APIs, Algorithms Can Fast-Track Bank Automation

The promise of automation has always loomed large in banking.

Clayton Weir, Co-founder at FISPAN, and Tony Wimmer, managing director, head of data and analytics at JPMorgan Payments, told PYMNTS that the promise makes the leap into reality with the aid of advanced technologies.

At a high level, Wimmer noted that the benefits of automation itself could be classified across a number of buckets.

There’s the automation tied to payments processing, where wire transactions or card transactions are streamlined by straight-through processing. In addition, there’s the automation that can make creating, maintaining and renewing subscriptions effortless. And finally, he added, automation can be a boon for decision-making.

Automation, said Weir, can reduce the steps needed to be completed when an individual or an enterprise makes the move to open a bank account and in some cases can eliminate any human touch on the part of the financial institution (FI) at all. In the background, said Weir, are the far-flung payments rails and all manner of files that need to be reconciled.

“There’s such a disparate number of systems that underpin the value proposition of a bank,” noted Weir, “that to walk you through those steps is still painful.” That’s especially true for corporates that literally have to beat their data into submission as they seek to get access to a range of financial services.

Read also: APIs to Drive Banking-as-a-Service Growth in 2022

As for automation: To get to that level of frictionless interaction, Wimmer said, it’s becoming more critical than ever to employ advanced technologies such as application programming interfaces (APIs) and algorithms, along with high-quality data.

“You need the APIs,” said Wimmer, “because you need interactivity and interconnectivity … to continue growing and to drive more automation.”

Cutting Down on Complexity

But getting there is easier said than done, he added, due to the fragmentation and the complexity of the banking ecosystem itself.

The pain points become especially acute when banking activities cross borders: Each country has a different way of sending wires and has different onboarding processes — and thus, bringing at least some activities into a standardized format can make things easier to understand for all stakeholders. Then the “human” part of banking can be confined to managing the exceptions that are only a few percentage points of transactions.

Wimmer said firms such as JPMorgan Chase have been able to create a sense of “payments intelligence” that leverages collaboration and a database to make sure that accounts are indeed valid and have been “seen” across various parties. Along the way, said Wimmer, there’s room for emerging technologies such as blockchain to help make those offerings easier to consume. A small FI in Singapore, for example, can “ping” JPMorgan’s Liink network to see if other banks around the world can validate an account before that FI begins transacting with that newly-encountered entity.

Ultimately, as Weir said, automation helps FIs take “the services of today and yesterday that the bank offers and makes them a lot easier to consume, directly, by users.”

Advanced technologies, said Wimmer and Weir, can wind up having an outsized ROI for FIs, and for enterprises. Eliminating back-end processes means that CFOs have greater visibility into, and control over, cash flow forecasting.

Wimmer observed that “there’s a ‘hard’ cost here — one where, if you don’t automate and digitize, you’re going to have high costs and inefficiencies … and you’re going to lose business.”