According to Gartner “one in three jobs will be converted to software, robots and smart machines by 2025”. Based on our own research and analysis, we estimate that ultimately 15 to 20% of the workload performed by Investment Banks operations could be transferred to Robots or Virtual Assistants.
Robotic Process Automation (RPA) is a step toward the digitalization of Corporate & Investment Banks. However we believe it should be considered as one of the many levers of a transformation strategy. So what should you expect from RPA? And how to include it within your strategy?
RPA is a virtual robot (or a software, really) configured to mimic humans’ actions. It is largely based on existing technological capabilities (e.g. screen scraping, work flow, and rules engines) but RPA is:
- Configured using demonstrative steps rather than coding and therefore, is accessible to non-technical users
- Able to recognize patterns and work with structured and unstructured data
- Non-invasive as it leverages existing systems and therefore does not require heavy integration
- Technology and system agnostic and capable to communicate with different systems autonomously
- Designed for rapid deployment at enterprise-wide level
5 EXPECTED BENEFITS AND 1 NOT SO EXPECTED
5 Key benefits are usually expected or looked for from Robotic Process Automation projects: cost reduction, accuracy, productivity, compliance and customer satisfaction. Besides, compared to other transformation levers (e.g. BPO, IT transformation), RPA is easier to implement and offers greater return on investment.
Yet, with the right approach, RPA can also improve engagement and employees’ motivation as it allows reducing repetitive and boring tasks and focusing on added value processes. In this case robots are considered as “Virtual Assistants” and are supporting the employees in performing their jobs.
WHAT IS THE MATURITY LEVEL?
We consider it is the right time to turn to RPA as the market is currently in its pivotal point, switching from simple macro applications to sophisticated RPA solutions. In banking industry, RPA is still in its early stages (machine learning, artificial intelligence, cognitive computing… are not implementation-ready yet) but business applications and the solutions offered by the main vendors are increasingly sophisticated and able to match more specific needs.
BUSINESS APPLICATIONS AND FIRST LESSONS LEARNED
ANZ Banking Group and Bank of New York Mellon are some of the frontrunners in RPA adoption, not just in pilots but in everyday operations:
- ANZ has implemented RPA with “Automation Anywhere” and “Open Span” software in several areas: loan and mortgage origination, account reconciliation, monthly close, audit compliance reviews, customer record maintenance and payments. As of March 31, 2016, 500 Bots were in operation inside of ANZ Bank across 8 delivery locations around the world. In one area, RPA reduced the need for staff from 40 to 2.
- BNY Mellon has a robotic process automation team that works with the bank’s business management and transformation team to find areas to use robotics. So far, they have come up with 8 pilots and moved 4 of them into production. In trade settlement, time spent to reconcile failed trade was lower from 10 minutes to a quarter of a second. One of its technology partners is BluePrism.
- Most banks are also working on the topic and have launched ‘proof of concept’ on areas as varied as payments, cash management, finance and HR processes. Projects are on-going to roll out success on larger scopes.
Yet today RPA is mainly used as a patch for obsolete core systems. Existing projects are somewhat limited to improving subsets of processes and discrete tasks, alleviating repetitive and tedious activities and supporting quick wins, but without genuinely transforming the organization or end-to-end processes.
HOW SHOULD YOU INCLUDE RPA IN YOUR OVERALL TRANSFORMATION STRATEGY?
It is our view that to get the maximum impact on business and processes, RPA should be used in conjunction with other transformation levers, as part of a comprehensive transformation approach.
Specifically, opportunities brought by RPA solutions should drive the following reviews:
- Re-assess IT spending: tactical developments in legacy systems to address shortcomings should be reconsider as RPA can be an alternative
- Re-think hiring / Human Resources strategy: as workload could be balanced between human and “robots”, teams would need to be reorganized, re-sized, and job descriptions, roles & responsibilities adjusted
- Revisit off-shoring / near-shoring strategy: RPA can be an alternative to off-shore or near-shore as it allows improving efficiency and cost baseline
- Reconsider off-shore, shared services platforms and BPO contracts: shared services, off-shored centers and BPO providers will optimize their activities thanks to RPA solutions, leading to lower operating costs. Consequently, contracts should be re-negotiated
Robotic Process Automation raises significant questions. There is yet to be a debate about the social impact of robots, especially in off-shore centers where millions of jobs are at stake. And even if RPA contributes to improve compliance, issues regarding security and responsibility haven’t been addressed so far.
See our methodology here