RPA FOR BANKING — BANKS BANKING ON RPA
“A penny saved is a penny earned.” — Benjamin Franklin
Banks have been both bullish and conservative at the same time when it comes to technology, and understandably so. Anything that secures their business, transactions, and assets are worth exploring but not if the downside involves cost escalation, risks of failure or information breach/leaks. As a result, while Fintech has been on the ascent in the past decade or so, there is also a high bar that has been set for a solution to become worthy of large-scale adoption.
Robotic Process Automation (RPA) scaled this bar after a few hits and misses in the earlier days. As learning evolves among the vendors, as implementations scale up in scope and complexity, bots have become not only near-perfect at delivering on promises of scale, efficiency, and accuracy but also adept, in an almost human manner, at learning for themselves and then applying those lessons in unstructured contexts as well. You can no longer measure the scale of an RPA implementation based on the number of bots deployed simply because the paradigm has shifted.
RPA for Banking
RPA for banking is an obvious synergy because it meets the triumvirate of banking needs — controlled costs, improved efficiencies, and secured data. It also helps banks navigate through regulatory rules and compliances that are among the most rigorous and complicated legal frameworks of any industry. RPA helps to keep banks light and lean in an era that calls for agile, responsive businesses.
Modern banks, after all, perform a wide variety of functions to an equally diverse universe of customers. Retail and corporate lending, home and vehicle mortgages, short-term credit or overdrafts, ancillary products and services, safe deposit lockers, investments… we have barely scratched the surface of what some of the biggest banks in the world do, but let it suffice for now to accept that these are activities 99.9% of banks all over the world are involved in.
How can RPA help them all?
Data Transmission
Banks exchange data with a large number of organizations — with statutory bodies for reporting and compliance, with identity databases for KYC fulfilment, with credit agencies for customer reports, with channel partners, with customers both individual and corporate, and with other banks and financial institutions, domestic and international, all of them with systems, frameworks and safeguards of their own. Until now, APIs, partial automation or manual exchanges were the only ways of sharing digital data.
With RPA, that’s no longer the case. A bot can do the work of an API, a scanner or a human — it simply needs to be taught what information to look for and where this information should be plugged in on another system. Repetitive tasks such as parsing a long-form datasheet row by row or querying a different database for individual records are prone to error when executed by humans; a bot, on the other hand, can do this faultlessly every single time.
Data Insulation and Information Security
Given the sensitive nature of data in the finance industry — particularly in banking — institutions have safeguards built in to protect this data from being accessed or modified in an unauthorized manner. Yet, these safeguards themselves hinder the efficient transmission of data. Any change in any of the systems will require retooling the APIs, an extensive process, or retraining the human operations, an expensive process. If data bridges are used, there is always the risk that one compromised system can be used as a gateway to access another, better-protected database.
Using bots eliminates this possibility since the bots operate outside the system looking in, simply reading data from the sources, unless they are explicitly granted permission to modify the data at source as well. They can operate as cut-out circuits in case any of the systems are compromised, protecting authentic data from being corrupted through error or fraud. This also helps organizations retain their information security standards without adversely impacting the business.
Format Standardisation
Each of the data sources a banking institution needs to access will have its own set of access protocols and formats in place. When formats differ — currencies or timestamps, for instance — but is not captured by the system, it can lead to catastrophic errors all the way through the information chain.
Using RPA, however, eliminates this risk. Bots can be trained to understand data formats and how to translate from one to the other. This is a mechanical task, but one that a bot can safely undertake millions of times a day without ever going wrong anywhere.
KYC Verification
KYC verification is an important process at every bank. It is also a highly standardized process, with clear and unambiguous rules governing each decision branch, which in turn makes it an ideal candidate for automation. Automating this process will free up valuable employees and resources that can then be redeployed in more impactful areas that require human judgment.
Mortgage and Lending Services
Banks process large volumes of paperwork for their mortgage and lending services. Right from the application stage to disbursal to periodic evaluations of repayments, banks are forced to employ a significant percentage of their workforce in processing. Yet, these are low-intellect tasks — there are guidelines after all for limits, terms, calculations, and administration — and exceptional cases are indeed the rarity.
With robotic process automation in insurance, bots can be employed instead. These can process applications and accounts at a much greater speed than humans can, and with accuracy rates that can never be matched by humans. This helps banks deliver better efficiencies in terms of cost and time in one of their core business areas.
Account Management and Query Handling
Giving human beings access to confidential customer data is always fraught with trouble. Using a combination of RPA and chatbots (or virtual assistants) can, on the other hand, deliver both security and customer satisfaction without compromising on the ease of use of the system. Confidential information is always shielded from human eyes when a bot is used instead, and these bots can then be used to answer everything from queries (“What’s my balance?” or “what’s my credit limit?”) to transactions (“I want to change my PIN”)
IT Services
In banks, the IT department is oftentimes just as busy as anyone else if it is constantly relied upon to dive deep into their databases or information systems and provide aggregated reports to managers. In many cases, these processes are established for security reasons such as eliminating any chance of a social hack into sensitive data sources; in others, it could simply be because the bank may not have the budget or the inclination (or both!) to invest in the effort of a robust reporting system on top of the existing ones.
RPA’s IT automation democratizes such tasks without compromising on information security. The IT department can, instead of devoting valuable resources to running the reports each time, simply set up bots of their own to collate and deliver data as needed. The employees thus rescued from the drudgery of mindless labour (!) can then be more productively utilized in the administration and growth of IT systems inside the organization.
Contract Management
Banks can administer their contracts with customers (such as for safe deposit lockers), lease-owners and third-party vendors more efficiently with financial process automation bots than without. These bots can scan contracts and convert them into digital artifacts that can be tracked on time, performance and fulfillment. Instead of having someone manually review each contract, bots can scan the whole lot at a single shot, compare them with other known or observed values and escalate only necessary cases to the appropriate teams.
Reconciliation and Settlement
Reconciling and settling bills on time is a major step towards keeping the engines of a bank running. Whether it’s rental for the premises, payments for utilities or maintenance contracts, reimbursements for employees’ official expenses or ad hoc repairs, delays in settling these can lead to more serious trouble in the form of escalated costs and/or punitive fines.
Upselling
Bots based on server side automation can be used to aggregate customer data, classify them into multiple segments, understand transactional patterns and preferences and eventually make sense of all of these bits of information to identify products or services the customer is likely to go for. This brings down the cost of marketing while increasing its effectiveness since there is an actual correlation between the customer and what’s being pitched.
Bank for the Buck
RPA has the potential to bring high levels of efficiency, productivity, and compliance to banks across the world, as well as increase levels of information security and product/service portfolios without needing to overhaul their systems. No wonder then that by 2020, more than 40% of banks are expected to invest in, and subsequently gain significantly from, RPA implementations on their business infrastructure.
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