by Wojciech Zarębski on August 1, 2023 You read:
Why does the banking sector need PRM?
The development of digital technologies is of crucial importance for many sectors of the global economy. One of the best examples of a dynamically evolving industry with a dispersed and extensive structure is banking. How does digitization change the banking sector, and what role does the PRM class system play in this? In today’s post, we will examine the needs of this industry and explain how the PRM system supports efficient management and functioning of banks, both at the central level and in individual branches.
According to the report “The Future of Finance: the rise of the new, Shadow Bank/Goldman Sachs” from 2015, regulatory changes and new technologies are reshaping the competition in traditional banking activities, including the payment ecosystem. As much as 8 years ago, there was already a trend of moving some operational banking activities outside the banking system. Simply put, this means that competitive entities started taking over the handling of selected services. The reason? The bank’s operational capabilities were insufficient to independently coordinate these processes. This phenomenon was defined as “parallel banking.” In 2015, attention was drawn to the fact that competitive players would carry out tasks related to activities such as lending, thus reducing the profits of the banks themselves. How can this be addressed? It is worth considering the introduction of a PRM system that automates selected operations, effectively limiting the scope of action for competing firms.
Why is it worth automating processes?
The authors of a 2019 report by McKinsey & Company noted that process automation in banking can bring about significant changes in back-office operations management. It was forecasted that by 2029, around 80% of transactional operations (e.g., general accounting operations, payment processing) and up to 40% of more strategic activities (e.g., financial control and reporting, financial planning and analysis) could be automated.
Both at the central and regional bank offices, the staff carries out work every day that is essential for the functioning of the institution but goes unnoticed by standard customers. These employees deal with tasks such as loan closures and executions, payment processing, and customer dispute resolution. Progressive digitization helps to efficiently carry out these tasks, thus enabling the utilization of available resources in a different, optimized way. Introducing the PRM system to the bank results in employees receiving an entirely different set of tasks. Instead of processing transactions or compiling data, they will use available technologies for product and service advising, creative problem-solving, or developing new products to enhance customer service quality.
Revolutionary impact of digital technology on banking operations
Process automation directly translates to improved profitability, which, in turn, enables banks to deliver products and services of even higher quality to their customers.
The McKinsey Global Institute identified six key features that will define future banking operations:
1. Automation
Widespread use of automation and new technologies, bringing about significant changes in both customer service and internal operational activities of banks.
2. Process efficiency
In banks, employees perform hundreds of repetitive tasks related to sales and the handling of credit cards, debit cards, or loans on a daily basis. To ensure the efficiency of these activities, consistent procedures, education, and error elimination are crucial, as even minor deviations can disrupt the entire process. Therefore, it is essential to focus on creating training materials and educating the employees of our partners or external locations through ready-made tools, such as the PowerPRM platform. This way, everyone will be equally educated and aware, and employees can concentrate on strategic tasks, leading to more efficient customer service.
3. Proactive analytics-based management
Analytics has diverse applications in the banking sector and contributes to improving the quality of operations management.
4. Artificial intelligence
Elimination of silos for simplified organization and utilization of potential for other strategic purposes. An example of this is customer helplines, where AI bots are increasingly used to handle orders.
5. Urgent need for experts in new technologies
The industry requires specialists with experience in new technologies. These experts will focus on innovation and developing solutions to improve customer service quality.
6. Developmental transformation:
Financial institutions will need to make significant organizational changes to meet market expectations. This will require a restructuring of organizational structures. The main goal of such action is the optimal and more efficient use of the talents and resources available on board.
Low-code and no-code platforms increasingly popular in the Polish market
In the domestic arena, we already observe increased interest in modern methods for building digital solutions – low code and no code. Platforms utilizing no-code and low-code approaches involve building processes or services based on a ready-made graphical interface, with minimal programming knowledge required. These tools will be increasingly used by the Polish banking sector, which expects swift introduction of digital products and services to the market. The greatest advantage of using the PRM system lies in its ease of integration with core banking systems.
Why should a PRM system be introduced into a bank?
Currently, we observe a growing awareness in this sector regarding the benefits of implementing a PRM system. The expectations of customers dictate the future of retail banking, and financial institutions must adopt a modern, scalable strategy for delivering top-quality services. PRM plays a crucial role in managing partner networks, including software and IT system providers, consulting firms, financial institutions, and other collaborating entities.
Moreover, thanks to PRM, the dispersed structure and some independence of individual bank branches no longer hinder effective management and handling various inquiries and ensuring efficient resolution of these crucial tasks. Introducing this tool helps standardize procedures and standards of conduct in all bank branches, and employees have access to specific cases and examples of solutions. This means that the same task is executed in the same standardized way in every bank branch from Szczecin to Rzeszów. PRM thus represents a ready-made database, and the time saved in this way can be utilized for other activities.
We encourage you to get in touch with our experienced experts who will share their knowledge and know-how to help implement the PRM system in your bank.
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