RPA in Banking and Financial Services: Exploring the Feasibility and Benefits

With the changing business paradigms, CTOs, CIOs, and other key decision-makers in the finance sector often find themselves at a critical juncture. The urgency to transcend conventional business models by embracing disruptive technologies is no longer a choice but a strategic mandate.

Robotic Process Automation presents itself as a formidable growth catalyst poised to revolutionize the way financial processes are executed whilst empowering institutions to recalibrate their operational prowess. No wonder, 80% of finance leaders have implemented or are planning to implement this emerging technology in their operations. What’s more interesting to note is that one RPA bot can displace up to 30 times the work done by a full-time human employee. Embracing this disruptive technology usually costs one-third the cost of an offshore employee and one-fifth of an onshore employee. Furthermore, the global market size of RPA in financial services is estimated to reach 4883.41 million USD by 2030.

Key Challenges for Adopting RPA Solutions in Banking and Finance

Robotic Process Automation has positioned itself as a disruptive force poised to revolutionize the banking and finance sector. However, as with any substantial leap forward, this technological transformation is not without its set of substantial challenges that demand careful consideration and strategic planning from decision-makers to successfully navigate the intricate landscape of RPA adoption within finance.

1. Compatibility with Legacy Infrastructure

When implementing Robotic Process Automation in finance, one of the common challenges that banking and financial institutions have to deal with is the legacy infrastructure. Today, a large number of institutions still rely on legacy systems that have been developed in the 1970s. In fact, 43% of banks in the United States use COBOL, a programming language developed in the 1950s. Integrating RPA technology with these legacy systems can be intricate and may pose compatibility issues. Therefore, it is strongly recommended to meticulously evaluate the adaptability of RPA solutions to coexist with the legacy infrastructure on which the core systems of the banking and finance institutions operate. This will help in ensuring a seamless integration process whilst maximizing the benefits of automation.

2. Resistance to Change

Though the positive impact of Robotic Process Automation solutions has been recognized globally, many banking and financial institutions are still hesitant to embrace this disruptive technology. A research report by ACCA and CAANZ states that 45% of respondents from leading financial organizations admitted resistance to change is holding them back from implementing it into their operations. This indicates that despite the technology’s maturity, its adoption has become a key challenge. It’s important to note that RPA adoption is just the tip of the iceberg of the enterprise-wide automation strategy and a complete shift in mindset and change management is required for successful implementation. In other words, decision-makers need to consider change management strategies that include exhaustive training programs to ensure easy acceptance of Robotic Process Automation within the organizational culture.

3. Regulatory Compliance

Banking and finance is one such sector that operates in a highly regulated environment. Implementing Robotic Process Automation within such an environment can be intricate and pose a slew of challenges. Therefore, it is strongly recommended to conduct a detailed analysis of how RPA solutions align seamlessly with industry-specific regulations. In other words, decision-makers need to make sure that these disruptive solutions adhere to stringent laws and compliance standards.

Redefining Finance With RPA: The Key Benefits Businesses Can’t Afford to Ignore

RPA has brought a paradigm shift in the finance industry by offering a multitude of business benefits from improving customer experience to streamlining operations, eliminating human errors, driving productivity, and more. Listed below are some prominent ones:

1. Better Scalability and Flexibility

RPA bots are designed to scale seamlessly making it ideal for banking and finance institutions to manage huge volumes of transactions during peak business hours. Besides scalability, it also offers increased flexibility to quickly adapt and meet changing business demands without compromising efficiency. Adopting this emerging technology empowers banking and finance institutions to focus more on innovative strategies and respond to any situation in a record time.

2. Increased Operational Efficiency

Once intelligent bots are implemented successfully, banking and finance institutions can automate mundane, repetitive, and manually intensive tasks with great precision and unparalleled speed, which in turn, makes their processes more efficient. By freeing human resources from rule-based tasks, this emerging technology enables an organization to restructure its workforce to higher-value functions, resulting in increased operational efficiency.

3. Significant Cost Savings

The automation of labor-intensive tasks with the help of Robotic Process Automation solutions translates into substantial cost savings. In other words, automation of redundant, manual, and rule-based tasks that would otherwise require significant manpower allows banking and finance institutions to cut down on high operational costs and reinvest those funds into more strategic growth initiatives. RPA in finance can save 25,000 hours of avoidable work per year and reduce costs by up to 75%. The interesting thing to note is that Accenture provided an optimistic forecast and suggested an 80% cost reduction with robots in finance.

RPA Use Cases in Finance

I. Invoice Processing

Businesses operating in the finance domain manage invoices daily. It is a tedious and time-intensive task that presents a constant challenge for professionals working in the back-office department since invoices are received or generated in diverse formats. With RPA implementation, finance institutions can minimize the need for human intervention by automatically processing invoices. This not only minimizes discrepancies but also accelerates payment cycles, strengthening the integrity of financial transactions.

II. KYC Compliance

Knowing your customer is another tedious and time-intensive task that banking and finance institutions need to perform for every customer, and it costs them 384 million USD to perform it in a compliant manner. Incorporating Robotic Process Automation in finance can help institutions automate the entire KYC process, which in turn, reduces costs whilst accelerating customer onboarding and improving customer experience.

III. Financial Reporting

One of the easiest ways to monitor financial performance is by generating reports that reflect profit and loss. However, updating P&L on a daily basis is tedious and time-consuming. The good news is that RPA bots can automate this task and generate reports in the desired format in real-time. Besides preparing P&L reports, these intelligent bots can come in handy for:

• Income statements
• Variance analysis
• Balance sheets
• Financial close processes
• Management reports

Summing Up

RPA can be a real game changer for banking and finance institutions since it empowers them to improve operational efficiency, reduce costs, and automate a wide range of tasks that are repetitive and time-intensive. If you are also planning to implement this emerging technology, it’s strongly recommended to partner with a professional company that has rich expertise and experience in RPA tools & technology.