The back-office
The back-office of any banking organisation is a function with many moving parts, responsible for connecting other departments like operations, risk management and compliance. As such, it is critical that firms review their back-office operations regularly to ensure maximum efficiency.
The importance of back-office review is not lost on our respondents, with over 50% checking the efficiency of operations at least annually. One-third of organisations check their back-office every 1-2 years, while 7% do so only every 3-4 years.
Regular back-office assessment is crucial to eliminate efficiency gaps, but this is an onerous challenge for most given the pressure of business-as-usual tasks. Challenges are only exaggerated when processes and systems become embedded within teams over time. The key to driving change across the back-office is empowering staff to introduce and suggest efficiencies identified as part of their daily work.
Optimising back-office operations
With many firms treating back-office improvements as a priority, we asked respondents more about their past efforts and plans to drive improvements. To optimise back-office operations over the last 12-18 months:
of respondents have focused on process automation
of respondents have focused on data analytics
Process automation
Process automation coming out as a top priority for 2023 suggests that firms are trying to streamline a network of manual processes that have grown over time. Removing manual inefficiencies with higher levels of automation offers a chance to increase efficiency and scalability while reducing cost – something which has been especially critical in the economic environment of the last two years.
Data analytics sssssssssssssssssssssss
While data analytics was a priority for both UK and US firms, UK firms were more likely to regard it as a top priority (36%, compared to 20% for US firms). In the UK, banking regulations demand that firms embrace a data-driven approach, aligning with the data strategies of the FCA and PRA. Both regulatory bodies emphasise the pivotal role of high-quality data in their oversight and require in-scope firms to maintain their data to the highest quality to meet these expectations.
Our survey found that, the larger a banking organisation is, the more likely it was to focus on enhancing data analytics. More traditional banks today have to compete with digital banks that already have advanced data analytics capabilities. Superior data analytics will therefore give legacy banks the ability to understand their consumers better and personalise product offerings more directly.
Optimising back-office operations: Looking ahead
Looking ahead to 2024 and beyond, firms plan to retain their focus on data analytics but now also regard cloud infrastructure to be an immediate priority relative to a few years ago. In 2024:
plan to optimise cloud infrastructure
plan to optimise data analytics
Cloud infrastructure
The ongoing focus on cloud infrastructure in banking aligns with the broader trend in financial services to become more cloud-native. This shift reflects a recognition of the numerous benefits associated with cloud adoption: from increased agility, scalability and cost-effectiveness to enhanced data security and product innovation.
