How to Avoid the Seven-Figure Cost of Human Error with Automation

In the financial services industry, efficiency and precision are paramount. A single data entry error can translate to staggering costs—in the U.S., poor data quality costs businesses $3.1 trillion every year, and 95% of organizations say poor data quality leads to consequences like wasted resources and additional costs, ineffective business initiatives, and poor customer experience.

However, data management is just one area where human error can prove especially costly. Something as innocuous as a clerical error during a manual process can translate to a $500-million headache and a typo can come with a $78 million price tag.

So, human error represents an undeniable and expensive challenge for financial institutions (FIs). But when the average person makes more than 100 mistakes at work per year, can an organization ever avoid the financial fallout of human error entirely?

Any process touched by people incurs some level of risk, but banks and credit unions that automate their critical workflows and put real-time data management on autopilot minimize errors, streamline operations, and improve accuracy, ultimately improving member and customer experiences while enhancing regulatory compliance.

Here, we'll explore four examples of how FIs can leverage automation solutions to minimize human error.

1. Automatically populate new customer information

Manual data entry is highly susceptible to errors, whether due to typos, misinterpretations, or simple oversight. Common data entry processes can be automated with an integration platform as a service (iPaaS) solution, which extracts information directly from one system and inputs it into another in real time, ensuring accuracy and consistency.

For example, an FI might leverage an iPaaS solution to automatically transfer new customer information from online applications into its core banking system. The solution would automatically extract the data from the application forms upon receipt and populate the necessary fields in the banking system, eliminating errors caused by manual entry and ensuring real-time synchronization between all systems for a more streamlined customer experience.

2. Turn high-volume end-of-day processing into a low-stress workflow

Workload spikes can drive stress higher and (unsurprisingly) 71% of people say they make more mistakes when stressed. Unlike human staff, automation solutions aren’t susceptible to stress, so critical processes can be handled efficiently and accurately, even during high-volume periods.

End-of-day processing serves as a key example. Rather than subjecting staff to the stress of processing a high volume of transactions, settlements, and reconciliations every day, FIs can implement a workload automation (WLA) solution capable of batch processing complex workflows. In turn, employees can be redeployed to more strategic work while automation solutions reliably carry out business-critical processes.

3. Build a regulatory compliance engine

Meeting regulatory requirements often involves compiling and reporting large volumes of data. Relying on manual compilation can lead to errors that result in non-compliance; as a result, FIs may face penalties on top of remediation costs.

As the regulatory landscape grows more complex, banks and credit unions that automate their compliance processes will find themselves positioned for long-term success. For example, an FI may use an iPaaS solution to gather the necessary data from various systems and populate a report, reducing the risk of non-compliance due to human error during the reporting process. Alternatively, the organization might leverage an RPA solution to mimic repeatable tasks, like pulling specific data fields from various sources, adding data to a spreadsheet, or uploading a completed report to a regulator.

4. Enable a free flow of data between critical systems and applications

Too often, bank and credit union staff must manually transfer information between systems and applications because the organization’s tech stack can’t properly integrate and communicate. It’s little wonder that this results in constant errors and inconsistencies.

For example, when a borrower receives loan approval, loan officers will often manually rekey changes to the borrower’s credit details into the CRM and core banking system. Errors in this manual process can have far-reaching implications for both the customer and the institution. Instead, FIs could simply connect their systems and applications with an iPaaS solution to ensure that changes to a customer’s data in one system will be synchronized across the enterprise, meaning that once the borrower’s details had been updated in the loan origination solution, those updates would automatically populate in the CRM and core banking system.

Augmenting skilled staff with automation

While there are myriad ways automation can minimize human error and thereby level up operational efficiency, improve accuracy, boost compliance, and enhance overall service quality in banks and credit unions, these opportunities ultimately stem from automation’s ability to align skilled staff to their most meaningful work.

Rather than focusing on painstaking and routine tasks that are vulnerable to error, employees can make greater contributions to member and customer experience, digital transformation initiatives, and other key business objectives when empowered by automation.

Examine your institution’s most error-prone processes and consider whether they truly require a human touch. An automation solution could be the answer for more favorable outcomes, saving you from a costly cycle of human error while freeing your staff to focus on more meaningful work.