The circumstances of today’s reality have prompted a number of businesses to change their approach to the activities they have been conducting. The COVID-19 pandemic has forced a number of organizations to modify their work from home policies and redistribute activities and operations to maximize health and safety protocols. During the transition, more remote working opportunities have developed. Customers have changed their purchasing patterns. Demand is still available for businesses with an ear to the ground; the process to address this demand, however, has changed.
In industries as sensitive as banking and finance, modifications need to be made with extreme caution. Keeping information exchanges secure and ensuring the right fortification is afforded to all systems is imperative to keeping the industry generating business. With a growing number of operations moving from physical to digital, businesses are incorporating RPA or Robotic Process Automation to keep activities running as they should. In 2018, RPA was the fastest-growing enterprise software section with a strong 63% (Convedo) growth rate from the previous year.
Incorporating RPA into the banking sector has changed execution methods and protocols. We explore how, in the article below.
What Is RPA?
RPA or Robotic Process Automation is a method to automate internal operations and practices that are considered cyclical or mundane. It allows organizations to configure tools or software, better known as “robots”, in order to maximize data manipulation, application interpretation, information capture, streamline internal system communication and ensure all relevant data is captured and stored as needed. Robotic process automation can handle simplistic commands such as automated responses or alerting relevant stakeholders of order/process status. Processes can grow to scales as large as deploying thousands of emails simultaneously and programming that centers around job automation within ERP systems. Considering the global RPA market is expected to be worth over USD $11 billion (AI Multiple) by 2027, potential applications across a number of industries are slowly but surely being discovered.
RPA is often seen as a gateway tool into more complex forms of employing technology to enable internal efficiency, including intelligent automation (IA), Machine Learning (ML) and even Artificial Intelligence (AI). All these tools can be trained to optimize future outputs and ensure judgement is only conducted using sound data and information. Additionally, rule-based operations help businesses move labour from menial tasks and repurpose them towards work that requires constant supervision or higher investment. This could take the form of customer service or creative activities such as marketing.
Banking and RPA
RPA (Robotic Process Automation) has large scale application potential within the financial sector. The two main applications revolve around;
- Eliminating the possibility of human error within cyclical tasks
- Enhancing internal optimization with better, faster and stronger service delivery
The banking sector primarily focuses on ensuring protocols are consistent, instructions are followed, and errors are minimized. There are a finite set of business activities within the banking sector, and these activities are often cyclical. Most of these activities do not actually require human intervention, with the exception of verification. This creates an opportunity for corporations to substitute physical employees for RPA and program verification systems into automation to ensure all information collected or activities conducted are in line with business protocols and preferred methods of operation.
With the ongoing global pandemic, leaving the house has never posed as many risks. Interacting with a teller or banking officer could pose larger-scale issues. RPA has pushed more banks to go digital and introduce more services virtually, minimizing the need for heading into a physical branch. RPA can be an extremely beneficial practice to introduce at a time where interacting face to face should be globally minimized.
In order to truly understand how RPA and banking working cohesively, it is important to understand the multitude of benefits afforded to financial institutions after implementation;
The financial sector is not one that looks for innovation or disruption. The systems and practices have been well established and are often manually executed. As an unwanted side effect, especially around simple but tedious tasks such as data entry, making an error causing possible fraud is a perennial risk. Most financial institutions bank on long term employees to handle the tasks they have always handled, hoping if an issue arises, they would be quick to spot the same. However, this is likely not the case.
Avoiding possible errors in their entirety with strong RPA programming can be an extremely beneficial system to introduce into any financial institution. Additionally, simple to execute tasks that do not require any intelligence application, such as payable processing, monitoring financial statements for irregularities and reconciling account balances, can all be successfully executed by an RPA system. Credit card application processing can be handled by more complex RPA systems. Preprogramming a more extensive set of rules and regulations to validate the acceptance or rejection of an application is very doable. The end result ensures that more activities are handled with enhanced efficiency and effectiveness.
Especially for larger financial institutions, introducing a strong system to handle accounting and asset management can help business move as it should. A large number of existing financial institutions bank on legacy systems or manual data entry. Introducing RPA as a substitute offers an opportunity for financial institutions to stay up to date with the latest in treasury management data and processes to optimize management of assets, liabilities, revenues and expenses.
Legacy systems and physical employees need to be upgraded or re-trained in order to process the same volume of information at half the efficiency. Errors within this end of business operations could cost an organization greatly. One of the critical benefits RPA offers is the versatility to be incorporated into legacy systems to offer elevation without a complete restructure. While the integration can be costly, the long term benefits, when utilized correctly, act as a strong balance. Larger scale accounting and data consolidation within the financial sector has truly never been easier.
A strong benefit of introducing RPA into a financial institution comes from being able to scale up or down as needed without investing further. The rules governing the RPA system may need to be rewritten, but there is no need to put down more resources towards implementation or hardware. As a result, businesses gain market agility and flexibility. Costs can be minimized without having to keep funneling money into the process. Additionally, the faster processing time and scale allow financial institutions to process more customers generating higher revenues.
Challenges and Opportunities
The strong prevalent threat with moving more operations to a digital platform is the risk of cybercrime. A cybercrime occurs every eleven seconds (Security Boulevard) across the world. This is a clear indication of any sensitive operation, such as those that occur within the financial sector, need to be approached with caution and comprehensive consideration.
As RPA technology develops, creating the right security mechanisms to accompany is imperative for a successful application. Additionally, RPA systems can be equipped with compliance guidelines to ensure all transactions are not only secured but are happening by the book. RPA minimizes the possibility of data leaking or individual based cybercrimes and moves all activities to a more secured space if the proper protocols are in place. Security and compliance are where financial institutions spend the most time and resources; RPA offers an opportunity to minimize and streamline these costs.
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Introducing RPA has not only changed how financial institutions are functioning now but have paved the way for further automation to be introduced as the industry develops. Artificial intelligence is slowly but firmly making its way into banking customer service through the incorporation of chatbots and speech recognition software incorporated into toll-free lines.
RPA has offered a safe and secure way for an industry as sensitive as finance to introduce operational efficiency and effectiveness while minimizing the additional resources required to achieve the same. Banks and other financial institutions looking to offer enhanced convenience to their customers and optimize internal activities should consider introducing some degree of RPA into their ongoing strategy.
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