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RPA Provides the ‘Glue’ Between Banks’ Big Legacy Systems

Automation is valuable for traditional financial institutions attempting to modernize

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Elizabeth Neus is the managing editor of FedTech. Before joining FedTech, Elizabeth was a reporter for Gannett, covering health care policy and medicine. As a Gannett editor, she worked on publications and magazines focusing on everything from defense to agriculture to travel to shopping. The Washington Nationals are her team; 80s Brit pop is her sound.

Robotic process automation sounds like a futuristic technology designed for online-native financial services companies — but established, traditional banks are the ones benefitting most from it.

They’re using RPA within the enterprise to connect big systems, such as enterprise resource planning solutions or customer management relationship solutions, installing RPA on the front end atop existing platforms.

“RPA is acting as the glue to get that done,” says Rob Valdez, cybersecurity and compliance manager for Kaufman Rossin, a CPA and advisory firm based in Boca Raton, Fla. “Small, nimble, agile-born, forward-thinking tech firms built their solutions right into their platform.”

“We have seen some very large financial services companies make very, very profitable and effective use of RPA technology,” he adds.

Proper Planning Is Critical to RPA Success

Careful planning when implementing a RPA solution is key — without it, RPA can magnify existing problems within a bank’s processes. What’s more, those problems can be made even worse by RPA use, Valdez says; more challenges are triggered by flaws in the process rather than the technology.

“If you already have good governance, then [RPA is] magnifying that,” Valdez wrote in a blog post on his company’s website. “RPA takes and amplifies whatever your culture is and makes it even more powerful.”

RPA is most commonly used for “work processes that are repeatable, definable and rule-based,” according to a white paper by Infosys. It’s particularly popular in the mortgage industry, where one mortgage can be touched by loan officers, underwriters, processors and more while the paperwork undergoes fraud checks, title orders and other processes.

A 2018 report from Transparency Market Research predicts that RPA in general is expected to expand at a compound annual growth rate of 28.1 percent between 2018 and 2026.

Rule-Based Processes Make the Best RPA Candidates

There’s no shortage of the tasks that RPA can handle for both large and small banks. “Certain things like AML [anti money laundering] departments are surprisingly manual,” Valdez says.

Any system that requires that data be reformatted and uploaded into a second system is also prime for RPA, he adds: “There are some really strong use cases where we’ve seen that done very well.”

In addition, “we see a lot of RPA being leveraged in the front-line account opening process at this point,” Jason Chorlins, risk advisory services principal at Kaufman Rossin, writes in a blog post. “RPA is being utilized to go out and screen multiple lists, such as [the Office of Foreign Assets Control] for some individuals who might be on a sanctions list or politically exposed persons [and other factors] that influence the bank’s decision of whether or not to take on the customer from a reputational risk standpoint.”

Once a financial services company decides to implement RPA, planning becomes critical. Many organizations are operating “at capacity,” Valdez says, and don’t have the time, the resources or the interest to analyze a process for flaws before adding new technology that can exacerbate those flaws. There’s one excellent way to prevent that from happening.

“It’s almost a cardinal rule with RPA — you want to go as small as possible with your pilots,” Valdez says. “People think, ‘I want to get this huge win, improve ROI and make a big splash,’ and their hearts are in the right place. But the whole ‘go small or go home’ thing is so effective. You won’t break other interfaces, and you won’t create incompatibilities.”

Process Vs. People: The $10 Million RPA Question

The “$10 million question,” as Valdez puts it, arrives soon after RPA is implemented.

“This virtual workforce has helped banks minimize (or, in some cases, eliminate) human intervention in the execution of tasks and decision-making and dramatically improved operational efficiency, sometimes up to 70 percent,” writes Vartul Mittal, a technology and innovation specialist publishing on Medium.

“This is where culture becomes a huge thing,” says Valdez. “Some organizations will absolutely repurpose and retool [workers to new jobs], and some organizations will choose to work more lean.

“But there is no shortage of other things available to do, moving away from the rule-based jobs and more to the judgment-based jobs having to do with customer interactions — that’s where the extra value is perceived.”

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