In order to remain competitive in a saturated market, banks have been forced to find ways to deliver the best possible user experience to their customers. This reflects internally as banks must maximise efficiency and minimize costs, whilst simultaneously maintaining maximum security and error-free processes. This is crucial for banks to keep up with the instantaneous nature of customer demands and desired growth. Robotic Process Automation (RPA) is a powerful tool to answer these demands.
RPA shifts monotonous, manual tasks from human to machine, freeing up back office processes. This has allowed banks to reduce the need for human involvement, which has directly impacted everything from performance and efficiency to staffing issues and expense. Some of the largest banks in Japan, as well as incumbents like Axis Bank and Deutsche Bank, have implemented RPA recently, to reduce labour costs and increase efficiency.
Reduce costs? Reduce errors.
Reducing expenses also means reducing the cost of errors from manual processes.
Bank employees deal with huge data from customers. RPA minimizes the manual processing of voluminous data to avoid errors (which is also time consuming!). Validating customer information reliably from two or more different systems with bots can take as little as a few seconds, rather than minutes. Introducing RPA for manual processes like this can reduce processing costs by 30% from automation and the sheer ability to avoid error.
There are several processes in banks which can be automated to reduce errors and free up employees to work on more important tasks:
- Accounts Payable
Accounts payable requires extracting vendor information, validating it then processing the payment. As this does not entail human intelligence, it is an ideal process for RPA. With the help of optical character recognition (OCR), RPA can improve the accounts payable process. OCR can read the vendor information and provide it to the RPA system. RPA can then validate the information with the info in the bank's system and process the payment.
This process should remove any room for error. However, if there is an error, RPA can notify the accountable employee to resolve it.
- Mortgage Loan
It can take months to process and approve a mortgage loan. The process involves several checks such as credit checks, repayment history and employment verification. Even a minor error can slow this process down, and, as humans, we are prone to error. The process of approving a loan is based on a specific set of rules and checks. This means RPA can speed it up and eliminate the bottleneck of manual approvals, by reducing the time it takes from days or months, to seconds.
- Know Your Customer (KYC)
KYC is an obligation for banks with every customer, but it is an incredibly costly process - or at least when it is carried out manually. To complete a KYC process involves data collection, monitoring and Enhanced Due Diligence. Many banks have now begun to use RPA to validate customer data and carry out these three essential elements of the KYC process. Here, automation reduces errors to minimal, accelerates the time it takes to complete, and also the number of staff needed in this area.
- General Ledger
Keeping the general ledger updated is mandatory for banks. It must be updated with info like financial statements, revenue, assets, liabilities, expenses and revenue in order to put together financial statements. Considering these statements can be accessed by public stakeholders and media, any error can reflect poorly on a bank's image. As the general ledger requires high levels of detailed information, unfortunately, there is a large scope for error.
To create these statements, banks need to pull information from multiple legacy systems, which cannot be integrated, verify it and make sure the ledger is constructed properly. RPA is the hero in this scenario, as, independent of the technology, it can integrate data from multiple legacy systems. Moreover, it can prepare the general ledger in the required format, even if the data in the systems are in different formats. This significantly reduces the amount of data being handled and the time taken to prepare the ledger.
Banks, financial institutions and insurance companies are transforming core operations with RPA to address industry disruption from FinTechs and technology in general. Aside from the processes above, RPA can help accelerate processes of compliance, credit card processing, fraud detection, account closure and customer service. RPA allows businesses to improve the speed and accuracy of its processing, allowing employees time to focus on more critical tasks.