There’s a lot of buzz around what RPA can do for businesses across industries, and the Financial Services Industry is no exception. As an industry known for having many rule-based, repetitive processes, and a tendency to rely on a variety of applications, Financial Services seems to be a perfect candidate for RPA. Gartner has predicted that 73% of corporate controllers will implement some form of RPA in their finance departments by the end of 2020, which has increased significantly from 19% in 2018.
In case you’re unfamiliar, RPA, or robotic process automation, allows you to discover, automate, and optimize your business processes for improved accuracy and efficiency. In financial institutions, this software is usually applied to processes that are already established in the institution, like communicating between systems and data processing, among many others.
A Streamlined Approach to RPA
RPA software finds your optimal opportunities for automation and creates custom workflow automation solutions that you can edit with easy-to-use tools. And RPA designers understand that not everyone has a strong background in IT. To ensure a user-friendly experience for all, the software and its tools are specially designed with the average business user in mind. It’s more than just an efficiency booster that saves financial institutions money. It makes the employees’ jobs more enjoyable as they can trade manual, repetitive processes for more value-added tasks.
In our previous installment in our RPA Across Industries blog series, we explored the world of Insurance. We learned about how RPA helps providers to remain competitive in a rapidly changing industry by cutting costs, exceeding customer expectations, and streamlining their processes. These powerful results can also apply to the Financial Services Industry, but they play out in different industry-specific ways.
Now that we have a basic background on what RPA is and some of its strengths, let’s look at top industry challenges and explore further how this technology can tackle them.
Slow Manual Processes
Like many industries, financial institutions rely heavily on manual, repetitive business processes. This inefficiency makes for huge money losses and a higher incidence of error, which can pose a threat to security.
As customer demand for fast, technology-forward service has risen, many banks have responded by digitizing their front-end operations. But what happens when the institution’s back-office processes are still heavily manual and paper-reliant? Unfortunately, this is the reality for many banks. The result is unnecessary costs and slow handling times, which directly affect customer service quality. The back-office simply cannot be neglected.
The financial services industry is increasingly competitive as tech-savvy digital newcomers continue to emerge. They bring with them new innovative ideas. Additionally, they don’t use old legacy systems as many industry veteran companies do. As a result, there is a push for reimagining these old systems, but doing so is no simple task. Companies looking to replace their outdated systems face complex system integration projects that can be costly and time-consuming. And many other companies are limited by outdated legacy systems that they have no ability to change, usually due to government regulations.
Demand for Digital
According to Dr. Alex Balbontin, Senior Expert, Digital Services at global management consulting firm McKinsey & Company, banking has seen an increase of about 40% on digital channel usage, with approximately 30% of those users being first-time users. It’s never been more important for financial institutions to quickly deliver seamless, user-friendly digital experiences. This brings forth undeniable pressure to update the technology that powers both the customer-facing side and behind the scenes.
Therefore, the need to update has only become more pressing as the number of remote customers has increased during the COVID-19 pandemic, As businesses step into the “next normal,” it’s also likely that more customers will choose to use their services remotely than pre-COVID-19 times. The need for digital evolution isn’t going anywhere, and it’s time to adapt.
Customer Needs Changed by COVID-19
Financial institutions have also been significantly impacted by COVID-19. Since the global pandemic began, the financial services industry as well as insurance (BFSI) companies have seen an influx of customers who need to delay payments and take out loans- and fast! In these unprecedented times, streamlined, quality customer care can go a long way, but inefficient processes are an obstacle.
Financial institutions have also faced the added challenge of providing all these services to customers remotely, as more than 70% of employees work from home, a dramatic shift from the 5% who worked remotely prior to the pandemic.
COVID-19 has taken the world by storm and left many institutions with little choice but to address their digital transformation strategy, regardless of where they were on their journeys. The urgency of the matter is causing organizations to prioritize advanced technology like RPA, rather than seeing it as an upgrade to consider down the road.
The financial service industry is bound to significant regulatory pressure. A Thomson Reuters survey investigated this obstacle and discovered that an average financial firm spends $60 million on customer due diligence (CDD), KYC compliance, and onboarding each year. And in 2016 alone, US financial institutions faced fines of $300 billion due to violations of the Bank Secrecy Act (BSA) and AML regulations.
How Can RPA Provide Value to Financial Institutions?
Save Time and Money with Faster Invoice Processing in Accounts Payable
Virtually every enterprise must process invoices, a time-consuming task that is traditionally very paper-heavy and error-prone. It can also be costly due to late or incomplete processing fines. Invoice processing is mostly rule-based, but invoice format often varies between organizations. This snag can be easily navigated with the help of RPA, which can scan, digitize, and validate critical invoice data. It then can automatically upload the invoice to your invoicing program. With your Robots at work, human error is eliminated, and your risk for late payment fines decreases – a huge ROI opportunity. This also means that your employees who previously manually processed invoices can channel their productivity to more value-driven work.
Improve Employee Onboarding Effectiveness
Traditional new employee onboarding techniques often consist of heavily involved training programs. This is especially a challenge within the financial services industry, as there is often a specific body of knowledge that only finance and accounting employees must know, riddled with rules and regulations. New employees often receive overwhelmingly large quantities of such information and struggle to retain it all. Information overload, plain and simple. With attended bots, you can easily create tutorials that help your new employees learn the ropes of relevant processes and applications. Doing so allows you to offer a consistent, standardized learning experience. And your employees benefit from learning by doing, a method which can improve knowledge retention. When your employees internalize knowledge the first time, you don’t have to spend as much time explaining and re-explaining concepts, and fewer errors result. It’s a win for everyone.
Improve Call Centers and the Overall Customer Experience
Over the past couple of years, the demand for businesses to take the customer experience to the next level has skyrocketed. And in the face of a global pandemic, this has become more relevant than ever. By innovating their front-facing and back-office processes alike with RPA, financial institutions can offer the seamless, quality experiences that their customers deserve.
You’ve probably had your fair share of inconvenient call center experiences, from “please hold” to slow service. These experiences are beyond frustrating. But the RPA can help financial institutions ensure excellent call center experiences for their customers. RPA can increase the efficiency of customer calls by gathering relevant account information onto a single convenient screen. This way, customer care representatives can see all necessary details and verify customers with ease. This streamlines the entire process, leading to a less slow, patience-testing experience for callers.
Improve Payroll Submission Accuracy
The biggest setback that payroll faces is its limited ability to standardize. This challenge stems from a variety of factors, including local payroll, compliance, and security requirements, and poor data visibility. This means payroll is often saddled with inaccurate data, incorrect submissions, and payment delays. RPA is a natural fix for these problems, however, especially because most processes in payroll are repetitive, manual, and based around set rules.
RPA can monitor the consistency of payroll system employee data, inspecting its accuracy against the data in your company’s existing ERP system. It can also:
- Run batch extracts, import, and validation for gross-to-net processing
- Measure with global trade data
- Feed the procurement system for new transfers, hires, and terminations.
- Automatically track and produce paychecks, benefits administration, rewards, and reimbursements.
And with your bots at work, you can trust that everything will be completed accurately and on time.
Streamline Accounts Receivable
Accounts Receivable is yet another sector of financial services that is steeped in repetitive rule-based processes. Still, each customer may have their own way of processing invoices and legal requirements vary depending on where the customer is based. As a result, billing customers is never as straightforward as routinely submitting an invoice and calling it a day. It also requires the company to supply specific documentation. And through all of this, there is considerable pressure to be fast and error-free, but this is no easy task. As you may have learned by now, these challenges make accounts receivable a picture-perfect opportunity for an RPA deployment.
RPA automatically submits invoices to customers, regardless of what online system they use. It also uses its flexible visual recognition technology to withdraw relevant information from the customer’s database, even if they’re using a legacy system. This information helps it send important documents, including invoices. And because bots can complete tasks faster and more accurately than human workers, your accounts receivable department will finally be able to keep up with the pressing demand to be fast and error-free.
Expedite Financial Data Collection
Your company needs to have visibility into its transactions so it can properly analyze financial performance. But for many institutions, the process of collecting this information is time-consuming. Since this process is highly rule-based, however, RPA is highly effective in collecting data for financial reports. This technology allows robots to easily collect data from any application or website that is relevant, no matter what underlying technology you may have. This way, you can save time across the board, and your employees can spend their time attending to other tasks, boosting productivity. And you can officially say goodbye to finding errors in financial reports.
Comply with Tax Requirements
The process of collecting the necessary information for tax reports can be very time-consuming, despite being rule-based and seemingly straightforward. Additionally, tax law is constantly in motion and complex in nature. The information that you may seek to complete reports is often stored across multiple locations, which complicates matters further. With the expensive threat of late fees and fines in the picture, the pressure is on. As a result, it’s invaluable to ensure that this process is as fast, efficient, and error-free as possible. RPA can do just that.
RPA helps institutions to easily automate processes like this, from collecting information from different locations in different formats and processing it, to using this information to complete computerized forms. It also conveniently allows you to complete these forms in any application you’d like. These affordances help finance and accounting departments to complete legally mandated tax reports quickly and error-free.
Seamless Deployment with Faster Results with Non-Invasive RPA
Financial institutions must deliver outstanding performance while simultaneously quickly scaling their processes. But striking a balance with this is difficult. Technology integration is an involved process, and it isn’t cheap. This is where RPA comes into play once again. These solutions allow for seamless deployment that is non-invasive within the IT architecture that the institution already has. As a result, the institution’s daily operations can proceed as usual through the deployment without skipping a beat. At the same time, RPA enhances the accuracy and efficiency of those existing processes.
Bots automatically interact with your existing business programs like any worker might. They can manipulate data in the presentation layer of the user interfaces that are already there. This function makes them a perfect match for legacy infrastructure. That’s right- your legacy infrastructure doesn’t have to be completely obsolete. You can give it new life with RPA. With this technology, there’s no need to disrupt your entire IT architecture. And you don’t even have to break the bank to get the results you want.
It’s plain to see that RPA can significantly reduce the time and human effort it takes to complete critical processes in finance. But the promise that eliminating human error holds for an institution’s ROI cannot be understated. As we’ve seen, RPA has the proven ability to provide value across many areas within a financial institution. And it doesn’t just improve matters on the front-facing customer end. By investing in back-office process efficiency, financial institutions can both deliver smoother, faster service to customers. They can also enhance employee productivity and morale, and expand revenue all at once.
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