Did you know, human-error in the banking segment costs approximately $878,000 annually and 25,000 hours of wasteful rework? So it’s no surprise that the banking and financial services want to turn things around.

Given that the cost of human error in the BFSI segment can be highly high thus, adopting Robotic Process Automation seems smart. According to a Mckinsey report, around 60% of occupations can automate over 30% of activities with RPA.

Probably, you must be wondering which tasks to automate in your banking and financial organization.

Once you have decided on the tasks, how do you start with RPA in banking and finance?

Here, we will dive into everything you should know about RPA in banking and finance.

What is Robotic Process Automation in Banking and Finance? 

RPA in banking and finance is termed as the use of robotic applications to augment human-efforts. 

In simple words, RPA helps banks and financial institutions in the digital transformation to automate repetitive manual processes, allowing employees to focus on more crucial tasks, eventually leading firms to gain a competitive edge and greater customer satisfaction. RPA is a valuable tool to cater to the pressing demands of the banking segment and help them maximize efficiency by minimizing operational costs.

A basic rule-driven robotic process automation is limited to what it can do. It follows the rules to automate tasks without any changes. For example, it logs into an account, moves files from different folders and logs out.

But, McKinsey predicts a second wave of automation and Artificial Intelligence, termed as Intelligent Automation, in the coming years where software bots and machines will execute 10% to 25% of tasks across a myriad of banking functions, broadening the capacity and simultaneously offering the workforce the opportunity to focus on higher-value tasks and projects.

Note: Here, we’ll use RPA to imply both regular and intelligent process automation. 

According to a McKinsey report, general accounting operations have the lion’s share of automation in finance. At the same time, business development functions can only be automated up to 56%.

By now, it would be right to say that every industry has found a way to incorporate robotic process automation (RPA) into its workflow, but so far, banking and finance are leading the way.

Why? Because

Investment banks, customer service banks deal, clearing organizations, exchanges and many others are increasingly recognizing the power of automation and the benefits of transforming their business process.

Here’s a quick look at some of the benefits of RPA.

Top 9 Benefits of RPA in Banking and Financial Institutions

Let’s have a look!

Improved Customer Experience 

There’s no doubt that positive word-of-mouth can make or break a company’s reputation.

Organizations place special emphasis on the customer experience, and the banking and financial industries are no exception. But unfortunately, working in a busy segment leaves no time for efficient customer service banks and communication.

Here, the RPA system comes into the big picture as it allows banks to incorporate bot technology, which will attentively address customer inquiries and offer suitable solutions to work with customers. The bots also play an important role in automating and processing financial transactions to customer onboarding through mobile apps.

Reduced Mundane Banking Operations 

It’s no surprise that banking and financial firms manage voluminous manual process on a daily basis. Most of them are important and take hours to process. However, organizations simply integrate the RPA system to handle the mundane workload of data transfer and employment verification rather than making the workforce do repetitive tasks.

After all, bots deliver increased productivity compared to full-time human equivalents and can work for 24*7*365 days per year. RPA enables organizations to take the mundane and tedious work away from individuals and redeploy their talents to more analytical and high-value business processes.

Increased Efficiency and Productivity 

Another benefit of the RPA system is how they achieve processes effortlessly and swiftly as these systems listen and follow instructions, leaving no room for ambiguity. Unlike manual processes, robotic accounting don’t have any shortcomings.

According to Gartner, banking automation can save up to 25,000 hours of avoidable work because of human errors.

Compliance with Regulations and Standards

Banks and financial industry around the world have important regulations with which they need to comply. And ensuring regulatory compliances requires two main objectives:

• Aligning business practices to comply with regulations.
• Excellent reporting and record-keeping to prepare for audits.

Fortunately, Robotic Process Automation can mitigate a handful of compliance and auditing pain points. RPA is a powerful technology that hands your most repetitive and manual tasks over to software robots.

Scalability

Robots have high scalability enabling you to manage high volumes during peak business hours by addressing the need for bots to respond to situations in record time. In addition, RPA implementation allows the bank to put more focus on innovative strategies to grow their business by freeing bank employees from doing monotonous tasks.

Cost Savings 

Eliminating redundancy and minimizing the need for manual intervention supports that banking and finance firms can exceptionally reduce the added costs they spend on resources, systems, and workforce.

Employees could easily avoid repeating responsibilities like entering new data and scheduling manual processes. Thus, utilizing this technology in the financial system can save approximately 20-25% of costs because of increased efficiency, low energy use, and reduced time.

Lower IT Expenditures

RPAs are not expensive functionalities.

With minimum functionalities, financial organizations, irrespective of their size, can integrate the digital systems without requiring skilled IT teams. Often, Robotic software doesn’t require exclusive coding knowledge to learn the system’s intricacies and operate them optimally.

Since the system automates the tasks, firms will not require additional IT experts.

Heightened Accuracy and Reliability  

Human errors are natural to happen. However, in some scenarios, even minimalist mishaps might cause a grave mistake that might cost behemoth losses for the organization. And, in unfortunate circumstances, it might even cost the customers a good reputation.

But, don’t worry; these can be easily alleviated by integrating RPA systems. With Robotic Process Automation, the systems will manage the process precisely and efficiently. Also, the voluminous data and processes can be effectively managed with the newest form of technological advancements like AI and Machine Learning.

Not to forget, RPA solutions can’t be hindered by data outages and are available 24*7. Also, the data is backed up efficiently, frequently, and automatically. So, if any unfortunate circumstances arise, it will be for a minimal time, and the process will continue seamlessly soon after.

Extract Information with Accuracy

Most of the bank’s financial processes is handled with high precision and security. However, human errors are inevitable, and with vast volumes of customer data stored in systems, it can be challenging to identify the relevant data and interpret them precisely.

So, RPA, an amalgam of technologies like Artificial Intelligence and Machine Learning, can easily store crucial information for any requested query in the ocean of stored customer data in systems. Also, when there are discrepancies or missing information on invoices, automated processing uses third-party databases to collect information to optimize Account Receivable concisely and Accounts Payable processes.

However, with RPA and especially Intelligent Automation, these processes can be done in minimal time.

Without any ado, let’s look at the most automated processes in the banking industry that have undergone digitization with automation.

“According to Grand View Research, the banking and financial services sector were leaders of RPA adoption in 2019, accounting for approximately 29% share of the global revenue”.

6 Most Popular RPA Use Cases in Banking   

Anti-Money Laundering (AML) and Fraud Detection

Banks are no exception to fraud and other miscellaneous activities targeting to ruin the reputation of the banks. Actually, there is no exact process to trace fraud, so banks usually integrate several approaches to identify common fraud occurrences.

However, these screening processes are better carried out with the help of the RPA system. These systems perform several procedures to identify the credibility of any application or transitions and detect any breach in minimal time. Also, with the implementation of the RPA system, banks and financial organizations can compare the typical fraud patterns and stop them. Therefore, saving the firm reputation for a longer time.

Use for Accounts Receivable

This is among the most challenging tasks – Account Receivable, as it can cause considerable losses in case of a mistake. And monitoring accounts receivable manually is time-consuming and requires entering enormous amounts of data manually.

Therefore, relying on an effective RPA system will help businesses correctly monitor and manage their accounts payable. Besides, RPA bots automatically generate invoices for clients to expedite the payment processes. RPA bots also send email notifications and reminders to ensure everyone is paid.

Know Your Customer (KYC)

Popularly known as KYC (Know Your Customer) is not only a crucial compliance process for major banks but also the most complex one. This process includes a minimum of 150 to even thousands of FTEs to perform checks on the customer.

Also, Thomson Reuters confirmed that some banks spend a minimum of US $500 million annually on their KYC compliance. Now, banks have started leveraging RPA technology to collect customer information, analyze it, and perfectly validate it to reduce the considerable cost and resources.

This empowers banking and financial institutions to complete the KYC process in a comparatively shorter duration with limited staff and minimum errors.

Offer Credit Score Alerts

A credit score presents the creditworthiness of a customer.

Banks and financial institutions must keep track of the credit scores to make sure and avoid significant liability issues. Though, with RPA, financial firms can easily monitor the credit score of their clients frequently. And with proper instructions, companies will be appropriately notified when a customer’s credit score drops below a certain threshold.

Before a customer officially declares bankruptcy, the banking automation software can monitor the status of credit scores and financial statements predicting possible outcomes, and guide navigating potential disasters.

Credit Cards Processing

The credit card application process may seem time-consuming at first because of the time taken for approval and validation. Don’t worry; that was the case before the introduction of RPA systems.

RPA does a great job of streamlining the credit card processing procedure. For example, skimming through a mountain of paperwork and making numerous inquiries to research and confirm a customer’s background and analyzing their financial statements information thoroughly will be unskippable. So, with RPA in finance, the entire process of validating data is completed faster and more accurately, and a final credit card approval or denial decision is made based on predetermined criteria.

Mortgage Loan Processing

Unquestionably, the application and validation process for a mortgage processing takes unbelievable time. However, the latest technological developments, accompanied by lesser customer patience, carry the potential risks of impacting a firm’s reputation.

Banks need credible information on the customer’s earlier finances, loans, properties, and other credentials. And considering the efficiency and reliability of the RPA system, banks can process and authorize the required information in a shorter time. Moreover, without the slightest chance of error and discrepancies, banks can easily and quickly prepare financial statements and validate the approval of loans stepping towards financial process automation.

Finally, you must be wondering how to implement RPA software in banking and financial institutions?

Here’s the answer!

Robotic Process Automation in Finance and Banking Segment: Implementation Tips

Our internal RPA experts at Signity Solutions, recommends following these steps to get started with automation initiatives:

#Step 1: Choose Your Robotic Process Automation Platform Carefully 

There are four trusted and tested options to consider:

• UiPath
• Blue Prism
• Automation Anywhere
• Workfusion

So, when searching for a reliable RPA vendor, you must consider the type of automation you want to implement. Like, is it a basic level of automation or an advanced RPA solution with ML and computer vision, such as an automated system for payment validation to prevent money laundering?

#Step 2: Find a Reliable Provider That Have experience Incorporating RPA in Finance Solution 

While searching for an experienced RPA solution provider, pay attention to their experience in your industry and the preferred technology stack, in addition to their ability to look beyond RPA to Artificial Intelligence.

Roll Up One’s Sleeves:

• The automated solution should be safe and available 24*7. So, ensure you have backup servers and are ready to swap automation architecture in real-time.

• Keep patience. Automation is a time-consuming process. It takes around three months to automate simple processes from scratch, like retrieving financial information from a PDF file and putting it into the corresponding database fields. And, in some scenarios, it can go up to a year. ‘

• Also, remember that the legacy system your organization is most likely using is a challenge to automate. According to Reuters, 43% of US banks use COBOL – based systems. A programming language from the 1950s which is not compatible with today’s innovative technology.

• Ensure the end-users of the automated processes can get their work done without requiring long training sessions.

• Foresee and integrate different scenarios of the selected processes. Automating only the most common cases will not work long-term as your employees will have to interfere.

#Step 3: Keep In Mind That Automation is a Gradual Process 

Integrating an RPA in finance, employees still need to monitor the results and intervene if the process encounters a case it has never seen before. It’s usually not possible to automate your process entirely at once. After all, it’s a continuous process. Often, the practice starts with employing parts of the selected processes and letting employees take over the cases where automation is not applied yet.

Finally, Robotic Process Automation in banking and finance is a continuous process. You can’t  automate everything at once, but it’s a good point to start selecting your initial point carefully.

Vice President of Advisory at Gartner, Dennis Gannon recommends starting with:

So, to make your business thrive in the long term, explore and discuss with your trusted RPA partner like Signity Solutions Read about RPA in Banking and Finance and start small with concrete sub-processes.