Elusive Returns for Robotic Automation, Part I: Why No ROI?

Financial Services Storytelling
Into The Future
Published in
8 min readFeb 23, 2018

Is RPA Really Not Saving Money in Wealth Management?

What is stopping Robotic Process Automation (RPA) from achieving its full potential in the Wealth Management space? Let’s face it, this is a place where RPA has tremendous potential, and the Wealth Management business is at a precipice. Every strategic — and tactical — move a Wealth Management firm makes could decide which side of this razor-sharp divide they will find themselves on. They will arrive in the future… or be left in the past.

Today, investment products from traditional wealth managers look similar across the board as the fiduciary rule and automated advice make an impact. Client service expectations are rising and margins are under attack- and fees associated with the value of advice will never disappear, but new models pose a continuing threat.

For these traditional advisors, catching up to ‘Digital First’ competitors won’t be easy, but they do need to address cost pressure, growing customer expectations, and continuous competition. With the reach of traditional Wealth Managers, paired with the right technology, the future for wealth management firms could be bright. But what’s between now — and then? The answer for many of our clients is service transformation, powered by automation. Specifically, Robotic Process Automation.

Throwing Bodies That No Longer Stick

In the past when both full service and retail wealth management firms wanted to grow their business, they’d create a tool (usually what they wanted to sell, not exactly customer centric!). If it got any traction, they would simply throw more bodies at the processes created by the new business. Well, that’s just not going to cut it anymore. Today, with the on-set of digital alternatives and a move toward fee transparency, the margins that allowed for increased human touch, have collapsed. The only way our clients can deliver better service for less spend is to automate routine service tasks so the people or savings can be reinvested in service quality- allowing firms to bend the cost curve as they grow.

Is Automation the Answer?

IBM’s Wealth Management Operations practice recently ran a survey in which we interviewed over 30 senior Wealth Management Operations and Technology executives across 12 leading Wealth & Asset Management firms. Questions spanned from what type of robotic automation program they were endeavoring to execute and how they were organizing processes for automation to what their initial satisfaction rates were. IBM believes that automation is the answer, however, clients are struggling understand how to achieve the business results they need. One thing clearly remained constant across all polls — disappointment.

Crashing from the Sugar High

All of the executives interviewed initially believed they would save enormous amounts of time and money, realizing returns associated with traditional IT automation. From 2016 forward, they committed strategic amounts of budget and management time to pursuing that goal. They fantasized about how Robotic Process Automation, infused with Cognitive Agents, could transform the inner workings of their banks — fast, easy and cheap. But they soon got over their Sugar High, and the realization that monetizing their substantial investment of time, money and energy in emerging tech was going to be harder than they expected.

Tech implementation projects, the way they are conceptualized, strategized and delivered, will decide the success of firms going forward. In Wealth Management, the firms who deliver better client service for less cost will win. Regardless of the maturity of the firms, the results from the survey were clear — RPA has not met, much less exceeded financial return expectations.

Not Just When, But How

Food for thought. Not one executive indicated that cost savings was the leading aspect driving the satisfaction they had achieved with Robotic Process Automation so far. This is because only 1/3 of the firms surveyed achieved targeted savings- and those that did had modest expectations around headcount reduction, and focused more on redeploying capacity elsewhere. RPA can be a great asset to help enterprises save time and money, however, it is essential to understand when, and how, to use RPA to realize expected, and even additional savings.

In speaking with 30 executives, three root causes for this problem emerged:

And one complication was universal- there were a lot more decisions inherent in many Wealth & Asset Management processes than many of our respondents initially thought.

Where are the Clerks? (I never realized my employees were so.. so.. so — Human!)

Many of the interviewed executives thought they had ‘clerks’ that ‘do repetitive tasks’ in the back and middle office, but what they actually have is employees. These employees use complex judgements that enable businesses to run smoothly and reasonably, using a human decisioning process-which was not always apparent upfront. When implementing RPA, firms are learning the hard way that back and middle office activities consist of more than just routine, repetitive tasks, and in almost all scenarios, judgement calls based on experience and best practice are being applied. In particular, the “Clerks” tend to access and synthesize information before performing a clerical task that is not always accessible to RPA type technologies, and in many cases, the guidelines they use to make a decision are in the realm of desktop procedures, not business rules that can be quickly and easily distilled into an “If/Then” statement. This process decisioning work will take up, on average, approximately 70% of a Full-Time Employee’s (FTE’s) workday, while 30% of the time will be spent on ‘clerical’ type work!

The Real Answer to Elusive ROI in Automation

Yes. There are all types of strategic and technological issues to surmount in automation. Also, the lack of deep expertise — and even the unknown of what humans and robots can do together — make setting an automation agenda tricky. But the very first thing you need to consider is; Process Decisioning. Read it twice. It means that you will be deciding, at the beginning of your automation transformation, which way you will use the automation. Before you get into the details of any process. Key success factor, so do your homework here!

Firms must decide how they how they want to use robotics and how they will work together with their FTE’s. Will the bots be treated as an employee? As a technology? Or both? This is a significant decision for Wealth Management firms to make. In order to make an informed decision, firms must first decide how they will address the judgments routinely made by clerical workers today. Once firms address where in the process this deep judgement is applied, they can then use robotics to alleviate the repetitive tasks that take place in the rest of the process.

Firms are increasingly looking to cognitive automation to reduce reliance on employee efforts. However, automation cannot completely replace all employees as they will be needed to train the cognitive systems. The fact is there is a balance to working with both man and machine — and we are just at the beginning of the tightrope.

Freeing the Future

So how will firms learn to merge machine and man to produce the best possible outcome? One necessity to determine before implementation is to consider how much time and energy will be freed using this increment of automation value and of immense importance — how exactly will this time and energy be spent to directly contribute to ROI?

Another endeavor implementers should take on is to build a RPA Bot that handles all clerical tasks in a process step, vs directly “impersonating” a human worker. Imagine, if you assigned many repetitive processes and tasks for a robot to perform — creating a FTE role for the robot? Could you not now reduce or redeploy your headcount by 1, and elevate your human worker? That worker could now return to their ‘non-clerical’, value-added work 100% of the time, rather than the previous 70%!

Now that automation is in place, your employee’s workday is evolving. More time spent on ‘non-clerical’ tasks could allow for increased time for support staff, in branch and home office, to work with advisors to deliver high touch service, and give back time to create more innovative solutions for clients — which in turn could lead to greater business growth.

In our research, one forward-thinking firm followed this process. The empowered FTE’s enabled their firm to undercut the market by charging a lower rate for additional services allowed by the capacity they had created with RPA. Thus, not only was the firm able to gain market share at a cheaper price (by making the cost of additional service delivery effectively free), but increased revenues as well. We encourage our clients to think about the revenue side of the equation with just as much intensity as we have historically considered cost when we think about automation. Redeploying capacity to higher revenue opportunities may be an easier path to success than hard cost saves.

So? What Next?

Robotic Process Automation will continue to highlight process decisioning points, and create solutions that merge man and machine. RPA will not be the only solution wealth firms will have to target. Top performers will leverage additional types of automation, complimenting RPA, to raise their competitive game beyond cost take out and focus on new ways of growing their business and workforce. To keep pace, firms will need to be clever in enabling process owners and business users to maximize capacity by leveraging improvements to their business processes- from RPA and other technologies and techniques. How do they do that? By thinking about how RPA can be coupled with other technological solutions… and humans!… to achieve maximum value.

Join us for Part II of “Elusive Returns for Robotic Automation?” where we will share more stories, and pointers for Wealth Management Executives to get the most out of technological transformation — and just in time — the proverbial train is leaving the station!

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