Robotic process automation (RPA) is quickly being a disrupting force in the financial services sector. It was named as one of the biggest trends to watch in the industry for 2018. The ability to automate human activity and free up employees to perform value added work creates an opportunity for innovation and growth like we have never seen since the industrial revolution.
The use of automated technologies to streamline processes or improve customer experiences are far from new in traditional financial institutions. The use of bank debit cards, automated teller machines and desktop automation (DA) are perfect examples. These technologies perform significant functions but they are limited in their applications. RPA, on the other hand is able to do so much more – able to control data, process transactions, trigger responses and communicate with other systems.
FinTech firms and startups have been pushing the pace of innovation and challenging traditional financial institutions to adapt or risk losing relevance in a rapidly shifting technological landscape.
While RPA has implications in a variety of different industries, financial service institutions, like banks and insurance companies, stand to benefit the most. Because this industry is heavily regulated and has high security, auditability, and data quality demands, robotics and automation just make sense.
FinTechs have managed to meet the needs of a new generation and provide services to traditionally underserved population. With consumers increasingly turning towards their digital devices to make payments, procure loans, make investments, and transfer funds, traditional financial institutions have been forced to invest in RPA and in some cases, partner with FinTech firms. Here are a few ways the technologies are being put to use:
Processing insurance claims is a manual, time consuming, process that is prone to errors. Errors create delays, which creates more work, ties up employees, and leads to unhappy clients. Some insurers have found success turning these processes over to RPA. An innovative company has paired with a RPA solutions provider to improve their processing across the globe. Before RPA, this global insurer had to go through 26 different banks and use smart searches to ensure that payments were being made against claims and this had to be done four days of every month. This verification process took workers the four full days to complete and included search errors, missed information, and unpaid claims. Since automation, the errors have been eliminated and the verification now takes only two hours, saving thousands of full-time employee hours and increasing accuracy.
RPA can provide incredible improvements in the area of customer service. Major banks and financial institutions, like Canada’s RBC, have been using chatbots to improve interactions with customers. Given the convenience and popularity of digital banking over physically going into a bricks and mortar location, this transition allows these institutions to stay relevant among their client base and offer services that align with where the majority of transactions are actually occurring. Because chatbots are available 24/7, customer concerns can be met at their own convenience and not necessarily during traditional business hours. And given that RPA speeds up processing and reduces the number of errors, customer needs are being met more quickly and more accurately.
RPA can improve accounting reliability and reduce errors by automating manual data entry and data gathering between different applications. This means integration between portals can take place without an employee having to log in/out and manually entering the data. Streamlining processes from invoicing to accounts receivable eliminates pain points at both ends of the spectrum. And with machine learning, the abilities and usefulness of this technology will only improve over time.
Investment values and information can change in minutes and RPA would give investors the ability to more easily track their portfolio. Bancolombia, the largest bank in Colombia, is already putting this to the test. They have introduced an “Invesbot” to help clients better manage their investments. Currently only available to those with investments greater than $7,000 USD, it offers real-time advice and tracks current market conditions by directly interfacing with Colombia’s stock exchange. As the technology develops, and spreads to other markets, it provides opportunities for growth with potentially more people gaining easy access to the stock market. It can also provide financial advice without people having to pay the fees associated with talking to a financial advisor, removing a barrier, and potentially opening up a brand new customer base.
Simply put, RPA can do things that humans cannot, at a speed that humans will never achieve. Software bots can interface with a range of systems gathering data easily and accurately. This technology can also communicate with legacy systems, removing pain points associated with the upgrading process. When employees are not performing repetitive, time consuming tasks, they can be employed in ways that are more effective uses of their time and their decision making abilities. For example, if an insurance company automates their processes with regards to basic claims, their underwriters are freed up to process more complicated claims. More work gets done without having to hire more workers.
FinTech companies have been pushing innovations in RPA giving consumers the opportunity to access a simple interface that is easier than paying high fees or dealing with intermediaries like mutual fund dealers or money transfer companies. This has forced traditional institutions to upgrade their own systems. Making the decision to invest in RPA now, gives companies a distinct competitive edge.
Not only will RPA drive all these companies to keep pace with the offerings from FinTech firms, it can offer a wide range of business benefits. Depending on how and where RPA is implemented, companies could see a potential ROI of 30%-200% in the first year alone. With minimal process change, businesses could see a significant improvement in productivity, removing backlogs caused by human error, incomplete data, and redundancies. As employees are taken off repetitive tasks and moved to more engaging work that better employs their skills, workplace satisfaction will steadily rise. And perhaps most significantly of all, RPA can save companies money. Employing and maintaining bots is not only less expensive than human employees, it is more efficient and more cost effective than traditional business process management programs.
RPA is the way of the future and is the next step in digitization. The potential uses and possibilities for its implementation are exciting and it stands poised to completely transform the financial services industry for the better.