Robotics Process Automation in Financial Services

When we think of robots, we think about physical, man-like machines that you see in movies like Star Wars, Transformers, and more. But this isn’t always how a robot may appear in the real-life.

The concept of robots has existed since the 10th century BC. and the first mechanical robot was built in the 4th century BC. 

In today’s world, Robotics Process Automation is the business process to automate the manual and repetitive tasks using A.I. applications. Robotics process automation is changing the way financial services operations are carried out on a daily basis.

The derived benefits from robotic process automation are cost reduction, speed, improved cycle time or productivity, refined audit and compliance standards, and more. The robotics process automation results in positive revenue growth by optimizing speed to market and by refining cross selling and the upselling of products. It also results in a higher customer satisfaction index by adding precision to response time in customer interactions and the personalization of offerings.

Automation in Banks

Banks and financial services have departments operating in a traditional setup consisting of forms and manual processes. The bank’s initial focus is to automate the back-office departments such as human resources, accounting and legal because most of the activities in the back office departments are manual and repetitive, hence the implementation of RPA improving productivity and accuracy.

Robotics Process Automation can also be used as a network of automated software called ‘bots’ that can enable two types of Robotics Process Automation (RPA): traditional RPA and cognitive RPA.

Traditional RPA is about automating the manual process having simple business rules. A good example of it is the process to write off a delinquent loan having a small principal balance remaining because the cost to recover the principal balance is higher than the remaining loan balance. This process can be automated easily because business rules are simple. Other tasks, such as email recording, document gathering, decision making and communicating loan decisions to stakeholders can also be automated using Robotics Process Automation. One minute of bot time is equivalent to 15 minutes of human time. 

Traditional RPA and cognitive RPA are also used to automate the heart of financial service businesses such as supply chain, product development and product maintenance. The rule of thumb is that an activity that is manual,  repetitive, can be documented, and can fit in standardized processes qualifies for Robotics Process Automation. The automation type (traditional or cognitive) is determined by assessing the complexity of decision making in the activity. Simple business rules are implemented using traditional RPA and complex business rules are implemented using complex decision trees or cognitive RPA. 

Bharti Mishra

Benefits of Robotic Process Automation

In the days (and years) to come, humans will play a role only in the overly complex decision making and, for the most part, will just validate the decisions made by bots. Future managers will manage human workers, as well as virtual labor bots. Companies do not pay salaries to bots. We will experience a massive shift in occupation of knowledge-based tech workers and middle-class income group workers.

The application of Robotics Process Automation on frontline customer facing applications results in revenue growth, which is why it is being used more and more all the time. The implementation of trained and self- trained algorithms and applications of the Natural Language processing will optimize the response time of customer interactions and personalization of offerings. Both these attributes are key contributors towards the customer satisfaction index. In the coming months, most of the customer and mobile interactions will be handled by smart agents with mechanical robots emerging as customer touch points.

The selection of Robotics Process Automation use cases should be based on ROI (Return On Investment). The use cases that include a high ROI and are the least complex should be implemented first and most of these initial use cases will have humans and automated software collaborating to achieve results.

The important use cases for Robotics Process Automation in banking are as follows:

1. Validating existing customer information.
2. Customer information gathering.
3. Compiling customer information.
4. Customer screening.
5. Customer servicing.
6. Regulatory and compliance monitoring.
7. Risk assessment.
8. Account opening and account closure.

SDLC Process for Robotics Process Automation

Like any software development that follows the SDLC process, RPA follows certain steps of development and implementation.

• Step 1 is to scope the project.
• Step 2 is to determine the baseline operating cost.
• Step3 is to analyze the current static process and identify RPA opportunities at mouse click level.
• Step 4 is to standardize the workflow of RPA to maximize the gain.
• Step 5 is to implement the mapped and documented workflow using RPA tools such as Blue Prism and Automation Anywhere.

The other steps on the path of completion are: testing the automated software, launching the software, and maintaining the software.

Challenges Faced in Robotics Process Automation

A few significant challenges faced by RPA implementations are as follows.

1. Siloed implementation of automated software.
2. Unclear expectations from stakeholders.
3. Inconsistent outcomes from RPA implementation. RPA implementation consists of modification in existing people and processes so there is a necessity to set up new rules to govern the processes.
4. The new RPA technology leads to disconnected dots in organization. There are tonnes of technical ambiguity in the RPA environment due to new RPA development and existing infrastructure so financial services should have CoE setup for an RPA integrated environment.
5. RPA is about culture change. Human capital is the most important capital owned by companies so the technology department and human resources department will have to work hand in hand on new skill development and repositioning of employees.