Did you know that, on average, human error in the banking sector costs $878,000 per year and results in 25,000 hours of wasteful rework? It’s no surprise that banking institutions want to turn things around.
Switching to Robotic Process Automation (RPA) development solutions is one alternative. According to a McKinsey report, RPA can automate more than 30% of processes in around 60% of occupations.
So, what all tasks in your banking or financial institution can you automate? How do you get started with RPA in banking when you’ve decided on the functions?
Prepare to dive into everything there is to know about Robotic Process Automation in the banking industry.
What Exactly is Robotic Process Automation in the Financial Sector?
In the financial sector, RPA is defined as robotic applications to supplement or replace human operations.
RPA assists banks and accounting departments in automating repetitive manual operations, allowing employees to focus on more essential activities and gain a competitive advantage.
A basic rule-driven Robotic Process Automation is restricted in what it can perform. It just follows the rules to complete things consistently. For example, it can log in to an account, move files, and log out.
Banks use intelligent automation to improve RPA by incorporating artificial intelligence technology such as machine learning and natural language processing.
RPA software can manage complex procedures, comprehend human language, discern emotions, and adjust to real-time data as a result of this.
RPA’s Advantages in Banking
Various industries, such as health care services, production, and insurance, use Robotic Process Automation.
As per Gartner, 80% of financial sector leaders are currently utilizing RPA for various functions. The following are some of the most notable advantages of financial process automation:
- Allows you to seamlessly scale operations as needed: Robots can operate for extended periods and don’t require breaks. During peak hours, they can handle increased request volumes.
- It helps you save time: When properly configured, a robotic application can cut the time required to complete specific tasks by up to 90%.
- Assists in reduction of costs: RPA deployment, according to Deloitte, will result in a 30% cost savings. Accenture is more upbeat, predicting an 80% cost reduction using robotics in finance for specific jobs.
- Guarantees that no additional infrastructure costs are incurred: Implementing RPA in finance and banking does not necessitate significant infrastructure modifications. It’s an overlay that sits on top of current banking software.
- Increases the efficiency of human employees: According to studies, robots can do tasks up to five times faster than humans. As a result, workers don’t have to waste time and energy on mundane tasks, allowing them to focus on more rewarding tasks, improving employee well-being and job satisfaction.
- Reduces the possibility of human error: Financial RPA follows a systematic approach to completing its assigned duties. It will improve output quality by removing errors that regular employees may make due to human nature, such as failing to pay close attention to the job at hand.
Applications of RPA in Banking
RPA offers a number of uses in the BFSI market to free up the workforce to work on more vital duties. The following are some of these applications:
Dedication to Customers
Every day, banks respond to a number of inquiries spanning from bank account details to application progress to balance information. It becomes challenging for banks to react to queries with a quick response time.
Such rule-based processes may be automated with RPA to react to requests in real-time and cut turnaround time to seconds, freeing up human employees for other vital duties. RPA can also help solve queries that require decision-making with the assistance of artificial intelligence.
Chatbot Automation uses natural language processing (NLP) to enable bots to understand and respond like people when interacting with consumers.
As the heart of the economy, banking is heavily regulated and must conform to numerous regulations.
RPA improves the quality of the compliance process by increasing productivity and ensuring availability 24 hours a day, seven days a week.
In the banking system, accounts payable is an essential but tedious operation. It entails gathering vendor data, authenticating it, and finally processing the payment. This does not necessitate any intelligence, making it an ideal application for RPA.
This problem can be solved using Robotic Process Automation and Optical Character Recognition (OCR) solutions.
The vendor details from the digital copy physical form can be read by OCR and provided to the RPA system. RPA will compare the data to what is in the system and then process the payment. It can alert the executive to any errors so that they can be resolved.
Processing of Credit Cards
Validating consumer information and approving credit cards used to take weeks in traditional credit card application procedures.
Customers were dissatisfied with the extended wait time, and banks were incurring costs as a result. On the other hand, banks may now complete the application in hours, thanks to RPA.
RPA can communicate with several systems simultaneously to validate data such as required documents, background checks, and credit checks, and then make a decision based on rules to approve or reject the application.
A mortgage loan in the United States takes about 50 to 53 days to process. Credit checks, repayment capacity, employment authentication, and inspection are all part of approving a mortgage loan. A slight blunder can cause the procedure to slow down.
The process is based on rules and checks and so RPA can speed up the process and eliminate the bottleneck, reducing processing time from days to minutes.
Detection of Fraud
One of the critical concerns of banks with the adoption of digital technology is fraud. It is challenging for banks to keep track of all transactions to detect probable fraud.
RPA, on the other hand, can track transactions in real-time and raise the red flag for possible fraud transaction patterns, reducing response time.
RPA can help prevent fraud by restricting accounts and halting transactions in some circumstances.
Automation of Reports
Like all other publicly traded organizations, banks must generate reports and deliver them to their stakeholders to demonstrate their performance.
Given the report’s significance, there is no way the bank could make a mistake.
While RPA systems give data in various formats, they may also draft reports by auto-filling the available report format, resulting in error-free reports and taking the least amount of time.
Process of Account Closure
With such a large customer base, it is expected to receive account closure requests every month. Account closures can occur for various reasons, one of which is when a client fails to deliver required papers.
It’s simple to keep track of such accounts, send automated reminders, and schedule calls for mandatory document submissions with Robotic Process Automation.
RPA can also assist banks in closing accounts in unusual circumstances, such as when customers fail to present KYC documentation.
In banking and finance, Robotic Process Automation is a continuous process. You can’t automate everything at once, so picking a starting point thoughtfully is a good idea.
In other words, start off small using realistic sub-processes/tasks. Define them on your process map, rank them based on the benefits of automating them, then create and record a set of probable case scenarios for the workflow you’ve chosen.
Basic chatbots can perform highly repetitive operations like allowing consumers to order new bank cards and update PIC codes, while intelligent automation may handle more complex jobs like evaluating past client data to identify suspicious transactions and sending alarms.
After you’ve automated the most time-consuming processes, you can work your way up to full automation at your leisure.