Finance automation

Finance automation is the use of technology to streamline many financial tasks and produce more efficient finance team members.

Finance departments are under pressure to deliver value efficiently. Using automation technologies frees up the finance teams to focus on more important business decisions.

Artificial intelligence (AI)-powered automation creates even more powerful workflows supercharging decision-making around financial processes. It saves finance teams extra time and enables them to make smarter decisions and meet their business needs.

CFOs and other finance leaders need to work directly with the rest of the C-suite and IT teams on their overarching digital transformation initiatives. The goal is to develop the right strategy for their automation needs, incorporating finance automation software to achieve their goals. Implementing financial automation helps them manage resources and avoid unnecessary manual work.

For example, the IBM® teams of transactional pricers around the world process about 100,000 subscription, renewal or upgrade offers per year, interacting with each subscriber four times on average. Automating several components of pricing decisions, such as data gathering, calculations and data entry, eliminated 35,000 human hours a year. Most importantly, this project reduced average bid cycle time by 75%.

In reality, there are many repetitive tasks that machines can do without needing human intervention. Every organization is different, so it requires an automation strategy to decide which manual processes require humans and which can be handled by automation solutions.

Automation creates challenges and opportunities for financial services firms, such as banks and investment advisors, and the internal financial teams at corporations.

For financial services firms, it can revolutionize how they provide services, such as trades and investment advice. It can also improve their customer services and back office operations.

For financial departments within corporations, automation streamlines how they onboard employees, collect relevant benefit and payroll information, and send and process invoices.

• Business process automation
• Robot process automation
• Intelligent automation

Business process automation (BPA) automates repetitive business processes by using software. It can be used in financial operations to streamline the systems that employees currently must do manually. It is an especially powerful accounting process. For example, accounts payable and accounts receivable teams benefit from automation. BPA initiatives include managing payroll and vendor payment and other financial systems, forecasting upcoming sales cycles and other systemwide processes.

TD Ameritrade worked with IBM to use BPA when enabling the transfer of funds from an external account to their TD Ameritrade accounts. Using components of the IBM Cloud Pak® for Business Automation package, TD Ameritrade went from error-prone, manual processes to automated workflows built upon “system-generated, rules-based decisioning, along with automatic field validation.”

They also tackled onboarding new customers by removing manual steps and incorporating automated task routing and escalation, reducing the time it took to open a new account by 70%.

Robotic process automation (RPA) is similar to BPA. While BPA is concerned with the overall systems, RPA uses bots to automate specific time-consuming tasks. It eliminates the need for employees to work on tasks that are not good uses of their time.

Automating these tasks not only drives efficiency, but it can also help to minimize human errors. Financial department, specifically, have many individual tasks that can be improved through RPA. For example, RPA can streamline and automating processing sending invoices or purchase orders, processing employee expense claims, generating income statements, processing customer orders and more.

Iconic Pittsburgh sandwich company Primanti Brothers worked with IBM to use RPA to build a bot that automated its daily sales and labor reports. The bot ultimately saved the company 2,000 hours annually and 84,000 USD a year.

In another example, insurer Aon Italy required on manual processes to collect information to adequately assess a prospective customer’s risk profile. It might take the insurer as long as three days to process a request for a quote. Aon Italy deployed IBM Cloud Pak for Business Automation’s workflow, decision management and application integration to drive greater cost savings and faster times to market in their quotes to customers.

Intelligent automation (IA) combines artificial intelligence, machine learning, BPA and RPA to streamline and improve decision-making. AI can supercharge automation by pulling in external data to append to organizational data to make smarter decisions around budgeting and future opportunities.

For insurance companies, IA can eliminate the need to handle rate calculations manually. It can also automate the paperwork behind claims and appraisals. It can also check every step of the way that insurance regulations are met, keeping the company compliant.

There are several finance processes that automation can improve.

• Bookkeeping
• Budgeting
• Customer service
• Cybersecurity and fraud prevention
• Data management
• Employee benefit onboarding
• Enterprise resource planning
• Expense management
• Financial planning
• Investment strategies
• Procurement

Organizations that use finance automation tools can more accurately and efficiently perform tasks like account reconciliations and creating ledger journal entries. That way, an organization has as close to a real-time book as possible for any questions from tax accountants or executives.

Automation technology can track expenses and income in real time, providing a holistic viewpoint of an organization’s budget. In addition, intelligent automation can take historical data and better predict future budget likelihoods, helping organizations to better plan for the future.

Financial firms, such as investment advisors, need to be available to customers 24-7-365. Automated chatbots and other tools can provide quick answers to simple questions at any time. IBM helped Virgin Money develop an AI-powered conversational assistant, named Redi, using Microsoft technology. The assistant used natural language understanding (NLU) to help customers with account issues in real time.

Automation helps keep investments safe. AI-driven automation can analyze debits and credits to identify whether a customer’s account has potentially been hacked. For example, a bank can use automation to determine whether a customer’s credit card has been stolen and automatically ask the customer to either approve a transaction or confirm it is fraudulent. If it is fraud, the automated system can immediately close that card to avoid future purchases.

Automation helps keep investments safe. AI-driven automation can analyze debits and credits to identify whether a customer’s account has potentially been hacked. For example, a bank can use automation to determine whether a customer’s credit card has been stolen and automatically ask the customer to either approve a transaction or confirm it is fraudulent. If it is fraud, the automated system can immediately close that card to avoid future purchases.

Automation software can help organizations make data accessible across multiple systems. For example, IBM client PNC needed to improve how its corporate entities might communicate across its IT system. The bank worked with IBM to use the IBM Sterling® Transformation Extender (ITX) solution, which automates the transfer and validation of data between several systems to enable transactions from both its internal and external clients.

Organizations can streamline receiving financial information from employees and provide them with an interface to view their benefits, like health insurance, 401Ks and equity positions. The system can produce notifications if the organization needs any additional information.

Financial services are part of the processes included in enterprise resource planning (ERP). It governs how an organization manages its functions, processes and workflows by using automation and integration. It is slightly different than accounting systems, which are primarily focused on financial reporting, accounts payable and receivable and banking information. ERP software focuses on other areas of the business, such as HR, IT and operations.

Automation can help organizations keep their expenses lower in several ways. Using automated systems to photograph and immediately categorize employee expenses in real time helps organizations have a holistic picture of their reimbursement obligations.

It also eliminates the manual data entry expense of those employees doing unnecessary work instead of value-additive tasks.

Historically, financial planning analysis required many manual tasks, such as collecting and consolidating financial data, budget preparation and financial statements. Automation can manage many of these tasks to free up the time executives spend collecting data and provide more time to analyze the data. For example, automation technologies can assemble cash flow statements, and the executives can better understand their ongoing liabilities and potential profitability.

Using algorithms powered by customer data, finance professionals can provide smarter advice to customers that aligns investments and savings with lifetime goals and risk tolerance. Investment firms can automate much of their trading now in real time, so they can prioritize time spent on advanced financial planning for high net-worth individuals.

Automation can streamline procurement through the identification of which requirements an organization has for a vendor or product. Financial automation software can then quickly parse a prospective vendor’s response to a request for proposal and eliminate any that lack the right criteria. It can send requests for more information automatically to those that make it to the next round.

• Better decision making
• Happier employees
• Improved operational efficiency
• Minimized human error

Automated workflows and dashboards give financial professionals more information to make quicker and better decisions. When financial services professionals have trades they have requested

Instead of poring over line after line in a spreadsheet, automated dashboards with up-to-date information provides accurate information that informs decisions.

For example, finance automation can save employees hours of compiling expense reports by having them scan receipts that the system can automatically categorize based on historical data and the organization’s specifications. Automation tools can also produce reimbursements quicker so employees are not complaining about their out-of-pocket expenses.

Financial automation helps organizations streamline finance operations efficiency by creating automation strategies around several laborious activities. These systems can run all day and night when employees are out of the office. So employees are ready to run with up-to-date information when they enter the office in the morning.

End-to-end automation tools can take information from one system, such as an ERP and input it into another, such as tax accounting software. Immediate transfers like this eliminate the potential for mistaken data transferring from one system to the other. This is especially important for things like tax compliance issues. Knowing the information on screen is accurate and up-to-date enables financial professionals to make accurate decisions.

There are several challenges inherent in financial automation.

• Potential for mistakes
• Reskilling and upskilling employees
• Security issue

It is likely that an organization’s financial teams have specific processes with which they are comfortable. Introducing automation software into their workflows can be an initial challenge, especially if they are not comfortable with many technologies. Reskilling or upskilling employees challenges organizations because it requires first and foremost for employees to agree to learn new processes. It also takes either building or licensing resources to train employees and time for them to learn. Ultimately, it requires changing of those habits and a positive approach to learning new skills. Even though automation tools eventually remove tasks from their workloads, they need to know how to use the tools and embrace a new way of working.

While automation software helps eliminate human risks on an individual basis, most software is originally programmed by humans. So if the initial programming is incorrect, it can create significant mistakes like incorrect trades or other financial decisions. For example, setting up trading software to automatically sell at stop instead of market produces different outcomes. Organizations and their stakeholders must take the time to set up the automation correctly.

Both financial service organizations and financial departments within corporations store, manage and analyze extremely sensitive information. Both have banking details that they must protect to keep their stakeholders assets secure. Financial services firms can have actual assets within their possession, which required even more security. Connecting multiple financial systems to the internet and automation platforms creates potential risks for both types of organizations. While hackers that use machine learning and other AI technologies can threaten these organizations, those same AI tools can also help organizations protect that sensitive data. As such, they need to continue to invest in cybersecurity to stay one step ahead of hackers and other malicious actors.