Roberto Vigano, Chief Banking Operations Officer at Avaloq, explains how financial institutions can optimize their back-office processes to enable innovation and support expansion into new client segments.

By Roberto Vigano, Chief Banking Operations Officer at Avaloq

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 personalized 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 By contrast, traditional firms often rely on manual payment processes and outdated back-office outsourcing models that hamper scalability.

BPaaS Versus BPO

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.

Unlike classic business process outsourcing (BPO), business process as a service (BPaaS) uses optimized core banking technology to standardize and automate workflows across the back office. The BPaaS approach generates higher efficiency and cost savings while maintaining regulatory compliance and data security.

Higher Efficiency

As a result, financial institutions can streamline their operations to reduce back-office costs by up to 30 percent, which enables them to focus more resources on their core business of preserving and growing their clients’ wealth. By automating up to 80 percent of repetitive back-office tasks such as payment processing, Avaloq’s BPaaS solution can minimize 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 optimizes their performance. Such innovation results in average straight-through processing (STP) rates of up to 99.7 percent for payments and close to 100 percent service accuracy.

Operational Flexibility

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 quickly adapt to changing business requirements. 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 specialized service provider, eliminating the need to establish complex and costly local back offices for international expansion.

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 specialized 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 here.