M-Files, the leader in knowledge work automation, has outlined a potentially pivotal cost reduction strategy for financial services firms.
The Finnish firm, which was named on the prestigious AIFinTech100 list, suggested that financial services organisations can secure a major competitive advantage by reducing their cost to serve.
Currently, 91% of financial services firms are already using or considering implementing AI solutions. M-Files believes that leveraging AI for effective automation, along with educating staff on its potential benefits, firms can drastically reduce these costs.
According to Yohan Lobo, Industry Solutions Manager, Financial Services at M-Files, businesses will be able to differentiate themselves from the vast array of competitors in the market and lower their cost to serve in the process.
Lobo remarked, “As new routes to market have appeared, the financial services sector has grown increasingly saturated, raising the level of effort required to create a genuine point of difference. Despite increased competition intensifying the pressure on companies to innovate, there’s no uniform model for the successful integration of cutting-edge technology.
“The true value of AI in financial services lies in reducing the volume of manual work, which typically leads to more frequent errors, slower processes and higher labour costs. Any activity a financial services provider engages in that doesn’t directly add value to clients is a drain on costs. Dedicating more time to the needs of customers is the key to long-term profitability.
“Non-advisory, compliance and administrative tasks increase cost to serve and these processes should be automated wherever possible. For example, systems that automatically classify documents and apply granular access controls – without the need for human intervention – can be introduced to ease the compliance burden,” continued Lobo.
Education is critical in this aspect – as it will allow senior company players to make the most out of AI – and not be thrust down the rabbit hole of just trying to apply it everywhere. Instead, leveraging it in areas where it can make a greater impact.
Lobo explained, “Understanding the situation and identifying the organisational issues technology can solve is another important consideration for financial organisations. This is where education comes in: senior executives need to be shown what AI can and cannot do so they can ensure that this resource is allocated in areas where it adds the most value. Similarly, employees must be educated on how this technology exists to support them, not replace them, and that its purpose is to funnel more hours into advisory work.
“Ultimately, financial services providers need to deliver a return for their customers to demonstrate value, which is easier if more time is spent on client-facing activities. Not only does this encourage retention, but it enhances reputation and helps attract new business. Conversely, inefficient firms will have higher operating costs and longer process cycles, leading to heftier fees and a poor client experience.”
“Higher profits facilitate further investment. If firms have the capital to re-invest, they can funnel additional resources into developing effective tech solutions, reinforcing and extending competitive advantage,” he remarked.
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