In the face of the global pandemic, banks started adopting technology to deliver faster and more reliable customer services to a digital generation of customers. Gartner reports that the 2020 pandemic galvanized the banking sector to adapt to these changing demands of their business and customers. Today, the post-pandemic challenge for banks and financial institutions is improving business efficiency while optimizing costs and security measures.

This is where Robotic Process Automation (RPA) can transform banking services. McKinsey reports that RPA can automate 40% of financial and accounting functions. Similarly, according to Deloitte, RPA can automate 50% of HR functions and tasks. That apart, several banking-specific use cases and applications are taking rot across the sector. Overall, RPA in the banking sector is projected to reach a market value of $1.12 billion by 2025. Banks like Axis Bank in India and German giant Deutsche Bank are already implementing RPA to automate several business processes.

So, are banks ripe for an RPA-driven business transformation?

Let’s first discuss some use cases of RPA in the banking sector.

4 RPA Use Cases in Banking

RPA technology can effectively reduce manual efforts and time across multiple functions in the banking domain. Here are the four leading use cases of RPA in the banking sector where the impact is already being observed:

1. Loan Processing

Before process automation, the loan approval process across banks used to take days or even weeks. RPA has effectively reduced this process to just 10 to 15 minutes.

For instance, using RPA-enabled document extraction, banks can extract customer data from submitted documents within minutes.

Credit scoring systems can approve (or disapprove) customers’ loan applications based on their financial profile and history. Along with RPA, machine learning models can validate customers based on customer analytics.

Among well-known success stories, finance company Credigy implemented RPA technology to automate the review process of all their loan-related financial documents.

2. Customer Onboarding

Due to strict KYC norms, customer onboarding in the banking sector is manual and time-consuming. Previously, Thomson Reuters reported that banks had to spend over $60 million yearly on KYC compliance.

With RPA technology, banks can automate their KYC and customer onboarding process by collecting and screening customer data. This reduces the time spent on onboarding customers and the manual efforts of staff. An associated benefit is a sharp reduction in human errors across the process.

For instance, when combined with Computer Vision and Optical Character Recognition technology, RPA can extract and validate customer identity from their application form.

3. Financial Audits and Compliance

Every so often, bank executives must manually update their general ledger with the latest information, like financial statements, expenses and revenue sheets, and more. Besides, bank auditors request more financial information to prepare yearly audit reports. Some of these are dictated by the norms banks are expected to follow and regulatory and compliance needs to drive others.

By automating several of these applications, RPA can effectively reduce the auditing time from days to a few minutes.

Additionally, RPA-enabled systems can keep track of regulatory changes and compliance requirements and update the manual process appropriately. This saves time spent on manual tasks and reduces the costs of non-compliance violations in the form of fines or penalties.

4. Customer Service

Each day, bank executives or customer support teams face many customer questions related to their bank accounts, financial fraud, loan inquiries, or credit cards. In this digital age, customer service is all about delivering the right answers to customer queries in a quick time.

This is where RPA can provide a great value proposition to banks. RPA can reduce the time required to validate each customer and their service history. Additionally, RPA can enable exceptional customer experiences through same-day fund transfers, account openings (or closures), and customer verification.

Next, let’s discuss the business benefits of RPA implementation in the banking sector.

Benefits of RPA Implementation in Banking

In the face of growing competition, RPA-enabled tools and technologies offer both time and cost benefits to the global banking sector. Among the primary benefits, RPA-enabled bots “free up” employees from their daily monotonous tasks, thus enabling them to focus on high-value tasks that need human creativity and intelligence. This, in turn, can improve their productivity and motivational levels.

RPA also enables automation of backend operations like loan processing, credit card approvals, and account opening. This has a direct positive impact on the customer experience and satisfaction, thus driving more revenues.

As banks add more services and increase their customer base, they often need help to scale up their operations and support structure. RPA-powered bots add to the benefit of scalability, thus enabling banks to manage higher call volumes during peak banking hours.

Among the main benefits, RPA implementation can deliver massive cost savings for banks. Gartner estimates that RPA can save banking teams around 25,000 hours of avoidable rework time each year. This is equivalent to 30% of a full-time employee’s working time. On average, Gartner estimates a cost-saving of around $878,000 yearly for a bank with 40 full-time staff. Now multiply that by degrees considering that most banking operations are significantly larger.

Considering these RPA use cases and benefits, why are more banks not implementing RPA technology? Let’s discuss some challenges hampering RPA adoption in the banking industry.

Challenges of RPA in Banking

Powered by the onset of digital technologies in the banking and financial sector, a significant shift has occurred in how customers interact with the banking business. The rapid pace of digital transformation overwhelms banking executives, leading to a mindset of “change resistance.” This 2020 PwC report states that over 80% of banking executives feel overwhelmed by the speed of technology change.

The ACCA and CAANZ research survey found that 45% of respondents list “resistance to change” as the top challenge stopping RPA adoption. However, this mindset problem is not the only challenge. Here are some of the other RPA challenges in banks:

  • Lack of process standardization: Process standardization is among the major challenges facing RPA adoption in banks. Non-standardized business processes make it difficult to choose the processes to be automated.
  • Incompatibility with legacy infrastructure: Legacy systems and applications are another “bottleneck” towards RPA implementation. For instance, 43% of American banks run their applications on the COBOL programming language.

In most cases, the problems relate to an inability to understand the latest technology and the need for in-house skills to apply it to the specific context of the bank. All banks possess domain knowledge, but very few can combine that with technology experience to drive an RPA-led transformation.

How Emergys Can Help Banks in RPA Implementation

In the modern age, banks and financial institutions recognize the value of RPA as a key technology enabler despite various challenges. By partnering with a technology provider like Emergys Solutions, banks can leverage RPA expertise to automate their business processes and tasks. Over the past five years, the Emergys team has enabled leading banks to solve their daily business challenges and grow their revenues.

Here is a successful case study of how an Alabama-based credit union leveraged the RPA solution from Emergys to automate their solar loan posting process.

Want to partner with Emergys on your RPA-enabled transformation journey?

Connect with us to learn more.

Emergys Blog

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