation techniques such as workflow capabilities and digitization has met with far more advance technologies that can disrupt any industry without notice.”

What’s deemed to be distinctively competitive through heavy, capital-backed investment now only requires a person with a laptop who has access to AI where most of the rules are open source, he says. “The time to service and innovation in products and service has become the key measure of success in satisfying customers. Waiting and effort is considered evil in this instantly gratifying world.”

Here are nine ways OPEX can transform financial services.

Artificial intelligence

OPEX is a moving target due to digital transformation and evolving customer expectations, particularly in complex sectors like financial services. Artificial intelligence (AI) is a key tool in advancing companies towards OPEX and ensuring scalability, with financial services businesses leveraging AI, data analytics and predictive analytics to analyze data and extract insights into clients’ financial behaviors, preferences and life stages. This enables businesses to craft hyper-personalized experiences, develop personalized investment strategies, tailor packages and provide product recommendations based on client profiles and financial goals.

Automation

The modern financial services sector faces escalating regulatory demands and a scarcity of skilled, cost-effective workers. Automation has emerged as a crucial enabler in helping financial services address both hurdles. By leveraging automation, organizations can overcome the administrative burden associated with compliance, ensuring regulatory adherence while optimizing for operational efficiency.

Cloud infrastructure

Modern OPEX strategies are being increasingly augmented by evolving cloud infrastructure. Banks are using cloud technology to automate tasks and free up staff for strategic analysis. They also leverage cloud infrastructure to assess vast amounts of data in real-time, enabling faster loan approvals, targeted product offerings and proactive fraud prevention.

Business process management

Business process management (BPM) – the OPEX approach that uses various methods to discover, model, analyze, measure and optimize business processes – is commonly used in the financial sector to enhance decision-making and reporting. BPM helps to make the invisible visible through its use of KPIs, metrics and data to enable better decisions, as well as creating a culture of incremental improvement based on data.

Process mining

By tracking business processes with event logs to identify bottlenecks, process mining improves efficiency and helps people become more productive. It is an important and widely applied element of OPEX. Process mining analysis can improve customer experiences (CX) in banking, painting a full picture of the customer’s perspective of actions. Banks can incorporate existing knowledge of how customers experience process outputs into datasets, providing a case-by-case record of how the average customer would react to performance.

Process orchestration and process reengineering

Process orchestration and process reengineering are emerging elements of OPEX. Process orchestration aims to go beyond isolated or fragmented automation by tying together automated and manual tasks as well as different business processes to help achieve end-to-end automation. Goldman Sachs, NatWest and the National Bank of Canada all use process orchestration to coordinate processes across people, systems and devices to overcome complexity and increase efficiency.

Process reengineering is the radical redesign of business processes to achieve dramatic improvements in productivity, cycle times, quality and employee and customer satisfaction. Leading financial institutions recognize that digitization and process reengineering go hand in hand.

Intelligent document processing

Intelligent document processing (IDP) automatically extracts data from documents, converting it into structured, usable and machine-readable information. It is an increasingly applied component of OPEX, with document-intensive financial services such as banking and insurance exhibiting strong demand for specific IDP capabilities. Its key feature is the capability to read text and understand the purpose of use.

Digital and technology transformation

The adoption of digital and technological advances is reshaping OPEX with advances coming when many financial institutions are facing talent concerns. Bank of America was recently recognized in the annual Coalition Greenwich Digital Transformation Benchmarking Study for its digital transformation successes and ongoing enhancement.

Three-quarters of global insurance organizations are preparing to implement new, digitally-focused management platforms in the next two years as the industry prepares to adopt much-needed digital transformation, according to a recent report from Novidea.

Function-first approaches and long-term perspectives

Financial institutions are focused on working smarter, rather than harder, leveraging existing investments in platforms and software. This function-first approach balances OPEX to costs, with many OPEX projects within the industry centered around enhancing functionality. By optimizing functions such as customer service, risk management or back-office processes, institutions can achieve significant gains in efficiency and effectiveness. OPEX nurtures sustainable growth and maintains a competitive edge for financial service companies, with financial institutions balancing immediate efficiency gains with strategic investments that yield lasting benefits.

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