Did you know that human error in the financial sector results in 25,000 hours of avoidable rework on average per enterprise and costs $878,000 per year?
One way that financial institutions could improve their operations is to start employing robotic process automation (RPA) development services.
According to a study by McKinsey, about 60% of occupations can automate over 30% of activities with RPA. Which tasks can you automate in your banking or financial organization? And once you've picked out what you want to do, how do you get started with RPA?
How does robotic process automation work in finance and banking?
RPA in finance can be defined as the use of robotic applications to augment (or replace) human efforts in the financial sector. RPA helps banks and accounting departments automate repetitive manual processes, allowing the employees to focus on more critical tasks and the firm to gain a competitive advantage.
Basic rule-driven RPA can only automate tasks with little variation. For example, it can log into an account, move some files, and log out.
One way that banks are using RPA more efficiently is by implementing artificial intelligence technology. This adds intelligent automation to the program, enabling it to handle processes, understand human language and recognize emotions better. Plus, it can adapt to real-time data without any additional input.
In this article, we will use the RPA term to imply both regular and intelligent process automation.
Benefits of RPA in banking and finance
The benefits of RPA in banking and finance include increased productivity, increased compliance, and improved customer service.
Allows you to scale operations seamlessly when needed. A robot can execute tasks without taking breaks or feeling burned out. They can help you scale your operations more seamlessly when the need arises. They work 24/7 and won't let up, even during peak hours.
Cuts down expenses . According to Deloitte, a 30% cost reduction is typical of RPA deployments. Accenture's more optimistic forecast suggests an 80% cost decrease with robotics in finance.
Minimizes IT department interference. Employees will be able to manage their own robotic assistants, without any interference from the IT department.
Increases human employee efficiency. Robots can work at speeds that are five times faster than how a human would work on a specific task. Human workers no longer need to waste time and energy working on routine tasks, and instead can focus more on meaningful projects, which increases the overall employee well-being and job satisfaction.
Reduces human error. Financial RPA has a systematic way of handling its allocated tasks. It will increase output quality by eliminating errors that regular employees may make due to human nature, such as not paying close attention to the task at hand.
RPA use cases in banking and finance
1. RPA for report generation
Financial RPA can automate all kinds of reporting tasks and administrative work. That's perfect for larger companies with a lot of different needs.
Banks and other financial institutions need to prepare detailed reports detailing their performance and challenges and present them to the board of directors. These documents contain a large amount of data, which makes it tedious for humans to prepare them. However, robotics in the finance industry can gather and organize data from different sources and put it in an understandable format. This will generate error-free reports and save you time.Without the need for manual intervention, Societe Generale Bank Brazil was able to automate a workflow that traditionally required six hours of employees’ workdays.RPA in banking can also help compliance officers. When they detect potential suspicious activity, they rely on software with natural language processing capabilities to extract the necessary information and fill it out on their required form.
2. RPA for accounts payable
When handled manually, handling accounts payable is tedious. Employees need to digitize and validate vendor invoices before finally processing the payment. That's cumbersome and time-consuming! With RPA in accounting enhanced with optical character recognition (OCR), invoices can be input by OCR software into robots for validation and payment processing. If there are errors, the system will notify bank employees.When employee's handle accounts payable the invoices need to be digitized, validated, and then processed. Having RPA in accounting is a great way to make this process more efficient. Optical character recognition can extract information from an invoice, pass it on to robots for validation, and process the payment automatically. In case of errors, bank employees will be notified.
Our internal expert shared the following example from his portfolio. A baby stroller and car seat company wanted to automate its accounts payable validation process. The company has branches at various locations, and each one sends its financial documents in its own unique format, which differs from other departments. It is tedious to process all this manually and validate if the provided information is consistent with the bank’s statements.
3. RPA for mortgage processing
Banks and mortgage loan agencies use RPA in time-consuming cases such as the verification process. According to The Mortgage Reports, 60 days is the average amount of time it takes to close a mortgage loan. Loan officers need to go through several tedious steps - including employment verification and credit checks - which can lead to errors with paperwork being lost or misplaced. With an 80% cut in the processing time thanks to robot process automation, banks will have some relief as well as clients.Radius Financial Group found a solution to their problem in RPA. Before they implemented RPA, loan processors would feel overwhelmed when they were managing 30 loans. With the help of robotic assistants, they felt comfortable managing up to 50, cutting cost by 70%.Even in the COVID era, Radius was able to thrive and grow. The company produced 30% more loan production revenue than the rest of their industry average and had about 50% more net income than the national banking sector.
Intelligent robotic automation helped them do this.
4. RPA in know your customer (KYC)
KYC is a tedious process with banks that has costly consequences. Every customer needs an individualized and compliant verification, which can take up to 1000 full-time equivalent (FTE) hours and $384 million per year for the whole process. Alert investigations take time as well, since 85% of daily alerts are false positives, and around 25% need to be reviewed by level-two senior analysts. All these efforts lead to €50 million in KYC compliance sanctions every year.
RPA can streamline the KYC process by minimizing errors, thus simplifying customer interactions with the business. That will result in accelerated onboarding and a better customer experience.
5. RPA in fraud detection
In 2019, anti-money laundering compliance costs totaled $31.5 billion for both US and Canadian financial institutions. This amount is up from 2017's $28 billion, primarily due to an increase in digital banking channels. However, a recent study found that highly skilled fraud analysts spend 75% of their time collecting data and then 15% entering it into the system. These two tasks can be automated, allowing anti-fraud professionals to focus on their main job - fighting a money laundering related crimes.
Robotic process automation in finance: implementation tips
1. Choose your robotic process automation platform carefully. There are four reliable and tested options: UiPath, Workfusion, Blue Prism, Automation Anywhere While searching for a vendor, consider the type of automation you want to implement. Is it a basic level of automation with no machine learning? Or is it a more advanced RPA solution with computer vision and ML capabilities, such as an automated system for payment validation to prevent money laundering?
2. Find a vendor who will help you incorporate the selected RPA in finance solution into your system. When looking for an intelligent process automation services company, pay attention to their experience in your industry and the preferred technology stack, and their ability to look beyond RPA to AI and data science (if needed).
3. Roll up your sleeves:
Keep in mind that the legacy systems your organization is most likely using at the moment are challenging to automate. According to Reuters, 43% of the US banks use COBOL-based systems. COBOL is a programming language from the 1950s, and such systems are not compatible with today’s innovative technology.
Automated solutions should be failsafe and available 24/7. Make sure you have backup servers and are ready to switch automation architectures in real time.
Be patient. Automation is a time-consuming process. It takes around three months to automate simple processes from scratch, such as retrieving financial information from a PDF file and entering it into the corresponding database fields. And it can take up to a year to automate complex processes.
Ensure that the end-users of automated processes can still get work done without requiring long training sessions.
Foresee and implement different scenarios of the selected processes. Automating only the most common cases will not suffice in the long term as your employees will have to interfere.
4. Remember that automation is a gradual process. With an RPA in finance and banking solution in place, human employees will still need to monitor the results and interfere if the process encounters a case it has not seen before. It is normal that you will not be able to automate your process flow entirely at once. It is a continuous process. The usual practice is to start with implementing parts of the selected processes and letting employees take over the cases where automation is not applied yet.
The bank needed to give employees more time to work and invest in providing better customer service, so they decided to invest in robotic process automation (RPA). After deploying the new RPA system, employees experienced a four-fold increase in productivity.
if you believe your business will benefit from an automation solution, check out our automation solutions which includes a free RPA consultation.
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