30 Aug The top Robotic Process Automation use cases for banks

Robotics Process Automation (RPA) is sweeping across banks globally. Demonstrated ability to help the bottom line by boosting efficiency and cutting costs is fueling RPA’s rise in financial services. RPA automates high volume low value tasks in back end processes using tools and platforms powered by Artificial Intelligence. The robotics part thus does not refer to actual robots but applications or bots that perform the automation. Banks have to deal with tons of data as part of processing loans, selling products & services, and because of intense regulatory oversight. The processes that underpin these activities when automated using RPA, result in less errors, less operational cost, and greater agility allowing for human assets to be redeployed to more value-added activities like sales.

Last year 30% of banks in a PwC survey said they had widely adopted RPA or were headed in that direction. Here’s a list of some processes that have benefited from RPA in banks:

KYC:

The KYC process is at the heart of banking and the trigger for starting a relationship with a bank that can last decades. The costs of people and compliance related to KYC are enormously high and for bigger banks can be hundreds of millions of dollars. Using RPA smartly in the KYC process results in demonstrably lower costs and a faster process, which means you can start generating substantial value from a net pool of customers much more quickly.

Credit Card processing:

It can still take days to weeks to process credit card requests. With a well executed RPA process however, within a few hours an automated agent will arrange relevant documents, perform background and credit checks and using a rules-based engine automatically make a call on if a customer is eligible for credit card or not, and even decide personalized limits.

Catching Fraud:

In the digital age banks are awash with data. This is an opportunity for great insights but at the same time it allows creative people to game a bank’s processes and commit fraud. With inputs like tax codes changing regularly loopholes can be created and exploited. RPA however can catch patterns not discernible to humans and they do it dramatically fast. They can identify cluster of activities that are patterned normally and those that seem off, like an unusual number of transactions within a specified time, and flag them for review.

Customer Service:

Customer service is an arms race as banks keep trying to lower resolution times, while customers keep raising their expectations as they interact with brands outside financial services who serve them in a superior and seamless manner. RPA not only lowers resolution times by automating parts like verification of details, but they can also completely take over low priority cases.

Compliance

Chief compliance officers are extremely excited about RPA. Compliance is necessary and arduous. RPA bots are 24/7. This means they simply get a lot more done with fewer errors. They also combine well with their human partners by doing the most soulless parts of compliance processing meaning acceptance of RPA culturally is easier!

Accounts Payable

This is the poster child process for RPA because it is that classic banking process that is monotonous but essential. A human has to process invoices from vendors, extract information from all fields in the invoice, validate all that information, and then process it. RPA automates this entire process and automatically credits payments to the vendor accounts after reconciliation. It does this faster and with fewer errors.

ROI and beyond!

RPA saves money. For example, a 34-branch bank in the US with 3.5 Billion USD in assets, saved 560,000 USD annually using RPA. Experts have put ROI on RPA deployments at 20-25%.

Where does this ROI come from and how do you measure it? There are 4 key areas. 1. Compliance – RPA means 100% compliance because only after criteria is met does information flow move past a decision point. Any issue gets escalated immediately. Resolution of issue means next time RPA won’t even need to escalate. 2. Speed – Post RPA deployment a process can be twice as fast! It’s not just because they’re following set processes faster it’s also because they’re doing this while processing data from multiple systems. 3. Quality- Robots do not make mistakes. So long as proper implementation and post implementation protocols are followed errors are eliminated. This saves direct costs but also creates value by increasing customer and employee satisfaction. 4. Productivity – RPA bots do not rest. They are faster and they do not make errors. This means processes that can be 70% to 1000% faster.

RPA can also have other more strategic benefits that can increase its overall value to a bank exponentially.

Any Chief Digital Officer can tell you they often face a dilemma where the pressure is to “go digital” but funding can be sporadic or project based, driven by perception or turf wars. RPA can be touted as a basic digital transformation project. Within maximum of 6 months of implementation and tweaking robots, the ROI starts coming in thick and fast. This shows boards the benefits of digital transformation and gives Chief Digital Officers breathing room and ability to successfully ask for more funds for deeper more powerful digital projects.

RPA projects inculcate a key skill into the technology and digital teams’ portfolio. This will come in handy as banks move up the curve to Intelligent Process Automation (IPA). These are robots that learn from prior decisions and data patterns and make their own decisions. IPA is far more complex to deploy than standard RPA, but it requires far less human oversight once rolled out, and it goes beyond replicating human work. Using disruptive technologies like machine learning and computer vision, it does the work better than humans meaning more cost savings and even faster processes. Some subject matter experts are already touting IPA as the core of next generation banking business models.

Conclusion

RPA like any technology initiative requires smart and careful planning and competent implementation. Their needs to be cognizance of existing cultural and process challenges that is incorporated into project execution. But beyond that a combination of quick implementations, with comparatively lower risks, quick ROI and clear benefits means RPA is growing fast. It augments existing human capability, resulting in a more efficient, empowered and digital bank.