Business Process Automation in Banking & Finance
Banking & Financial Services
The Banking and Financial Services industry is the largest consumer of Information Technology Products and Services to the tune of $487 Billion globally, according to Gartner. Even with the most sophisticated software — whether it be Marketing Automation (MAS), Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), Accounting G/L or SAAS based systems — organizations face challenges where disparate internal and external systems are not integrated, creating lots of manual business processes around them.
These challenges created the $63 Billion Business Process Outsourcing Industry, in which BPO providers primarily use the offshore labor arbitrage to drive costs down. But any labor arbitrage based model has its limits. As the industry hits the maturity cycle, wage inflation combined with productivity loss erodes the cost benefits gained. What can a Banking or Financial Services organization do about this?
Automation technology can challenge existing BPO models, helping enterprises drive productivity and cut operational costs. In many cases, intelligent bots can be trained to perform BPO functions without data and process knowledge ever leaving the physical boundaries of your business.
Many Retail & Commercial Banking business processes can be improved with automation technologies. Below are several major use cases:
Customer On-boarding & KYC (Know Your Customer)
Financial Institutions require customers to provide information about themselves and their financials in various forms (via website, physical forms, mobile platforms, third party platforms etc). The customer information goes through the bank’s internal processes as well as processes that require regulatory compliance with external agencies. Such processes may include background checks, identity verification, financial fraud and AML (Anti-Money Laundering) checks. All this requires data to be entered and pulled from different internal and external systems, which traditionally entails staff spending time on these repetitive tasks. Smart Automation Robots can be trained to perform these tasks the way a human would. These intelligent bots push and pull data from multiple systems and follow a rules-based workflow. By integrating Machine Learning and AI, the bots can also be trained to “read” various documents in whatever format they exist.
RPA can also “integrate” systems together at UI/surface level without developing costly low-level systems integration investments.
Most Mortgage Lending processes revolve around multi-channel Loan Origination platforms, Document Imaging & Management Systems, 3rd party Service Provider data push/pulls, G/L systems etc. The cyclical and highly regulated nature of the Mortgage Industry also affects the level of consistency in Mortgage technology investments.
The Mortgage origination process also differs based on the size of the Lenders and the current state of the secondary market’s regulatory environment. Before the financial crisis of 2008, the secondary markets (MBS market) were dominated by private banks but are now dominated by government sponsored entities (Fannie Mae, Freddie Mac, etc.), requiring banks to operate in a different regulatory environment. Over time, markets may be deregulated again and compliance procedures may change once again.
Due to such challenges, it’s rarely feasible to make technology investments where implementations span multiple years before business is able to reap the rewards of such investments. This is where RPA and Cognitive Technologies can solve a lot of “low hanging fruit” problems.
Use cases include:
- Using RPA to quickly enable 3rd party data push/pull (Employment/Asset verifications, Credit Reports, Tax Returns, Appraisals, OFAC, etc.)
- Using RPA instead of traditional time consuming SDK/API for systems integration where real time high speed integrations may not be required. For e.g. capture loan application using various channels and run automated batch processes in the back end to push/pull data into various systems
- RPA Bots can assist Call Center Operators with Case Management by pushing/pulling data with minimal or no manual intervention
- Post Close Loan QC reviews
Credit Card Operations
Use cases include:
- Capture Credit card applications from multiple channels and process them into the Bank’s core systems of records
- Lost/stolen card case management. RPA Bots can assist Call Center agents with pushing/pulling data from various systems of records to get the Case processed quickly. Take, for example, the debit card data breach issue. With a Bank’s human resources keying in the data, let’s say it requires 100 hours at $18 an hour ($12 plus benefits). The total of $1,800 would be only the hard cost. What would that employee accomplish over those 100 hours when freed up by RPA software?
In general, a software Robot can do same amount of work as about 6 humans.
Core Banking Operations
The Back Office Core Banking Operations where RPA technology can boost significant productivity includes
- Customer data updates, address changes etc
- Accounting Reconciliations
- Check Validation Procedures
- Overdraft protection involving 3rd party system integration and Bank’s internal processes
Audit, Risk & Compliance
Seasonal audits are always ongoing and Risk & Compliance is always a moving target. Although many Banks have invested significantly on IT to automate the business processes involved, the fact remains that many of the IT investments can’t keep up with the ever evolving nature of these processes. The promise of RPA technology is quick to implement and quick to change. This allows banks to react quickly to such changes
- AML & Fraud checks using bank’s internal processes and 3rd party Data Push/Pulls
- Risk Reporting
- Data Quality
- Internal Controls testing