Automation can help financial institutions (FIs) appeal to younger generations seeking streamlined banking services.

“I think it’s very important for every company in financial services to actually make their offerings appealing for the Gen Z customers,” Gustavo Gomez, chief executive of automation platform Bizagi, told Bank Automation News. “Because those are the customers that will predict the future of the banking service.”

Founded in 1989, Bizagi creates a digital process layer that connects banks’ legacy systems via APIs to its low-code platform for digitization and automation. The cloud-based platform can reduce processes such as customer onboarding from weeks to minutes, Gomez said.

Fintech competition

Among Gen Z and millennials, 48% have opened an account with a new financial provider after a frustrating digital banking experience, according to a recent study from banking solutions provider Alkami.

Banks’ technological progress has revolved around basic banking services, such as transferring money or providing statements, Gomez said. FIs risk losing to innovative fintechs that are focusing in areas such as quick and seamless cross-border transactions, he said.

“Those services in the traditional banking space are still very outdated,” Gomez told BAN. “The fees they charge are still very big. That’s why [fintechs] Revolut and TransferWise are growing so quickly.”

Banks can no longer rely on apps with a beautiful interface. Efficiencies are equally important, according to Gomez.

While FIs typically have rigid cores that run on outdated technology, third-party fintechs can place the process layer on top of legacy systems and reuse the data and logic of the bank’s existing core, he said.

“The front end in an enterprise application needs these processes to run behind in order to provide the proper experience,” Gomez told BAN. “Making the app pretty is OK.

“But if you were going to transfer some money and you press the transfer button and it says, ‘Yes, we’ll come back to you in two weeks,’ then you would say, ‘Let’s forget it,’” he said.

Getting ahead of inflation

Automation is not only beneficial to attracting younger customers, but it has also helped banks tackle hurdles brought on by the COVID-19 pandemic.

One of Bizagi’s customers, VTB Bank, saw requests for deferred payments on mortgages and car loans increase a hundredfold during the pandemic. By digitizing and automating the $3.3 billion bank’s deferral payment processes, efficiencies increased by 90%, according to Gomez.

Rising inflation and interest rates could uncover a similar situation, and banks have an opportunity to get a head start, he said.

“The organizations need to make those processes much more efficient,” Gomez told BAN. “If they don’t do that, they will hurt their profit margins. How do you use the technology to deliver the kind of service that is required while protecting the margins? These are the kinds of things that I see coming.”

Bank Automation Summit Fall 2022, taking place Sept. 19-20 in Seattle, is a crucial event on automation and automation technology in banking.  Learn more and register for Bank Automation Summit Fall 2022.