A new report revealing widespread concerns from leaders around their businesses over the next three years has found that automation is key for growth moving forward.

Carried out by reconciliation and finance automation software firm AutoRek, the report found concerns around scalability and regulatory pressures affected 92% of professionals surveyed.

The research was designed to create an “instructive picture” of the challenges and solutions facing the financial industry this year.

Speaking to senior professionals from the financial services sector, AutoRek established that automation in banking, for example, is key for regaining competitive advantage over the next few years.

Business leaders discussed the barriers faced around payments, data handling, compliance, and growth, as well as new technologies in use or consideration.

Firms that are slow to adopt emerging technologies should be aware that they are now falling behind in an increasingly automated and competitive landscape, AutoRek said.

Automation in Banking

Commenting on the findings of the report, Banking Lead at AutoRek Nick Botha said: “While automating data flow has been a priority for some years now, this survey makes clear how many inefficiencies continue to plague firm’s day-to-day operations when it comes to data processing and reconciliation.

“Legacy banks, in particular, are grappling with often more than 20 disparate systems written in varying generations of software, none of which are designed to interact with one another.

“While a decade ago that might have flown under the radar, the last few years have seen control of the payments space shift from banks into the hands of Payment Service Providers (PSPs), whose ability to deliver totally user-native customer service is forcing the whole industry to step up.”

According to the collected data, manual processes were found to be the biggest roadblock to achieving automation, cited by 46% of firms, followed by legacy systems (42%), poor interoperability (40%) and regulatory requirements (38%).

In-house IT solutions were found to be the most common for data handling across payment operations, used by 44% of firms – a higher reliance on in-house systems than in most other sectors.

Recommended

• Amazon backtracks on plans to block Visa payments in UK
• Could digital twins help keep your carbon footprint in check?
• Lithium-sulphur battery technology could quintuple EV range

However, around 56% said that they either already have or are in the process of deploying modern tech such as artificial intelligence, machine learning and application programming interfaces to help monitor and streamline their data management processes.

One-third of respondents said that onboarding was planned in the next 12-24 months. Only 12% reported having no plans to apply tech to improve data management processes.

Botha added: “Beyond competing for market share, it’s a question of compliance. The costs associated with non-compliance are substantial both from a financial and reputational perspective, and regulators are increasingly less forgiving, as we have witnessed in the last few months with significant fines incurred by some of the world’s largest banks.

“New technologies like AI, ML and APIs can be used to create greater interoperability and remove or significantly reduce manual interventions and use of spreadsheets.

“Investing in these capabilities today will enable firms to address evolving customer preferences, mitigate risk and achieve regulatory compliance down the road – essential elements for remaining competitive in the payments landscape of today.”

Get the latest news from DIGIT direct to your inbox

Our newsletter covers the latest technology and IT news from Scotland and beyond, as well as in-depth features and exclusive interviews with leading figures and rising stars.

We will keep you up to date on the pivotal issues impacting the sector and let you know about key upcoming events to ensure that you don’t miss out on what’s going on across the Scottish tech community.

To subscribe, click here.