Calculating the Real Costs of Manual Banking Processes

When finance teams or risk committees evaluate their finance operations to identify any potential risks, manual processes are often at the top of the list.

In most manual banking processes, employees are granted direct access to their organisations’ bank portals to process payments and download statements. However, advancements in technology have rendered this a risky and, equally, unnecessary practice.

 

Why are manual banking processes considered potential security risks?

Manual banking processes require a select individual or individuals to log directly into an organisation’s bank portal, giving them ‘complete control over an organization’s financial data’. This in turn increases the likelihood of theft, fraud and human error. Manual processes are also exceedingly vulnerable to malicious activities such as hacking, identity theft, and phishing.

Imagine if an employee’s access to their businesses’ bank portal was compromised; this could enable fraudsters to transfer large amounts of money without authorisation, resulting in severe ramifications for the business.

To put the scale of these ramifications into context – in Feb 2023, KPMG put an eye-watering figure out on employee fraud: “Embezzlement has remainded the most common fraud type for 2022… This includes a case which saw an employee steal £6.7m from company accounts.”

 

Compliance is at stake

Manual processes also make it almost impossible for organisations to keep an accurate audit trail of activities made directly through a bank portal. This represents another red flag for compliance, as it’s now a legal requirement for companies to provide activity data to ensure they are operating legitimately.

Additionally, there’s the obvious issue of inefficiency. Manual processes are time-consuming as opposed to if these were automated.

Minimising the need for individuals to manually log into bank portals to process payments and retrieve statements is therefore vital for finance teams to protect and scale their operations.

So, let’s dig a little deeper.

For finance teams, removing manual touchpoints is the key to safer, more efficient payments processing. Why?

➜ Manual processes are inefficient : Manually managing bank accounts and payments is a time-intensive task that decreases efficiency across the whole finance team.

➜ Errors are likely to occur : The risk of manual error, resulting in inaccurate payments, is multiplied by the number of individuals processing payments as well as the number of bank portals they have access to.

➜ Access to bank accounts is difficult to control : The more individuals have access to sensitive data, the higher the risk of fraudulent activity, whether that be employees perpetrating crime or falling victim to cyber criminality.

Read more about how to automate bank statement retrieveal here.

 

The real costs of manual banking processes

To illustrate and quantify the monetary value associated with the risks laid out here, we have helped our customers calculate their potential risks and costs. These examples illustrate quite convincingly why relying on manual banking processes should not be seen as “cost-free”.
Case Study: An education business with £375m turnover

This business is in the Education sector and has a turnover of £375m, processing £9.8m worth of transactions per month. They are manually processing payments and manually retrieving statements from their bank portals

 

Case Study: A large restaurant chain with £600m turnover

This business is a large restaurant chain, has a turnover of £600m, processing £30m worth of salary and supplier payments per month. They have some automation in place with payment files being created and manually uploaded to bank portal, and statements are downloaded automatically.

 

Are you surprised by these results?

The logic we’ve used here may not entirely resonate with you if your business has more controls in place or follows a less complex payment process. Many factors need to be considered to understand the risks specific to you. However, in our experience, we have found many of our customers more open to error and fraud than these examples suggest.

Would you like to get a better understanding of your risk exposure due to manual banking processes?

Try our free calculator below to find out how much manual banking processes are really costing you.

 

Calculate your costs