The financial industry is currently experiencing robust growth due to the changing regulatory environment, rapid technological changes and increased competition. Many financial institutions are outsourcing data entry to meet emerging Big Data requirements. Many new opportunities are emerging, and one of the major among those is robotic process automation (RPA) or robotics. This technology is transforming how insurers, banks, and capital markets firms carry out their basic business processes.
Robotics Being Increasingly Adopted
In fact, there has been a significant modification in each and every department in the financial industry. Currently, the job description of accounts payable is changing and it may totally disappear after 20 years. Artificial Intelligence and machine learning represent the new age of automation that can outperform humans in various ways. However, experts believe that skilled employees will continue to work alongside software automation and Robotic Process Automation (RPA) for data analysis and guide the software. This new technology will require new learning and it is an opportunity for accounts payable departments to learn new skills and develop their job description. Implementing AI helps employees focus more on raising their profile, provide good internal service, and be motivated.
According to a January report by McKinsey Global institute, nearly half of the activities that people are paid to do are now being transferred to robotics. Activities that are repetitive and do not require any creativity such as data processing services, data collection etc can be easily replaced by automation. This change puts jobs like customer service, sales invoicing, account management, accounts payable clerks etc at risk. But these positions are not likely to disappear altogether because as yet, people will need to work along with the machines to produce growth in per capita GDP. The more likely scenario is that the role of accounts payable clerks and other accounting professionals will change and they will become more valuable as human analysts and strategists to validate a machine’s processes.
Financial service companies can now install advanced software to perform complex financial tasks better and more cost-effectively. This robotic or cognitive automation can replace many processes that are now being done in-house or outsourced. This will enable financial institutions to gain a competitive advantage by being faster and more accurate than firms that use people for the same tasks. Some financial institutions like investment banks, exchanges and clearing organizations are quickly moving towards automation. Robotic automation can harness and analyze data to help make better decisions. It can also improve the protection against cyber attacks.
- In the finance and accounting areas, robotics can be utilized for fixed-asset counting, recording journal entries, conducting general ledger account reconciliation, maintaining account master data, and performing intercompany transactions.
- Robotics can be used to manage incoming vendor invoices, handle vendor inquiries/disputes, and process vendor payments.
Significant Role of Robots in Financial Risk Management and Compliance
- Robotic process automation can help financial firms review employees’ disclosures regarding personal accounts.
- It can automatically examine account openings and paper statements, thereby ensuring quick and apt levels of review for employees’ trade and transfer disclosures.
- Transfer disclosures and disclosure attestations can be examined automatically.
- Robotics can reconcile employee reports as regards entertainment and gifts, and identify any anomalies and potential issues.
- Robotics can help spot and explain changes in risk exposure, and determine the business-related or data-related causes for such changes.
- Robotics can be used to assess credit limits and determine the reasons for breaches in such limits. It can also generate recommendations for remedial action.
Robots can be installed on top of an ERP system and can perform repetitive tasks 24X7. These robots can learn such tasks easily and work like recorders. They can easily pick up routine tasks such as creating an asset or normal posting; you need to perform these only once for the robot to learn. The robot will repeat the tasks as often as necessary based on the steps learned and the basic IT system. Advantages offered by robotic automation are as follows:
- Minimal human resources required for repetitive tasks
- Short implementation times with manageable effort
- 24×7 performance
- High flexibility as a result of fast, easy setup
What Robots Can’t Do
Although robots offer various financial benefits they also present a downside. Robots typically work on the user interface level i.e. the surface of an IT system. If the underlying systems are changed the robots must also be replaced. Robots use only the existing system with all functionalities and restrictions. It can work only as much as the underlying system allows, so if the system setup is poor or includes many restrictions it will try to mitigate these limitations. The same issues exist with un-harmonized and standardized processes where separate robots might be necessary.
The financial industry is greatly reliant upon documents and RPA is a solution that can help manage and retrieve information and enable streamlined functioning. Just as outsourcing data entry significantly helps in reducing the need for in-house data entry personnel and ensuring optimum results, robotics can also prove to be advantageous for the organization. Regulatory authorities welcome RPA implementation at financial services firms because tasks can be undertaken at high speed, and a uniformly high level of quality can be assured. All the same, robotics will not replace the need for human skills and oversight in the risk and compliance functions. Risk and compliance professionals may welcome robotics to replace their mundane and manual tasks. They will also appreciate the insight that robots can bring to their existing roles. There is no doubt that RPA is the next probable step in the evolution banks can consider to reduce costs and increase control and consistency of execution. RPA can standardize tedious, manual tasks and ensure increased control and accuracy. Alongside eliminating the need for some job positions, it can free up compliance employees to perform more high-value and interesting work. The financial sector can implement workforce virtualization via robotics and bring about remarkable transformation and increased revenue.