In times of increasing complexity and volatility of business, it is becoming more and more important to involve financial experts at an early stage to support operational and strategic decisions. At the same time, cost pressure is increasing not only in the operational environment, but also in the financial area. This also requires increased efficiency in accounting, controlling, risk management and actuarial processes. In our practical and informative newsletter series, you will learn at regular intervals how the financial sector of the future can be shaped. The first part of our series is dedicated to the topic of automation and efficiency.

In addition to the challenges mentioned above, increasingly complex process requirements are coming to the financial areas of insurance companies. The phase of deregulation twenty years ago is long gone - the industry is clearly feeling the change. A simplification of market regulations through government standards is not to be expected, but a multitude of new regulations and obligations. Some of these are the strict capital requirements under Solvency II, the new financial reporting with IFRS 17 and the implementation of stricter compliance rules. While some insurance companies are faced with the major task of correctly implementing the current requirements, new and comprehensive sets of regulations are already on the horizon and hardly allow companies to rest. Therefore, a future-oriented optimisation of processes was often put on the back burner in the past.

However, the automation and optimisation of its own processes is essential for the finance sector in the insurance sector to remain successful in competition. Without this, hardly any capacities are available to support sales or the operative departments in an advisory capacity in strategic questions or forecast calculations. This is also noticeable in the investments of the insurance industry. According to the GDV, an increase of €4.45 billion in investments by German insurers in information technology was recorded in 2017 (Ausschuss Betriebswirtschaft und Informationstechnologie Gesamtverband der Deutschen Versicherungswirtschaft e. V, Ergebnisse der GDV-Erhebung "IT-Kennzahlen 2014 - 2016", p 67.). However, these are often used solely to implement legal requirements without at the same time driving the automation of standard tasks.

Intelligent automation platforms are already being used successfully in the financial sector, especially in industrial and commercial companies. The solutions include automated processes for quote-to-cash, source-to-pay, record-to-report or plan-to-perform. But also in insurance companies, there is automation potential for monthly closings, risk reporting, planning or general ledger reconciliation. Many of the standard tasks could already be completed faster and more efficiently with the help of intelligent automation, thus relieving humans of their daily tasks so that they can concentrate more on advisory and strategic tasks. Computers are already able to independently create files, compare interfaces, check documents, make bookings or trigger payments.

The continuously increasing amounts of information can be better structured, classified and correlated by (intelligent) systems. In the future, we can expect systems that work symbiotically, leading to a division of labour between humans and artificial intelligence. For this very reason, it is important to further optimise today's processes in the financial sector and to adapt them for the future. Advantages that arise from this division of tasks are, on the one hand, the reduction of ongoing costs and, on the other hand, the increase in team performance, for example, to cope with growing volumes with the same or reduced team size.

RPA or digital process automation?

With the help of powerful systems and applications, automation potentials and the digitalisation of financial processes, such as planning and forecasting, financial and risk reporting and compliance, can be realised. In addition, the application of new BI tools and controlling solutions is now more interactive, faster and easier to design for the user ("usability" and "user experience"). Insurance companies have the opportunity to implement digital process automation in practice and free up capacities for strategic and advisory functions. In addition, cross-divisional process automation is supported.

In addition to complete process automation, there is also the possibility of RPA (Robotic Process Automation). The concept behind this is simple: a software robot imitates typical human-computer interactions, thereby automating them and sparing humans tedious and repetitive tasks. The robot thus bridges this gap and allows humans to spend more time on more complex and comprehensive tasks. The study by Lünendonk®, which was carried out in cooperation with KPMG, shows that cost savings of 40-70% can be achieved with the help of RPA - so there is already a very high potential here. (Study, by Lünendonk® in cooperation with KPMG, Germany: Intelligent Automation, 2018: p.7).

However, robotics is not enough to fully map and automate more complex end-2-end processes - the once great euphoria is already fading in some sub-sectors. RPA is cheap and quick to implement, but it does not offer a complete solution for business process management and is only flexible to a limited extent (Khalaf, Amanda: The benefits [and limitations] of RPA implementation, in: Accenture, 26.09.2017).

Insurance companies should therefore make a conscious decision as to which automation approach is best suited for solving a problem. Both approaches can also be combined to maximise benefits and achieve even greater efficiency.

Our newsletter series on "Finance of the Future

In the other articles of the newsletter series "Finance of the Future", we shed light on the following topics, among others:

  • Automation of reporting processes
  • Automation of regulatory compliance processes
  • Increasing data quality through automation
  • Acceleration of planning processes through automation