Published in


RPA in Banking: Hop On The Train Before It Gets Too Fast

Automation is the focus of many industries, and banking is surely one of them. Banks are actively implementing Robotic Process Automation (RPA) that can take on tedious tasks. Imagine how much faster and more efficient your work can be, even if you only automate report generation — daily P&L reports, monthly closing reports, compliance reports for fraudulent transactions, etc.

McKinsey’s research reveals that in finance, only 16% of tasks cannot be automated using current technologies. The rest can be safely left to RPA.

In this article, we review the processes and operations of the banking sector, where implementing this technology can bring you the most benefits.

Part of a cost-saving initiative or a step toward a bank’s digital transformation strategy? RPA is your ally either way

If you don’t feel like starting a full-scale digital transformation, you can still tap into robotic process automation in banking. The main benefit of RPA for any industry is that it’s a minimally invasive solution. There’s no need to build a new IT infrastructure and completely reshape your business to leverage multiple advantages of RPA in banking operations, such as lower expenses, boosted productivity, and eliminated the possibility of human error.

There are four main areas in the banking industry where robotic process automation can be used: reporting and audit, risk and compliance, lending and mortgage operations, and customer servicing. Let’s investigate them in detail and uncover RPA use cases in banking.

Reporting and audit

Streamlining the entire document processing approach is a sore point for the banking industry as accurate reporting is fundamental to make well-informed financial decisions. Any bank is constantly coping with a myriad of documents that come from CRM, ERP, and other systems. In addition, the documents may not correlate with each other, be of different formats, and along with solving these issues, employees have to keep an eye on security. When done manually, processing unstructured documents, categorizing different document types, validating multiple data points, etc. overwhelm the staff. With this approach, it’s challenging to avoid document inaccuracies that result in financial loss. On average, human error in the banking sector costs $878,000 per year.

What can you achieve by adopting RPA in banking? Let’s look at how robotic process automation helps unburden your employees who already have a lot of manual work on their plates.

The technology empowers you with end-to-end document processing. The RPA bot, which extracts data from various documents and interprets them using Optical Character Recognition (OCR) technology, can scan a set of documents in seconds and identify gaps and inconsistencies.

This is how it looks:

Besides document processing, legal and audit operations include control activities. Digital Workforce research reveals that more than 90% of internal controls, such as data extraction from different IT systems, are still performed manually despite the possibility to easily automate up to 90% of the operations with the help of RPA.

Risk and compliance

Banking is one of the most regulated industries, alongside the healthcare sector. It’s no wonder compatibility with tons of compliance requirements is among the top priorities for these types of organizations. Implementing RPA is helpful for:

1. Know Your Customer (KYC) and Suspicious Activity Reporting (SAR)

KYC is a mandatory standard in the banking sector designed to establish customers’ identities and understand the nature of their activities to prevent threats such as money laundering. It may require up to a week for the KYC to be approved by the KYC Registration Agency.

Another part of the risk mitigation process is an AML (Anti-Money Laundering) investigation process that requires 30–40 minutes for each case and drains your employees’ time if done manually. At the same time, this task easily follows the rules and unfolds into an algorithm, and it takes only three minutes to complete with RPA. The technology works according to the ‘if-then’ principle. If some activity in a customer’s profile looks like a potential threat, such as making numerous transactions in a short period, the bot flags it and reports it as a suspicious activity (SAR) to the concerned department. With this approach, bank staff only invest time examining and investigating suspicious accounts. Here’s a system that demonstrates the advantage of using RPA in banking and finance.

2. Regulatory compliance

When aligning business practices with regulations and maintaining records to be ready for audits, RPA in corporate banking comes in handy for such tasks as:

  • Automating audit report generation for regulatory agencies. Bots centralize data collection and create reports in the required format, simultaneously eliminating the influence of human error. The bot can do 6–7 hours of manual work in a minute, saving time for staff.
  • Checking if data is regulatory compliant. Leverage an RPA bot to track regulatory updates in real-time by cross-comparing notifications. In this case, you can react quickly to changes in requirements, avoiding penalties that can put the depth of your pockets to the test.

Lending and mortgage operations

The majority of mortgage operations have a high automation potential. Thanks to RPA, banks can alleviate the burden placed on the staff and free them up to deal with more sophisticated tasks and operations that can’t be handled without human involvement.

As for loans, RPA implementation in banking can reduce circle time for a loan by half.

Let’s take a closer look at the loan processing. One of its initial stages is the extraction of the inputs from the loan documents created by the loan officers. It takes 5 minutes per form when done manually. And if you let RPA handle this operation, it will be done ten times faster.

There’s more to come. Radius Financial Group’s example of RPA in banking reveals how you can achieve positive results thanks to the technology even in unfavorable market conditions, such as the pandemic. Before RPA implementation, employees could take care of 30 loans in their pipeline and felt overwhelmed and stressed. Adoption of the technology allowed it to almost double the number of processed loans — it reached 50 without affecting the staff’s well-being and, at the same time, cut operational costs by 70%.

Mortgage loans are tricky both in terms of opening and closing. The latter appears to be more challenging for banking staff. On average, closing a mortgage loan requires 45 to 60 days. It takes quite a bit of time, as before approving an application, bank staff has to check the client’s employment, creditworthiness, etc. Even a minor typo in data submission on the customer’s or bank’s side can lead to a delay, not to mention other complications in processing the application. Banks using RPA can eliminate bottlenecks like this and cut loan processing time by 80%.

Customer servicing

A customer-centric approach is no longer just desirable but critical if you want to succeed in the banking sector. At the end of the day, even digital transformation is a customer-first process, not technology-first.

Here are two robotic process automation examples in banking for customer servicing:

  • Automatic classification of emails and auto-reply setup. Opening, copying and pasting contents, and analyzing 60 mails requires 90 minutes of your employees’ time. With RPA, they can finish these tasks 15 times faster.
  • Single automation interface. Your staff doesn’t have to open applications by hand, cut and paste customers’ data from different apps, and manually perform basic calculations — RPA use cases in financial services show that all these operations can be easily devolved to the technology. Moreover, bots complete these tasks four to five times faster than humans, positively impacting the customer experience.

Augment your employees’ efforts with RPA technology to achieve remarkable results faster

According to McKinsey, the banking industry is now experiencing a second wave of automation. But consider that RPA isn’t a silver bullet — it’ll be only useful if you fix the processes that are non-standardized or broken in the first place. Automation should be done wisely to empower your employees and boost your organization’s productivity and profit. Some banks start implementing RPA without a long-term plan and understanding of their capabilities and resources. Others make a plan, but it can turn out to be ill-conceived. That’s why banks end up with hundreds of bots that were supposed to automate numerous repetitive tasks, but statistics says that 30–50% of RPA projects fail to be effective. Instead, if unsure about how to implement RPA correctly, it’s best to turn to RPA specialists that are proficient in the technology and processes needed to get tangible results.

Originally published on instinctools.com



Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store



We advance and innovate businesses with digital transformation. 20 years in the market. Let’s talk > contact@instinctools.com