The modern banking and finance business is constantly growing and changing exponentially. As a result, financial institutions are faced with the challenge to stay competitive and create better and efficient ways to deliver superior customer experience (CX).
Financial institutions have siloed systems and intensive paper processes that can be daunting. They are faced with the challenge of maintaining the highest security while increasing efficiency at lower cost. The employees are too focused on repetitive and labor-intense processes, and hence unable to focus on other high-value tasks.
As an answer to all of the above, financial institutions have turned to Robotic Process Automation (RPA). RPA is a powerful tool to maximize operational efficiency, increase profitability, and improve customer experience. Capgemini says that RPA is capable of generating 25%-50% cost savings through automation of data-intensive repetitive tasks, thereby leading to improved processes.
So, what is the significance of RPA and how can it simplify various processes in the banking and financial services institutions? RPA can efficiently automate numerous processes, scaling up to meet the demands of future requirements of the banking and financial services sector.According to Research and Markets report, RPA in the financial services market is anticipated to reach $955.2 mn by 2023, up by 24.5% from 2018.
Top 5 Benefits of RPA in the BFSI segment
- Optimized Integration
RPA bots have the capability to seamlessly integrate with multiple legacy systems through UI automation. This helps bring the entire system in sync for better performance.
- Time & Cost-effective
These software bots can generate reports within a short span of time by fetching data across multiple systems. This helps in improving the services; with faster reporting assisting in informed decision making.
- Reduced Repetitive Tasks
With the help of OCR (Optical Character Recognition) technology, RPA bots can convert paper information into digital formats and validate the same across multiple systems. For example, it can help enter any new account info into multiple systems, making the onboarding of a new customer faster and substantially reducing the waiting period.
- Improved Business Operations
It helps improve service desk functions by automating laborious and complex tasks. For instance, loan processing is conventionally considered to be a slow and time-consuming process, but can be accelerated by automation mechanisms using AI. Also, credit card processing is streamlined efficiently by many banks these days, as RPA helps gather information and run background checks based on eligibility criteria and validates the identity immediately to know if the person is qualified for a credit card.
- Enhanced Customer Experience (CX)
Call center responses can be automated through RPA. Its smooth integration can shorten call durations, enhance communication, and generate automated responses delivering faster resolution and quick support. All of this can take customer experience to better levels.
Top 7 Areas where RPA shines
Robotics in banking has significantly automated and organized various time-consuming and repetitive processes as well as effectively streamlined back-office operations leading to improved performance and cost savings. Following are some of the various functions in the banking and financial services that could be improved and thus present huge opportunity for RPA to generate automated banking systems.
- Know Your Customer (KYC)
RPA can optimize the mandatory process of Know Your Customer (KYC) that usually involves large number of full-time employees to perform the laborious task. KYC is a data-intensive process and hence RPA can easily assist in validating the customer data, proving to be both time and cost efficient. The process can be completed without the need of excessive staff, with minimal errors and improved accuracy.
- General Ledger & Automatic Report Generation
Banks need to generate a general ledger with information such as assets, liabilities, revenue, and expenses which is recorded in the form of financial statements. To generate these financial statements, which can later be accessed by other stakeholders, the general public, and media, humungous amount of data needs to be collated from across systems. With this being done manually, it is a very cumbersome process with the possibility of a fair amount of error always creeping in. Using robotic process automation in banking, data can be integrated from multiple systems seamlessly. RPA can not only integrate data, but can also ensure that data is validated and updated with no errors.
In a similar manner, automatic report generation is another advantage of using robotics in banking. Using RPA software, data across platforms can be easily integrated in the required and understandable format to be presented to the board and stakeholders as per compliance. Using automation, report generation takes lesser time and leaves no room for error.
- Accounts Payable
Another tedious and monotonous process in the banking system is the accounts payable process. The process involves the task of extracting vendor information, validating the information, and finally processing the payment on satisfactory validation. This less intelligent but laborious task can be handled by robotics. RPA in accounting and finance can step in to resolve the issue through the use of OCR. In case of any errors or conflict, the bot can notify the concerned executive to intervene and take action, if necessary.
- Credit Card Processing & Mortgage Processing
Initially, banks would take weeks to process a credit card after successful validation and approval. The long waiting period was irksome for the customers, leading to dissatisfaction and many a times resulting in cancellation of the request for a credit card. However, now using RPA software it just takes a couple of hours to gather information on a particular customer, perform background checks as necessary, and finally validate and approve a credit card for the said customer based on the set parameters by the bank.
Similarly, mortgage loan processing in the US was a time-consuming process involving a lot of scrutiny checks. RPA helps to accelerate the process by streamlining the various tasks involved and addressing the bottlenecks that usually resulted in delaying the process of mortgage loan initiation. This led to higher customer satisfaction.
- Accounts Closure
Banks have to deal with enormous amount of accounts closure requests on a monthly basis. At times, accounts closure is also initiated because of non-compliance on the part of customers to provide the necessary documents and proof. Keeping track of all such accounts and requests becomes a mundane task at hand. RPA can step in and generate automated reminders for furnishing necessary proof of documents. Account closure requests can also be processed within a short time frame keeping in sync with the set rules entered in the software. Financial authorities can then focus attention on tasks requiring higher human intelligence.
- Fraud Detection
With technological advancement, incidence of fraudulent financial transactions only multiplied making it difficult for banks to manually detect fraud patterns. Using automation in banking, such fraudulent patterns can be easily tracked and flagged in real time, raising an alarm for action without any delay. Banks can then either stop the suspicious transaction or block the account as they see fit. Fraud detection and prevention becomes efficient and streamlined for banks resulting in curbing financial cybercrime and fraud.
- Customer Experience
Customer onboarding in banks happens in huge numbers on a daily basis. An automated banking system reduces the waiting period significantly by promptly verifying customer details across systems and validating it to complete the onboarding process without any human intervention. In the same way, banks receive queries of all kinds related to various products and services on a regular basis. Through RPA, chatbots can respond to general queries lowering the turnaround time and efficiently redressing enquiries made by the customers. All of this leads to superior customer experience.
3 Steps to Implement RPA
RPA is here to revolutionize the banking and financial institutions as its acceptance in the sector increases by leaps and bounds with each passing day. However, to realize the maximum impact of RPA, banking and financial institutions should follow a balanced approach.
Step 1: Assess the requirement
Analyze the various processes to check for suitability of integrating RPA. Shortlist various processes or operational issues that RPA can address efficiently and effectively, assessing both the impact and feasibility of automation implementation.
Step 2: Build a business case
Map the current resources and simultaneously predict the need of future resources towards building a better and cost-effective virtual workforce. A quick comparison of the cost involved versus the derived benefits based on metrics such as efficiency, time and effort should be done to set realistic and achievable targets for future.
Step 3: Choose the right model
Select an appropriate RPA operating model to suit the specific requirements and choose the right partner who can seamlessly offer end-to-end RPA implementation and provide further support in proper execution.
There lies a lot of scope for RPA, if leveraged sensibly and efficiently by the banking and financial services sector to enhance their processes and to get a competitive edge in the long run. Although it might seem to be high-cost investment, consider the value in terms on ROI that RPA brings to the business.The market size for robotic process automation in the global BFSI segment was said to be valued at $167.1 mn in the year 2018 and is expected to grow at a CAGR of 31.3% from the year 2019 to the year 2025. Leading players in the BFSI segment such as Deutsche Bank and Mitsubishi UFJ Financial have already started to leverage the benefits of automated banking system to stay ahead of the curve. You don’t want to be left behind, do you?