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Robotic Process Automation (RPA) in Financial Services (FS) - A Game changer?

-by Souna Uthappa and Naveen PV

Over the years, robotics has become a key driver of growth and efficiency across various industries such as manufacturing and hi-tech. The financial services (FS) sector, however, remained a step behind being cautious of automation, but thankfully, only for a while! It has recently taken baby steps and adopted robotic process Automation (RPA) to overcome the challenges of complex regulations, sluggish macro-economic factors, and the emergence of disruptive technologies.

Interestingly, the recent familiarization has unveiled more opportunities for RPA to have far-reaching impact on the FS sector -- beyond traditional process automation that focuses on automating individual tasks! The spotlight has now turned to a fundamental tenant of RPA called artificial intelligence (AI) that is being extensively used to capture, interpret, and analyze complex financial transactions and real-time interactions between various platforms and software applications.

The fact that new-age AI applications can carry out complex tasks, unassisted, by leveraging inherent problem-solving capabilities, is setting the stage for ground-breaking solutions in FS. Some areas where RPA can have tremendous impact include:

• Exception management
• Tasks involving high volumes of data
• Cross-system manual processing
• Data gathering and reporting
• Reconciliation activities
• Monthly account closure
• Bulk data updates
• Regulatory reporting
• Balance sheet reconciliation
• Capital markets
• Affidavit creation (loans)
• Audit trail creation
• Template maintenance
• Customer services
At this very moment, many firms are utilizing RPA to achieve short-term benefits such as cost reduction, agility, efficiency, accuracy, speed, greater performance, and quality. That's not all, many enterprises are also realizing long-term benefits such as re-deployment of resources for more strategic, value-added initiatives, while creating more agile organizations that can improve customer experience.

Yes, leaders are driving the RPA trend!

MasterCard, Visa, Lloyds Banking Group, Deutsche Bank, Merrill Lynch Wealth Management, ANZ Banking Group, and Barclays are some of the frontrunners in RPA adoption. For instance, when ANZ implemented RPA to fix time-consuming errors which occurred daily in one area of payments, they were able to reduce resources from 40 to 2 and redeployed them to other areas where they could make an impact.
Barclays also implemented RPA across a wide range of processes including accounts receivables, fraudulent account closure, loan application opening, 'right of setoff', etc. Consequently, they were able to save around 120 FTEs and reduce their bad debt provision by £175 million per annum.

The bottom line is that businesses have high expectations from RPA-related initiatives, especially where cost reduction through effective staff utilization and the right sizing of resources are major focus areas. Even though RPA adoption comes with inherent challenges such as misplaced expectations and resistance from employee unions, it is emerging as a major game changer, helping the industry to become more agile, smart and lean.

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