RISE OF DIGITAL LABOR IN FINANCIAL SECTOR

April 25, 2020May 5, 2020 Ankita Kapoor

Robotic Process Automation (RPA) and its IMPACT on the Financial Sector

Over the years, the global economy has seen a steep growth enabled by emerging technologies. From market place transformation to robust international trade, technology has been a catalyst that wielded major influence on the contemporary business environment.

Evolution of the tech-world, AI and Automation have fostered various business solutions. RPA, robotic process automation has been one of its recent subsets. It is a form of business process automation technology. RPA uses artificial intelligence to execute repetitive, rules-based and back-ending tasks. It enables organisations to automate structured functions and allows increased focus on core business activities, resulting in meeting customer expectations and improved management. Thus, calling it robotic, emphasizes the utility of a machine that can stand in for a worker and handle disparate, discrete chores.

This concept has been around earlier in the form of screen scraping which now done by observing user actions in GUI, performs automation by repeating those tasks directly in GUI. RPA tools have stronger technical similarities to GUI testing tools. It enables automation in products that might not feature APIs.

In contrast to other traditional IT solutions, RPA impacts business operations by reducing operational costs by replacing human workforce in high frequency with reduced processing time for repetitive tasks. It leads to 40%-70% cost-saving. It has been designed to perform tedious and monotonous functions that does not correlate to human intelligence. Thus, lending operational efficiency and enhanced productivity, simply by performing better, cheaper and faster than human labour.

DEPLOYMENT

In the era of Digitalisation, Financial Sector has been one of the extensive users of technological solution to revitalise the way it delivers better customer experience. The industry players have been leveraging RPA and AI software into their business practices which reaps benefits of automated processing, precise financial forecasting, personalised financial services for the customers, accurate analytics, customer data management and fraud protection.

Financial services organisations, AMP, ANZ and Westpac, were among a host of leading Australian financial institutions that announced plans to leverage robotics, back in 2016 to automate time-consuming processes, allowing employees to redirect their focus to solving more complex problems.

Analysts Gartner released their first ‘Magic Quadrant’ guide for RPA at the start of the year, revealing that this class of enterprise software is the fastest-growing application sub-segment it tracks, with year-on-year growth of more than 63% in 2018.” According to one global study by Deloitte, “having RPA will become “mandatory” in order to maintain competitive advantage, going forward.”

A recent Gartner article piece provides, “And given that the research now estimates that global appetite for RPA solutions will reach $1.3 billion this year, it’s no surprise many large company chief information officers (CIOs) are looking at RPA’s potential. Indeed, some of the biggest adopters of RPA are banks and building societies.”

To seize this opportunity, banks and financial institutions must adapt a strategic approach.

“A second wave of automation and AI in the next couple years where machines & software bots will execute 10% to 25% of tasks across a myriad of bank functions, expanding the overall capacity and giving the workforce an opportunity to focus on higher-value tasks and projects.

The exponential growth of RPA in financial services can be estimated by the fact that the industry is going to be worth a whopping $2.9 billion by 2022, a sharp increase from $250 million in 2016 …” Mckinsey report states.

Banking and Financial Institutions have always been known for their lengthy, manual processes which eventually results in delayed services and negatively impacts customer satisfaction levels. RPA can enable financial institutions and Cos to reduce manual efforts, compliance fulfilled and mitigate risk without any additional infrastructural cost and its low-code approach.

Integration of RPA with Banking process, serves as a useful tool to furnish:

Automatic Report Generation
Customer Onboarding
KYC and Anti -Money Laundering
Account Opening
Mortgage Lending
Credit card processing
Loan Processing

CAPITALIZE

RPA once set up and implemented correctly with required employee training, structured inputs, and governance, the bots become the digital workforce. In hand comes the benefits of scalability, cost-effectiveness, business growth with legacy data. Faster and Custom reporting and automate customer query resolution are additional buy-points. Robotic process automation (RPA) helps banks & financial institutions increase their productivity by engaging customers in real-time and leveraging benefits of robots. A 2016 PwC survey found that,

“two-thirds of financial services companies are leveraging RPA internally, while many others have turned to outsourcing vendors, many of which are themselves utilizing RPA.”

Automation in the finance sector is not new. Similarly, small and medium organisations face a limitation in terms of cost and human resources. As a result, with rising operating expenses, compounding regulatory dues and compliance of statutory requirements, business processes slow down. There obvious resort is to reducing cost by striving operational efficiency and outsourcing business processes. While this market sector may be dominated by financial giants, midmarket financial enterprises can gain plenty by investing in the technology. RPA is readily scalable to midmarket enterprises, where it delivers the same efficiencies and helps balance the playing field between smaller firms and their larger competitors i.e. transforming to digital labour technology.

Today, transition to RPA is creating unparalleled opportunities with customization, actionable information and better insights.

ARGUMENTS

Various arguments have been raised in association to risks of adopting RPA. Criticism includes creation of complex environment that requires timely maintenance and involves risks of stifling innovation. This has been denied on the grounds that RPA is a lightweight technology and its low code approach. RPA platforms are supported drag and drop development, which is easy to understand and develop workflows.

According to Harvard Business Review, most operations groups adopting RPA have promised their employees that automation would not result in layoffs. Instead, endowing people with greater capacities and having them work symbiotically with technology and are assigned to focus on more significant tasks. One academic study highlighted that knowledge workers rather than feeling threatened by automation, embraced it and viewed the robots as team-mates. Every organization reports that it is dealing with bigger workloads, thus automation helps workers to be relieved. The same study highlighted that, rather than resulting in a lower “headcount”, the technology was deployed in such a way as to achieve more work and greater productivity with the same number of people

Employee now are more engaged by 72% of the participants and reported, 50 hours saved per month, per employee. According to a Forrester study, RPA improved efficiency by 36% and manual errors reduced by 33%.

As per GO-Gulf, an average of 40% switch jobs due to insufficient opportunities for skill enhancement and trainings. RPA takes the bot out of human, making room for extra time for gaining further training thus adding to the skill set and increasing worker retention. RPA merely shifts the demand for jack-of-all-trades employees to those with a more particular set of skills. With this its evident that, that widespread job displacement in the future will not be because of technology or automation, but due to our inability to train and upskill the workforce (& our ecosystem of employees, partners & customers) to embrace the positive impact of automation.

However, some analysts perceive that RPA has led to decline in the market of business process outsourcing (BPO) industry. A treatise provides that “Automation Technology will enable enterprises, to create high-value jobs for skilled process designers in onshore locations (and within the associated supply chain of IT hardware, data centre management, etc.) and decreases the opportunities for offshore workers. On the other hand, this discussion appears to be healthy ground for debate as another academic study was at pains to counter the so-called “myth” that RPA will bring back many jobs from offshore. The study of impact is still ongoing.”

INVESTMENT

Forbes foresees, RPA as one of the striking subject in enterprise technology sector these days.“ RPA software is appealing to organizations across the world, due to its quick deployment cycle times, compared with other options such as business process management platforms and business process outsourcing,” said Fabrizio Biscotti, research vice president at Gartner. As RPA adoption is elated, investors are flocking to the red-hot sector to make the best on high returns.

Last April, UiPath raised $568 million in a series D round of funding at a $7 billion valuation, led by hedge fund Coatue Management, with participation from Alphabet’s CapitalG, Sequoia, Accel, Madrona Venture Group, IVP, Dragoneer, Wellington, Sands Capital, and funds advised by T. Rowe Price & Associates. And last year, ‘Automation Anywhere raised $300 million from SoftBank at a $2.6 billion valuation.

Advances in RPA along with evolving AI, have the potential to change fundamentally the way enterprise workforces operate. RPA in all enterprise functions such as Customer Service, Operations, HR, IT and Finance can cause modified workflow designs and processes and create hybrid structures where robots and humans work together.

This understanding consequently shapes the opinion that with rise of RPA market, all industries infused with this technology are also at benefit. RPA’s use in financial sector creates opportunities for new impact projects and do it at a profitable margin.

RPA can be foretold as the future of enterprise automation and a key pillar of digital transformation strategy.

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