Bots and Banking: Staying Ahead of the Innovation Curve (Part 2 of 4)
When it comes to technological innovation, financial services firms have forever been trendsetters. Banks are now leading the way in robotic process automation, unleashing a new generation of machines on high-volume rote and routine work that are aimed at containing costs, accelerating time to market and, most importantly, keeping customers loyal and happy. (Part 2 of a four-part series)
The rise of intelligent machines has already begun. Like the cotton gin, factories and even offshoring before it, robotic process automation (RPA) is helping organizations to do more in less time, for less money and while freeing workers to focus on more constructive and strategic tasks.
Three Reasons for the Successful Union of Bots and Banking
While some industries are riper for opportunity than others, banking may be at the top of the most promising list. In fact, the pairing of bots and banking have really taken off in the last 18 months, if our engagements are any indication.
In our view, there are three reasons for this. See figure 1 below.
That said, among the three primary banking sectors — namely retail/consumer, wholesale/corporate and investment banking — the latter (especially trade settlement) appears to be gaining the most automation traction.
Like all financial institutions, investment banks operate in a very paper-intensive environment. By digitizing these workflows and asking automated bots to process more straightforward paperwork, however, much of this effort can be streamlined via automation.
Due to the sheer amount of paperwork involved, forward-thinking banks (investment or otherwise) are streamlining a wide variety of tasks, namely in instances of funding, credit, applications and anything else that requires multiple or otherwise painful handoffs.
In our experience, the most suitable tasks include one or more of the following:
High-volume transactional work (such as accounting or investment processes).
Low cognitive requirements (i.e. little to no creative, subjective judgment or complex interpretation skills needed to process).
Easily broken down into simple, unambiguous rules.
Prone to human error (i.e., matching numbers across multiple columns).
More specifically, robotic automation is seeing tremendous activity in compliance departments. Ever since the 2008 financial meltdown, governments worldwide imposed several new regulations and costly compliance rules. Since much of those rules include most (if not all of the above), compliance officers are turning to robotic automation to reduce costs and regain the compressed losses of recent years. (For more on this, read our Digitally Cognizant blog, “How Banks Can Use AI To Reduce Regulatory Compliance Burdens.”)
But it’s not just rote ordinary business or compliance tasks that bots are improving. When considering all the big data banks collect on customers, banks are applying automation to dig deeper and unveil insights into customer behavior that were previously unfathomable. In other words, these simple bots are learning to help banks to more intimately know, understand and predict future customer behaviors.
Despite their promise, banks face several bot roadblocks. Chief information and operations officers are rightfully concerned about the loss of knowledge base experts who understand the process. If routine work is farmed out to bots, how can they grow human talent from the bottom up to gain the expertise needed to take on more creative and strategic tasks?
So long as knowledge workers are involved in the setup, maintenance and continuous improvement of bot deployments, however, the above is more of a perceived fear than actual one.
In fact, when done properly (if not programmatically), RPA commands banks to understand the ins and outs of their business more than ever before and to utilize bots to augment, if not extend, human capabilities.
This article was written with insight provided by Cognizant Automation Hub thought leaders PVL Narasimhan, Prashanth Nandella and Arumugam Balamurugan. To learn more about automation, please visit the dedicated section of our website.