With emerging digital technologies, changing government policies and increasing customer expectations, the banking industry is witnessing constant changes. The competition is fierce due to the new technology-aided processes and customer expectations are higher than ever. Transformation initiatives within the banking industry are shifting their focus – right from products and processes to customers and their individual requirements. Customers now expect consumerised bite-size services that banks are increasingly introducing. Efficient data collection and management is fundamental to improve business processes and banks look forward to automate their data processing with the support of professional data entry services. Rapidly evolving customer demands and a hyper-competitive environment mandate the replacement of complex transaction processing processes with more user-friendly, value-adding platforms focused on intensifying customer connection. Internally, the challenge is to maximize efficiency, keep costs as low as possible and maintain increased security levels. To keep up with these new challenges, Robotic Process Automation (RPA) has become a powerful and effective tool. RPA has the potential to change the banks’ working model by automating many of their back-office processes.
Robotic Process Automation (RPA) refers to technological solutions relating to business process automation using software bots or artificial intelligence workers. Traditionally, workflow automation is carried out by a software developer who creates an action list and writes code or uses software APIs to automatically run internal tasks according to a pre-defined sequence.
How Does RPA Work in the Context of Banking?
Robotic process automation (RPA) is growing exponentially. According to P&S Market Research, the global robotic process automation market is projected to reach $8.6 billion by the end of 2023. In the banking industry, robotics process automation (RPA) is gaining traction, with adoption rates increasing pace since mid-2016. Robotic process automation refers to technological solutions related to business process automation using software bots or similar virtual assistants which are programmed to complete repetitive and labor-intensive tasks. Banking is one such industry vertical that has numerous possible applications for RPA.
The novel technology has dramatically streamlined a wide variety of back office processes that had once bogged down bank workers. Upon implementation, the bots take charge of the operational processes that involve opening of applications, transferring information, responding and interacting on emails, and other complex tasks that otherwise need a larger workforce, and are considered to be time-consuming. In fact, RPA in banking can directly reduce the need for repetitive manual work tasks, data reconciliation, and transcription – up to 70 percent.
Benefits of Using RPA in Banking
Nowadays, retail and commercial banks are equally facing increased pressure from the management, shareholders and external competition to reduce costs, enhance product quality and accelerate the processing of back-office work. RPA can help banking operations management to tackle the large-scale routine data processing tasks, when paired with the right type of process analysis. The financial benefits of robotics in banking depend particularly on the specific improvement it brings in both back-office processes and the customer experience improvement.
The benefits of the digital workforce and RPA in banking industry can be best explained with the help of a real-world example. From the very first second a new customer walks into a bank, he/she is continually assessing and changing their opinion about the bank. There are several rises and drops in the degree of user experience and every single action and interaction with the bank has a prominent role to play here.
For the very first step of opening an account, many banks rely on manual form filling, which is a cumbersome process and leads to manual errors and unexpected delays which cause user frustration. Manual approvals and verifications often take days, especially when KYC (Know Your Customer) regulations for user identification are being studied. This is where robotic process automation comes into the picture and makes a vital difference by integrating with each step and making things simpler and more effective.
Here discussed are some of the benefits of using robotic process automation (RPA) technology in banking –
- Automating data accumulation and entry – Data accumulation and entry can be a monotonous and labor-intensive process in the banking business and RPA can help simplify this process. Integrating robotic automation technology into the data entry pipeline can speed up the manual data accumulation process. Bots can carry out a large percentage of manual work, access systems and applications, collect data from various systems and conduct analysis, allowing you to make better decisions. Other specific mechanisms whereby RPA can support data accumulation include – reducing data entry headcount, speeding up the time allocation, automating the data cleansing and pre-processing requirement and enhancing the error checking and data correction capabilities of the organization.
- Uninterrupted internal/customer service – As banks deal with multiple queries ranging from account application status, loan enquiry, and account balance information and so on, it becomes extremely difficult for the customer service team to handle all these enquiries within the required turnaround time. RPA can automate such rule-based processes to respond to queries in real time and reduce turnaround time thereby freeing up customer service team for more critical tasks that focus on improving the customer experience. AI-enabled RPA chat bots – made available online throughout the day – can help handle requests and send automated messages/alerts to customers when necessary. Internally, bots can be used to resolve customer issues like setting up new accounts, resetting a password, creating new lines of credit and providing investment advice. Everything from loading a customer’s profile and reviewing payment history to finding a fraudulent activity can be done within seconds using a bot.
- Credit application processing – Earlier, credit card application processing was a time-intensive process where it used to take weeks to validate the customer information and approve credit cards. The long waiting period often resulted in customer dissatisfaction which eventually led to a customer cancelling the request. However, with RPA banks can now process the application within hours. RPA uses “Neural Network-enhanced Optical Character Recognition” for document processing and machine learning techniques to validate information such as documents required, background checks, credit checks and decide whether the customer application need to be approved or not.
- Improved compliance – Banking sector businesses need to follow many strict rules and regulations. In a highly regulated industry like banking, approving loans, mortgages and making investments – a system that for enhanced compliance is highly valuable. By integrating RPA technology, banks can be assured of improving data accuracy and compliance.
- Accounts payable (AP) – AP is a simple, but boring process in the banking system that requires digitizing invoices from the vendors. It requires extracting information from all the fields in the invoice, validating it, and then processing it for payment. RPA with the help of optical character recognition (OCR) solution can solve this problem. OCR can read the vendor information from the digital copy physical form and provide information to the RPA system. RPA automates this process by validating the information with the information in the system and process the payment to the vendor’s account after reconciliation of errors.
- Mortgage loan – In the United States, it take approximately 50-53 days to process a mortgage loan. The process of approval goes through various checks like credit checks, repayment history, employment verification and inspection. With RPA, banks can now accelerate the process based on set rules and algorithms and clear the delays or complications to reduce the processing time to minutes from days.
- KYC process – Know Your Customer (KYC) is a mandatory process for banks to perform necessary checks on the customers. According to “Thomson Reuters”, banks spend more than $384 million per year on KYC process compliance. Considering the cost of the manual process, banks have started using RPA to validate customer data. With increased accuracy, the entire process of validating consumer data can be completed within hours with minimal errors.
- Report automation – Banks need to prepare monthly or yearly reports to evaluate the performance. RPA helps banks in preparing reports with accurate data. It gathers information from various sources, validates it, arranges it in an understandable format, and schedules it to be sent to different sources.
- Account closure process – Banks generally receive several requests to close the accounts on a monthly basis. Considering the high volume of data handled by the bank and the checklist they need to adhere to, the scope for human error also increases. With RPA, banks can send automated reminders to the customers asking them to furnish the required documents. It can also process the account closure requests in the queue based on set rules within a short duration with maximum accuracy.
The banking industry, (especially retail banking) is preparing for a paradigm shift through effective implementation of RPA. Currently, the RPA technology in the banking sector is largely based on frameworks developed earlier. However, the future will witness robotic platforms shifting radically to a more UI centric automation process. With the evolving speech and gesture recognition tools, the way transactions are processed will increasingly depend on the end customer level.
RPA adoption does not mean the end for banking jobs; rather it will free human resources to focus more on value-based roles. With so many advantages, banks must consider RPA technology, along with data conversion for change. RPA can provide the edge over competition with reduced cost and improved efficiency for significant growth in business. However, many banks still rely on manual processes. Back office outsourcing services provided by a reputable BPO company helps handle routine back office tasks thereby reducing the costs and enabling more focus on core competencies.