Financial services companies such as banks and insurance have been one of the early adopters of RPA.
In 2017, the Japanese financial giant, Sumitomo Mitsui Financial Group (SMFG), Inc., decided to improve their productivity and operational efficiency. Their goal was to reduce the operational costs by JPY 50 billion by the end of 2020 and JPY 100 million by mid-term.
They realized that the only way to meet this goal is by harnessing the power of Robotic Process Automation (RPA). SMFG has started to use RPA to automate compliance and risks, preparation of customer reports, and routine operational processes related to loans, currency exchange, etc.
RPA has enabled SMFG to save 400,000 hours of employee time.
According to Gartner’s 2019 poll, 80% of finance leaders have implemented RPA or are planning to do so in the future.
So, what makes RPA so popular among financial services companies?
Simplify Customer Onboarding
According to a survey by Deloitte, 38% of customers drop off the onboarding process due to paperwork, and the volume of information asked by financial institutions. Additionally, customers are also required to complete their Know Your Customer (KYC) and Anti-Money Laundering (AML) processes. This delays the process of onboarding and leaves the customers frustrated.
According to KPMG, over $228 million is spent on customer onboarding.
Financial service companies cannot afford to lose customers due to paperwork or a disengaging onboarding process. That’s where RPA can help. RPA can simplify the process by capturing data from the KYC documents using optical character recognition (OCR). This data can be compared with the one provided by the customer and can be accepted or rejected depending on whether all data matches. The entire process that would ideally take 2 or 34 weeks can be reduced to just a few days using RPA.
Danske Bank, for example, has been able to reduce its onboarding process from 30 minutes to a few seconds.
Maximize Productivity, Minimize Errors
Due to the huge amount of data that financial services companies handle daily, even a battery of employees cannot assure a 100% error-free process. Human errors are natural to occur, and human productivity is bound to be affected in the long-term. RPA, on the other hand, can work 24/7/365. It mimics the actions of the human workforce and automates manual, repetitive tasks such as updating records, validating customer details, report generation, etc. This leaves little scope for errors and can potentially displace up to 30x the work of human FTE.
Improved Customer Service
Financial services companies deal with hundreds of customers daily. To serve these customers better, companies have been started using RPA to automate their routine tasks. It frees up the employees to focus on more crucial tasks such as engaging with customers, building trust, and responding to customer’s queries. Companies have also been using RPA in customer service.
Take Royal Bank of Canada, for example, has been using smart chatbots to improve customer service.
High Adherence to Compliance
Finance companies operate in a highly regulated environment. A single oversight can lead the company to significant losses and bring disrepute. Considering that RPA is rule-based, it can flag any discrepancy in data or process and detect frauds at an early stage.
According to a survey by Accenture, 73% of compliance officers believe that RPA can enable them to improve the quality of the compliance process. In fact, a Deloitte survey showed that 85% of respondents thought that RPA met or exceeded their expectations in compliance.
A survey by CFA Institute revealed that automation had helped companies to reduce headcount in the asset management industry by 70% and save costs up to 40%.
Prudential Insurance, for example, used RPA to identify mismatches in information, validate if the two services were of the same individual, look for inversion of the policy number, and check if there was a loan on the policy. The automation process helped the company to save up to $500,000.
Leslie Willcocks, a professor at the London School of Economics, says that RPA can typically make an ROI of 30% to 200% for companies.
From helping banks to deliver a superior experience to customers at every touchpoint to simplifying claims processes for insurance customers, RPA can help financial services companies to transform into customer-centric companies that engage and not just sell to customers. It can move them from having a transactional relationship to a more meaningful engagement with customers.
Remember, RPA can make or break the way companies function. Hence, a careful need and process analytics is essential before taking a plunge.