The BFSI sector is globally embracing AI as a core technology for the future. By leveraging it in the front office operations they aim to improve revenues and customer experience. As per research, it is said that 41% of lenders are focusing on front-office changes to enhance the overall customer experience with digital technology [2].

They are adopting various ways to connect and expand the overall customer base. However, if the back office is not efficient enough to provide an error-free process and quick service, how can you expect a loyal customer base?

In an organization, front-office and back-office functions are distinguished in nature yet they complement each other. They are fundamental to providing a great customer experience. As a reason, it is essential to keep both front and back-office operations effective and efficient.

Back-office automation can help escape repetitive tasks such as billing and accounting, payroll, records maintenance, and data entry. Without these support mechanisms, the front office cannot deliver the expected results. However, these activities, if not automated would consume time, manpower, and financial resources.

Understanding the Barriers to AI Adoption in Back-Office Operations

According to Capgemini Consulting research, 60% [3] of customer dissatisfaction is due to the back office. Work pileups at the back office might go unnoticed at the beginning but as the manual tasks keep increasing, the delays and work inefficiency start spreading outward, affecting the whole organization.

So why don’t all companies automate their back-office operations? There are three key reasons why many enterprises still give it a second thought:

The Complexity of Processes:

Some businesses hesitate to adopt Artificial Intelligence in the back office due to the belief that their processes are too complex to be effectively automated. They may have intricate workflows with multiple dependencies, specialized tasks, or unique requirements that they think cannot be adequately addressed by AI systems.

Cost Concerns:

The perception that implementing AI will be too expensive is another significant barrier to adoption. Businesses may worry about the initial investment required for AI infrastructure, software development, and ongoing maintenance costs. They may also have doubts about the return on investment (ROI) and the time it takes to achieve cost savings.

Disruption and Workforce Concerns:

The transition to an AI-driven back office can be seen as disruptive and raise concerns about employee training, job security, and overall business operations. Businesses may worry that employees will resist the change or be unable to adapt to new AI systems.

Bridging the gap with AI to transform back-office grunt work into strategic action

By modernizing the traditional method of operation in the back office, the BFSI sector can experience tremendous growth and productivity. As automating the backbone of the organization can address various bottlenecks in the sector.

Automation of Repetitive Tasks:

AI excels at automating repetitive tasks that consume valuable time and resources. This includes tasks such as records maintenance, data entry, billing and invoice processing, and report generation. By automating these tasks, AI frees up employees’ time, reduces human errors, and allows them to focus on more strategic and complex activities.

Error Reduction and Improved Accuracy:

AI-powered systems can process vast amounts of data and identify patterns that may go unnoticed by humans. By applying advanced algorithms, AI can detect anomalies, reconcile discrepancies, and ensure data consistency. This reduces the risk of errors and ensures high-quality outputs, leading to improved operational efficiency and customer satisfaction.

Support for Decision-Making:

AI provides valuable support in decision-making processes by analyzing large volumes of data and extracting meaningful insights. AI can uncover hidden patterns, trends, and correlations, enabling informed decision-making. This helps businesses identify optimization opportunities, forecast demand, and make data-driven strategic choices, leading to smarter and more efficient decision-making.

Back-office process automation is non-negotiable for BFSI operations

In today’s digital world, customers are informed, and they are aware of the latest technologies and market trends. As a reason, they are not willing to negotiate on technology. They demand improved services and better facilities. Hence by adopting AI in the back office, you can leverage the following benefits:-

Cost Reduction:

AI implementation in the back end can lead to significant cost reductions by automating tasks, increasing productivity, and optimizing resource allocation. As per the report, 40% cost can be reduced with the help of AI in the back office [4]. AI-powered analytics and forecasting models also help businesses make data-driven decisions, avoiding costly errors and optimizing financial strategies.

Enhanced Customer Experience:

Automating processes and reducing errors with AI improves service speed and accuracy, leading to better customer experiences. AI-powered email automation or document automation can handle customer inquiries and provide instant support. AI analysis of customer data enables personalized interactions and tailored experiences.

Streamlined Operations:

AI implementation streamlines back-end operations by automating tasks and optimizing processes. This eliminates bottlenecks and reduces operational inefficiencies. AI systems can analyze data to identify process optimization opportunities, improving productivity and business agility.

Conclusion

Embracing AI in the back office is not just a choice but a strategic necessity for businesses, especially in the BFSI sector, to meet the ever-evolving customer expectations. Despite the barriers to adoption, the benefits it brings to the table are substantial. While front-office automation enhances the customer experience, back-office automation ensures seamless support, forming a robust and efficient organization.

It’s time for businesses to recognize that AI-driven automation is not merely a supporting tool but a strategic ally that paves the way for unprecedented growth and competitive advantage. Harnessing the power of AI in the back office could very well be the secret to transforming not just internal processes but the entire trajectory of an organization’s success.

Sources

1) https://www.gartner.com/document/4014167?ref=solrAll&refval=369153815

2) https://hesfintech.com/blog/back-office-automation-in-digital-lending/

3) https://www.capgemini.com/wp-content/uploads/2017/07/backing_up_the_digital_front25_11_0.pdf 

4) https://financesonline.com/crm-software-statistics/