Unlocking the Power of Business Automation Software in Financial Institutions

Day-to-day operations in many banks and credit unions still rely heavily on legacy systems and manual processes. Why? Often, it simply comes down to the status quo—that’s the way things have always been done.

While there’s no need to reinvent the wheel, there’s no need for financial institutions (FIs) to invest unnecessary time, energy, and resources on business-as-usual tasks either. Business automation software allows banks and credit unions to modernize without destabilizing, equipping them with the tools to harmonize IT infrastructure, cut down on manual workloads, and provide a higher level of service.

To clarify how FIs can take a more proactive approach to their operations with business automation software, we’ll explore the status quo’s true costs, tour the automation landscape, and highlight opportunities you may be overlooking.

The hidden costs of “doing things the way we always have”

Financial institutions often resist change, especially when “the way we’ve always done it” is deeply embedded. However, sticking to manual processes and legacy systems has hidden costs—costs that are rarely captured in a spreadsheet but are felt across the organization every day.

Wasted time in process bottlenecks

Consider how much time your team spends on routine tasks like collecting documents, reviewing transactions, or checking compliance requirements. Even small inefficiencies add up quickly. For example, a delayed approval in a loan process could cost days, frustrating customers and leading to potential revenue loss.

Considering that 53% of FIs cite increasing operational efficiency as a top strategic priority, it’s clear seemingly small bottlenecks add up to bigger business blockers. Business automation software removes these bottlenecks by handling routine tasks promptly and reliably, allowing teams to focus on value-added work.

The stress of staying compliant and accurate

Financial regulations are ever-changing, and staying compliant can feel like climbing a never-ending hill. Not to mention, all manual processes require constant vigilance and run the risk of human error—each mistake is a potential fine or PR nightmare waiting to happen.

By automating compliance-related tasks and core processes, banks and credit unions can mitigate risk, free up resources, and provide more reliable service. And while many FIs recognize that cost savings are inherent to eliminating manual work, few realize just how much they stand to gain from eliminating manual errors—before implementing automation, TruWest Credit Union anticipated significant savings from automating their seven-page run sheet, but they realized an additional savings of $2,000 per month due to eliminated errors.

Employee burnout from repetitive work

No one dreams of a career where they spend every day of their life handling the same set of routine tasks, but in many financial institutions, it happens. Manually reconciling accounts, double-checking data entries, or generating simple reports can lead to burnout and high turnover.

As the banking industry grapples with a tech talent shortage that shows no signs of abating, FIs must find new ways to attract and retain skilled talent. Business automation software relieves this burden, allowing employees to work on more fulfilling projects.

Exploring the business automation software landscape

As the lexicon of business automation terminology grows broader, it’s easy to get lost in a sea of acronyms. But not all automation software is created equal, and the right solution depends on your institution’s specific needs—orient yourself in the automation landscape with this breakdown of business automation software commonly used by banks and credit unions.

Business process automation (BPA)

BPA is designed to automate complex, repeatable, front-end business processes that involve many steps using low-code or no-code technologies, ultimately streamlining workflows and ensuring consistency.

• Example use case: Taking unnecessary time and effort out of employee onboarding by implementing BPA workflows across tasks like collecting new employees’ personal information, filling out tax documents, setting up payroll, and more.

Robotic process automation (RPA)

RPA uses software to record and mimic human interactions with a user interface, allowing “bots” to perform clicks or keystrokes that normally require manual intervention. RPA is especially useful for automating high-volume, repetitive tasks that don’t call for flexibility or critical thinking in decision-making.

• Example use case: Streamlining the account reconciliation process by automatically pulling transaction data from various sources, comparing it against internal records, and flagging discrepancies for review.

Workload automation and orchestration

Workload automation software orchestrates tasks’ flow across systems, ensuring processes move smoothly between steps without delays or bottlenecks despite complex scheduling. It’s commonly used in areas like payment processing, reporting, and file management.

• Example use case: Turning ACH processing into a hands-free operation by automating the monitoring, processing, and posting of files to the Fed.

Intelligent process automation (IPA)

IPA combines RPA, AI, and other technologies to create business process automation that thinks and learns.

• Example use case: Automating credit assessments using pre-defined algorithms for a faster, more transparent applicant experience.

Integration platform as a service (iPaaS)

iPaaS solutions help automate, integrate, and connect applications and data in any environment. In contrast with automation tools that use batch processing, iPaaS is a real-time form of automation, leveraging integrations to connect data across disparate systems using configurable triggers and actions.

• Example use case: Synchronizing data across a loan origination solution, CRM, and core system in real time to equip every department with up-to-date information.

Business automation in action: understanding the opportunities

Blinded by the status quo, banks and credit unions often overlook the automation opportunities right in front of them. Many of FIs’ everyday processes are ripe for optimization with the right business automation software; if you’re struggling to understand where business automation software could fit into your operations, consider these possibilities.

1. Payment processing

Payment-related workflows from ACH processing and P2P payments to wire transfers and beyond can be automated with the right solutions. Rather than manually monitoring, processing, and posting files to the Fed, risking errors or costly overtime, banks and credit unions can simply automate the critical tasks that most impact their accountholders.

2. Account opening and customer onboarding

Opening a new account or onboarding a customer involves multiple steps, from collecting personal information and verifying documents to compliance checks.

Automating these steps not only speeds up the process but also reduces errors. With automation, customers can complete their onboarding journey in minutes rather than days, enjoying a frictionless experience while FIs ensure compliance requirements are met in the background.

3. Loan origination and approval workflows

The loan origination process is often slowed by manual data collection, credit checks, and approval routing. Automating these workflows allows data to flow seamlessly between systems, triggering the next step in the process. For example, leveraging business automation software means that once a customer submits an application, FIs can automatically pull their credit data, verify documents, and route the application to the appropriate officer for approval—all without human intervention.

Similarly, FIs can utilize solutions like RPA to decline applications based on pre-defined criteria. Automating this one piece of the loan approval workflow saved Georgia United Credit Union $14,000 and hundreds of hours every year.

4. Transaction monitoring and fraud detection

Monitoring transactions for suspicious activity is critical, but manual reviews are time-consuming and prone to errors. Business automation software can continuously scan transactions, flagging anything that deviates from established patterns.

This allows banks to detect fraud faster while reducing the workload on risk management teams. Additionally, automated workflows can be triggered when fraud is detected to freeze cards, send notifications, and generate reports.

5. Reporting and compliance management

Regulatory compliance is a resource-intensive focus for banks and credit unions. From anti-money laundering (AML) checks to producing reports for auditors, compliance tasks require precision and timeliness.

Automation ensures that compliance workflows are executed consistently, that all required data is captured, and that reports are generated automatically, reducing the risk of non-compliance due to oversight and freeing up resources for more strategic initiatives. For example, automating OFAC processing is one of the ways that Logix Federal Credit Union put over 70% of its data processing workload on autopilot in the span of just a few months.

6. Disaster recovery

With business automation software, banks and credit unions can do more than simply take manual work off skilled staff’s to-do list—they can also ensure critical processes follow a contingency plan in the event of a disaster.

Business automation solutions allow FIs to coordinate multi-platform backups, define automatic failover conditions, and enable self-healing routines to keep operations running during unplanned system interruptions or outages. By automating 95% of the failover process, VyStar Credit Union reduced failover time by 40%. Similarly, Jack Henry successfully utilized workload automation and orchestration to improve RTO by 83%.

The shift from reactive to proactive operations with business automation software

The true power of business automation software lies in its ability to empower people to achieve more. With greater capacity, skilled staff can move organizations from a reactive mode—where every process issue becomes a fire drill—to a proactive state that leaves room for innovation.

When tasks are automated, you’re not just making things faster; you’re creating consistency and reliability that allows your organization to better plan for growth, adapt to changing regulations, and deliver consistent service to members or customers.

To learn more about how your bank or credit union can embrace the power of business automation, get in touch with the experts at SMA Technologies!