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  • RPA in Banking: Keeping up with the Fintech Players

    Published on May 23, 2022

     RPA offers the potential to change the working model of banks by automating back-office processes across geographically dispersed branches. Many critical operations in the banking industry such as account opening, KYC, fraud claims, customer service, and compliance can be effectively automated to reduce operational cost. This can help banks to drive better turnaround on delivery, improve customer experience, and simplify transactions.

    Customers are increasingly getting used to customized offerings and the convenience of making online purchases through smart devices. This has inadvertently raised their expectations from banks to offer the same convenience in their user experience. Unfortunately, for banks, this lacuna in customer expectation and delivery is being serviced by upcoming fintech startups who have the agility to use emerging technologies to introduce customized business solutions and offer better customer touchpoints.

    For Banks, a big challenge against these fintech start-ups is its inability to achieve operational efficiencies in its back-end processes which, in turn, inhibit the level of front-end system enhancements that can be made to improve customer experience. RPA plays a critical role in empowering them to rapidly automate their business operations and effectively transform their overall experience delivery.

    Fortune Business Insights study suggests that the global robotic process automation market is expected to grow from USD 1.61 billion in 2021 to USD 7.64 billion in 2028 at a CAGR of 25 percent in the forecast period.

    Over the last decade, banks and financial institutions are reported to have spent more than $321 billion on compliance operations as well as penalties. Banks are losing millions just on compliance operations. Almost 10 percent of a bank’s operating cost is attributed to compliance costs. Increasing operating expenses, fuelled by regulatory fines along with fierce regulatory mandates slow processes down and result in a poor delivery of customer experience. RPA can enable banks to streamline processes, reduce errors, and comply with regulatory mandates to reduce penalties, and enhance the overall consumer experience.

    Banks must start with a top-level sponsorship for such automation initiatives. Usually, such initiatives are faced with resistance from stakeholders due to fear of job losses and the general inertia associated with any change. Also, technology initiatives fall under the domain of internal IT and don’t get much cooperation from others. To curb these challenges, banks can partner with a Managed Services Provider that can guide them with a right mix of processes that must be streamlined and automated to enhance process efficiency. It helps banks to push technology initiatives to MSP, with focused imperatives that align with their business objectives.

    Banks can start by automating operations of customer-facing products and services such as Current/ Savings Accounts (CASA), Fixed Deposit, Cards, UPI, etc. and try to streamline them to offer better experience to the end-customer.

    Banks have applications that are used by different processes internally in silos. For instance, for a Fixed Deposit opening/closing process, a customer calls the support center, the executive raises a ticket in the CRM, the data is then fetched by the operations at the end of day and the query is executed i.e. account is either opened or closed. In case of account closing, the details are then sent to the finance process to disburse the balance amount to the customer. The process is manual, time consuming, and prone to errors. It also leads to a delayed experience. RPA can help to automate processes end-to-end by creating a communication between internal applications, so that requests are executed in real-time, with 100 percent accuracy and no involvement from stakeholders. This leads to a faster service delivery and helps in better engagement rate and overall NPS. It also helps the banks as its employees can now focus on more productive tasks that are aligned with business objectives. Other internal processes such as fraud detection, report generation, ID creation can be automated by RPA as well.

    Conclusion

    RPA has been a massive contributor to accelerate the speed of work, reduce manual load on processes and enhance accuracy to comply with regulatory mandates. RPA will help banks to improve the efficiency and efficacy of their business in terms of security, data consistencies, regulatory process, and operational elasticity. RPA, along with machine learning and artificial intelligence, will define the success of banks for many years to come and will help them to stay ahead of their Fintech brethren.

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