Robotic Process Automation (RPA) is quickly evolving to become a part of the financial sector. Most major financial companies such as Deutsche Bank and Axis Bank have been assessing possibilities to use new-age tools such as RPA and Artificial Intelligence to minimize the human efforts and chances of error.
RPA is used in processes that involve high transaction volumes and mundane activities such as recording journal entries, conducting general ledger account, performing internal transactions, and maintaining accounting master data. It is also used in auditing expense reports, managing incoming vendor invoice, and processing vendor payments by solving their disputes or inquiries.
In fact, according to KPMG, in the next 15 years, almost 75% of the existing offshore jobs in the financial sector will be done by RPA, which means 75% of the cost will be saved by these firms.
With so many companies incorporating RPA as a part of their process, the focus has shifted from doing mundane tasks to tasks that require human intelligence. Some of these tasks include - identifying consumer behavior and seeking new opportunities to engage with them.
Some of the regular tasks performed by RPA in finance companies are:
- Improving existing processes: RPA can streamline operations and cut costs by integrating RPA with current infrastructures and processes and ensuring that the technology does not create any unwanted disruption in day-to-day operations. The aim of introducing RPA is to improve the quality and efficiency of what already exists and not replace it.
- Making high-volume, repeatable processes less mundane: It can be tedious to perform a task repeatedly. Chances of error become high when people start losing interest in the work and their focus on work decreases. RPA is particularly helpful for processes that require a lot of volume and repetition to complete a task.
- Simplifying content-intensive processes: Even as processes are going digital, there is a lot of paperwork that needs to be copied from one place to another. It is in cases like these that human error occurs. So, when it comes to copying content from one source to another, RPA can easily automate the process and reduce the errors.
How else can RPA improve the efficiency of financial institutions?
According to a report by Kofax- a California-based company specializing in automating information-intensive processes, there are three ways in which RPA can transform the financial businesses.
- Increasing efficiency of the banks: Often manual processes can slow down the productivity of people and make the processes susceptible to errors. This is where RPA comes to use. RPA uses intelligent software to automate mundane tasks such as collecting information from different portals, internal bank systems, etc., and entering them in the database, thus saving the time of the employees and utilizing them to engage in tasks that require human intelligence. It increases the staff’s efficiency level by 35-50%. According to Gartner, banks are the highest adopters of RPA in the finance industry due to significant cost reductions and its flexibility to be deployed in front-, middle-, and back-offices of the banks.
- Transforming the mortgage industry: The 2008 recession experience has made financial institutions cautious while dispensing loans to people. While the banks are trying to provide error-free and efficient mortgage services, outdated manual processes, and slow customer response time have bogged them down. Often the lenders have to manually enter the lending information in the database, which is not just a waste of time but also highly prone to errors. The manual work leads to delay in dispensing loans, which eventually leads to dissatisfaction among customers. This is when RPA becomes important. RPA can help in meeting loan quality, compliance issues, and cost issues and can automate the manual tasks such as entering data to enable the loan department to focus on dispensing the loan. Implementing RPA helps in generating revenue quickly, enhancing customer satisfaction as they do not have to wait to get loan approvals, and streamlining the audit process to ensure that the documentation is in order.
- Simplifying compliance and risk management: Compliance rules have increased like never before. From money laundering regulations to KYC, every additional process creates hassles for the financial institutions. While hiring resources to perform these tasks might seem like a logical thing to do, it might not be a cost-effective solution considering that there are new regulations added frequently. Therefore, the best solution to this problem is investing in RPA as it can be deployed across different processes to complete the time-consuming compliance tasks on time without any hassles. By implementing RPA, financial institutions can directly extract regulatory information and updates from multiple websites and update the customers about it. It also provides data such as on risk assessments via dashboards and databases or any format required to help employees to identify and resolve potential risks. Most importantly, it provides auditors with complete and accurate information by streamlining it and maintaining the documentation up-to-date.
While financial institutions have acknowledged RPA’s contribution in simplifying their work and making the employees more efficient, and IT companies like Capgemini, Accenture, Unlock Insights have been offering RPA solutions to financial institutions, it has been observed that these organizations are going slow on adapting to changes.
According to Gartner, the reason for this is the company’s firm belief in the legacy systems, lack of vision or organizational support, and the high cost involved in integrating the systems. The need of the hour is to encourage the financial institutions to embrace RPA for selected processes and help them see the benefits within 6 to 12 months of implementation. Once, the organization is convinced of the advantage of implementing RPA; it can be slowly introduced across other processes without disrupting the business.