Manual processing costs financial services £10m a year

‘fstech’ reports that financial services firms are losing millions of pounds due to manual processing of agreements, according to 4C research.

The average loss is over £10 million a year, while 31 per cent of companies lose £1 million or more a year.

The digital consultancy interviewed 100 finance professionals, at manager level and above, finding that lack of automation is resulting in wasted resource. Businesses are spending an average of 78 hours per month processing agreements, with 13 per cent spending over 200 hours per month.

Jani Van Hecke, head of the contract lifecycle management practice at 4C, pointed out that businesses often neglect the non-customer-facing part of the business, “so it’s no surprise that the manual processing of agreements is resulting in lost money and time for financial services companies”.

Only 11 per cent of financial services firms have a fully automated process for managing their agreements, while just seven per cent of agreements have access restricted to the named owners.

The vast majority of financial services companies (93 per cent) have experienced issues as a result of non-automation and 47 per cent have suffered financial losses as a result.

Issues cited include human error, such as incorrect document disposal (56 per cent) and time delays to projects (49 per cent). A similar proportion (47 per cent) have suffered financial losses as a result of manual processes, while a further 43 per cent are seeing agreement crossover, with people signing different versions of the same document.

Just over a quarter have suffered non-compliance (30 per cent) or other legal issues (25 per cent). Around two in five financial services companies (39 per cent) admitted to having unintentionally allowed an agreement or contract to expire.

At the same time, 61 per cent of respondents said they see full digitisation and automation of their manual agreement processes as very important.

Half of the organisations which have not yet fully digitised cited cost (47 per cent) as a barrier to moving in this direction, while 42 per cent reported concerns around data security and 39 per cent said company culture were key barriers.

Despite these barriers, those surveyed said they could see the benefit in fully digitising their agreement processes. The key perceived benefits among those still operating at least some manual processes were data safety (39 per cent), higher employee productivity (36 per cent) and an improved customer experience (34 per cent).

Gareth Stephens, UK chief executive at 4C, added: “Cost and data security were cited as barriers to automation, yet our report shows that access to contracts is currently open within businesses and that manual processing is hurting revenues.”