In this Q&A, Murray Campbell at AutoRek makes the case that Ops teams face hidden costs caused by manual processes.
(Murray Campbell, principal product manager at AutoRek, recently took questions from FTF News about the hidden costs of manual processes that remain in place because firms think they’re more cost-effective than automated solutions. In this Q&A, Campbell makes the case that firms face many ongoing, unknown costs associated with manual processes that carry price tags that cannot be overlooked. This issue was first explored in AutoRek’s new report, “The Infrastructure Gap: Capital Markets Operations 2026.” AutoRek is an end-to-end financial controls and data management platform provider.)
Q: Could you explain in detail the hidden costs of what you are calling the “manual processing tax,” and how you discovered this problem?
A: In summary, the “manual processing tax” refers to the costs that a business will incur as a result of its operational processes being manual and spreadsheet-based. There is a misconception that manual processes are a cheap or cost-effective option for a business, in comparison to investing in an automated solution. However, firms face numerous ongoing costs associated with manual processes that are easily overlooked.
These costs would include:
- The costs of rework due to errors that happen as a result of processes being manual — data input errors, file corruption, or incomplete process steps followed — are all examples of why a process may need to be restarted or re-performed, therefore resulting in a resource cost to the business.
- Even without errors, manual processes are a considerable resource drain on the firm — this is an ongoing cost that needs to be met. Humans need to spend considerable time completing repetitive tasks where the process is manual. This is work of no value-add and must be completed before the real focus on investigating exceptions and risk items can occur.
- Furthermore, this use of human resources to create and execute manual processes also results in an opportunity cost for the business – staff is not being used elsewhere, adding value where critical thinking and decision-making are required, because they need to spend time setting up files manually daily. This is a considerable ongoing cost of running manual processes.
Q: Could you also discuss the three major aspects of the manual processing tax and how they are hurting operations?
Murray Campbell
A: Budget Leakage: As found in the report, nearly 16 percent of budgets are being used on fixing the issues resulting from manual processes. This is a significant proportion of budgets that could be used elsewhere to invest in automation, but instead is being used to remediate issues and deliver tactical fixes to manual processes. This is also only part of the problem, and we see other examples of budgets being used due to manual processes. For example, where firms experience spikes in volumes, the answer is to divert more resources to the process because the manual process can’t handle increased volumes. This is a real use of a budget for a short-term fix, rather than using the budget to invest in a solution that can meet and support volume growth over time.
Talent Misallocation: This refers to the use of staff across operations to carry out manual processes, focusing on the need to perform repetitive tasks that add little value and, instead, would be perfect candidates for automation. Skilled staff should instead be used to focus on where they can add real value, on investigation and decision-making. This, in turn, drives skills development within operations and can act as a motivator to retain staff, instead of experiencing high turnover due to the manual nature of roles.
Regulatory Exposure: Manual processes mean manual controls, which, in turn, means increased risk of regulatory exposure. Financial services firms operate in a highly regulated environment, and their processes and controls should reflect this. The operations department, in particular, is high risk, as cash and asset flows must be accurate and secure or risk considerable loss to the firm. Where controls are manual, the risk of loss is increased. Importantly, adequate oversight and governance are limited in a manual process, whereas automation provides a firm with auditability to track and see all actions taken.
Q: How aware are securities firms of this tax and its many extensions on operations?
A: I think in most cases, particularly where operational processes are manual, the focus for every day is very much just on completing business-as-usual processing. Given this focus, there isn’t necessarily always time to also take stock and consider the impact and costs of these processes.
Firms are most likely to track the cost of losses from errors where there is a direct cost associated with an issue (for example, the cost to correct a client’s account). However, for all the additional costs that are swallowed up as part of a firm’s budget, it is probably less likely that they are taking the time to quantify what those costs are.
Q: What are the first steps that a firm should take to rectify the situation?
A: Firms need to carry out a review of the operational processes and identify where they have ongoing dependency on manual processes. This should help to draw up a list of areas where they can look to invest in automation that they can then prioritize and look to deliver against.
Q: Are there any cutting-edge technologies that could help firms find a breakthrough in counteracting this multifaceted tax?
A: Automation is the first key step for a firm to start to realize the value in its data and processes, while freeing up its staff resources to add value to the firm. Partnering with the right vendor solution will also allow a firm to achieve this value as soon as possible and will also allow them to drive any additional benefits available from the automation — for example, automated controls, increased volume handling, additional reporting, and real-time data insights.
Beyond automation, A.I. is now offering the next generation of automated solutions. This is where A.I. can target any inherent process inefficiencies that remain despite a process being automated.
Q: If survey respondents say that 82 percent of operations remain manual, how likely is it that full automation would ever become a reality?
A: As operations departments are made up of several teams and each team has many processes and tasks, it is not unsurprising to see that within those areas, there remains at least an element of manual processing. It may also be the case that some tasks are suitable to remain manual and may not need to be automated. So, in that sense, full automation may not even be the objective.
However, what firms need to do is to identify the manual processes that would benefit from automation and target achieving that. So, those processes that carry risk and would benefit from automated controls are executed regularly, if not daily, involve a range of data sources and high volumes of records, with repeated actions, and should absolutely be targeted to deliver automation.
Q: What are some realistic steps and milestones for firms that want to move much closer to fully automated operations?
A: Review operational processes to identify where manual dependencies exist:
- Carry out prioritization of those manual processes to identify where automation can be of most value.
- Document a plan for automating the highest-priority items over a period of time.
- Review available software vendors to identify suitable solutions that can meet and exceed your requirements.
- Once identified, agree on the plan with your chosen vendor to deliver against your list of requirements.
- Execute the plan to automate the processes.
- Re-baseline your initial list of priorities to agree on what the next objective should be.
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