This is a sponsored article from Avaloq.

Roberto Vigano, chief banking operations officer at Avaloq, explains how financial institutions can optimise their back-office processes to enable innovation and support expansion into new client segments.

The financial industry continues to face margin compression and increased competition, driving firms to enhance their efficiency, seek new revenue streams, and accelerate time-to-market for new products and services.

At the same time, rising demand for highly personalised services at a lower cost has sparked the emergence of digital-only neobanks in the financial industry. These challengers are able to operate at a lower cost, leveraging modern systems and adopting lean fee structures to meet evolving client needs and expectations.

By contrast, traditional firms often rely on manual payment processes and outdated back-office outsourcing models that hamper scalability. For example, a private bank seeking to expand into the affluent client segment must transform its operations to effectively handle increased transaction volumes, cater to a larger client base, and diversify its range of services.

BPaaS versus BPO

Unlike classic business process outsourcing (BPO), business process as a service (BpaaS) uses optimised core banking technology to standardise and automate workflows across the back office.

The BpaaS approach generates higher efficiency and cost savings while maintaining regulatory compliance and data security. As a result, financial institutions can streamline their operations to reduce back-office costs by up to 30%, enabling them to focus more resources on preserving and growing their clients’ wealth.

By automating up to 80% of repetitive back-office tasks, such as payments processing, Avaloq’s BPaaS solution can minimise the risk of human error and significantly reduce processing times. Avaloq deploys 191 live bots, including cognitive AI bots, to automate 97 processes and continuously optimises their performance. Such innovation results in average straight-through processing (STP) rates of up to 99.7% for payments and close to 100% service accuracy.

BPaaS allows firms to shift from fixed internal costs to an external pay-per-use model, aligning expenses with actual demand. This enhances their operational flexibility to adapt to changing business requirements quickly.

At Avaloq, we continually invest in process quality, risk controls, and business continuity to mitigate operational risks and enhance service quality. We also enable financial institutions to share regulatory compliance costs with the broader Avaloq community, resulting in additional savings while maintaining adherence to regulatory standards.

BPaaS gives firms seamless access to regional expertise through a specialised service provider, eliminating the need to establish complex and costly local back offices for international expansion.

A future-ready back office

In the coming years, traditional financial institutions will be under mounting pressure from clients and regulators to lower fees and enhance their competitiveness. In response to these demands, BPaaS emerges as a strategic solution, providing firms with the ability to not only control costs but also elevate their value proposition by streamlining operations, leveraging automation, and tapping into specialised expertise.

Avaloq’s advanced technology harnesses the power of cloud computing and robotics to automate manual processes. Its combined Core Banking and BPaaS solutions allow financial institutions to scale their business faster and bring new offerings to the market swiftly.

Find out more about how Avaloq is transforming back-office efficiency.

This is a sponsored article from Avaloq.