What does Robotics mean?
With the proliferation of computer processing power, technology has reached a point where its ability to perform human-like task has become possible. Most think of robots as physical humanoids acting as human and interacting with humans, or big machines with long arms making car parts (think Toyota factories). There are also “bots” which refer to non-physical robots, such as software. These include the “chatbots” that everyone is talking about today, that are designed to simulate an intelligent conversation with one or more human users via auditory or textual methods.
When we talk about robots in the service industries, we essentially are talking about bots. There are various names for referring to robotics in service industries such as Rapid Automation (RA), Autonomics, Robotic Process Automation (RPA, preferred term for this article), Intelligent Process Automation or even plain Artificial Intelligence, but all these terms essentially refer to the same concept: letting organizations automate current tasks as if a real person was doing them across applications and systems. Functional trained robots are virtual workers and execute rule-based information processes, improving accuracy and efficiency.
What a lot of leaders currently regard as “automation” is likely driven by core IT investments (i.e., the implementation of specialized enterprise apps such as ERP, CRM or BPM). All of these can drive automation — but not to the level that RPA can by mimicking human actions at the software presentation layer or user interface (GUI), and interacting with multiple applications, just as a human would.
What are the benefits?
RPA in the banking industry can extend the creative problem-solving capabilities and productivity of human beings and deliver superior business results. Thanks to this technology, employees have the potential of attaining new levels of process efficiency, leaving behind the repetitive and time consuming low added-value tasks, to reduce operational costs and increase speed, accuracy and throughput volume for the organization.
Beyond obvious cost savings, the benefits from implementing RPA include:
- High quality by a reduction of error rates
- Time savings via better management of repeatable tasks
- Scalability by improving standardization of process workflow
- Reducing friction (straight-through processing)
- Non-intrusive integration by reducing the reliance on multiple systems/screens to complete a process
What is also worth noting is the low amount of initial investment needed to start benefiting of such cost savings, when comparing to IT integrations or outsourcing strategies. Investment in RPA usually has a short payback period given it approximately takes $20k per robot (with the assumption that an average project would require a 4-man-weeks effort and at a daily rate of $1000, and this excludes any running costs such as licenses for maintenance, server costs and any virtual desktop costs) and has a very quick go to market (in some instances, the development of a robot can be done in a few hours).
What are the use-cases?
This new domain is still at its infancy but we can start seeing some use cases today. In India, the country’s largest private lender ICICI became the first in the country to deploy robotics. The bank has re-engineered 200 business processes with software robots that are configured to capture and interpret information from systems, recognize patterns and run business processes across multiple applications to execute activities including data entry and validation, automated formatting, multi-format message creation, text mining, workflow acceleration, reconciliations and currency exchange rate processing among others.
BNY Mellon has a dedicated RPA team using Blue Prism® to program bots with rules that let them perform research on orders, resolve discrepancies and clear trades. It takes a human five to 10 minutes to reconcile a failed trade. A bot can do it in a quarter of a second. In addition to being faster, bots can work at night, saving employees from having to work night shifts. They can handle overflow when a stream of work outpaces the available staffing.
Further use cases that could be overtaken by Robotic Process Automation:
On KYC for instance, the setting up of a robot can start by instructing the robot to gather information to verify the customer ID automatically, step by step. The robot can then be taught to extract this data and pass the customer information to populate the on-boarding application. The bank employee would log into the system, see the work in their queue and select the account they want to work on. The bank employee sees the results, and upon review notices issues with the customer identification, along with notes highlighting various discrepancies and additional details. From there, only exceptions would require manual review, the rest could be submitted for STP (Straight-Through-Processing) without any employee interaction.
RPA companies landscape
Here is a non-exhaustive list of companies providing RPA solutions:
Final word
Over the past years, businesses in the U.S. and Europe have sought to reduce their operating costs and increase their overall efficiency by standardizing, centralizing and sometimes outsourcing a wide range of processes. Over time, more complex and sensitive processes became candidates for “industrialization”. We see Robotic Process Automation as the next step in the approach to reduce costs while also increasing controls and consistency of execution. Robotics come also with changes in the organization: the need to monitor robots (‘Control Tower’ of humans), how to handle the Business Continuity Plan, etc.
Overall we can anticipate that the adoption of robotics in banking will be evolutionary. While its rapid adoption is almost inevitable, leading firms will use it as a way to not just reduce costs, but also to improve controls and improve the effectiveness of their staff, making them more productive and valued within the organization.
Even though RPA adoption comes with inherent challenges such as misplaced expectations and resistance from employee unions, it is emerging as a major game changer.
