Illustration of a robot working on two computers at once
Application Development

How Robotic Process Automation Shapes Fintech's Future

Posted: April 24, 2018

Robotic process automation's workflow efficiency benefits have been of great value to financial services organizations. According to KPMG, banks and other financial organizations that leverage RPA realize 75 percent cost-savings.

Bots can perform repetitive, clerical tasks such as processing customer applications and responding to basic customer queries faster and more accurately than human workers. Bots also behave more predictably than people. They don't deviate from their programming so they won't make mistakes or circumvent processes. Accordingly, RPA is a powerful risk management resource that many financial institutions already use to monitor compliance and create audit trails.

But RPA's contribution to operational efficiency is just the tip of the iceberg. Financial organizations that venture deeper into RPA's capabilities will find a wealth of transformational opportunities that can reshape the customer experience. In particular, RPA is an enabler of new digital financial technology (fintech) that enhances the quality of service and convenience for employees and customers alike.

Setting the scene for fintech evolution

According to PwC's Kevin Kroen, RPA is the "starter piece" for long-term digital transformation initiatives. On the most basic level, RPA can be used to bridge integration gaps between legacy software. For instance, RPA can act as an integration mechanism that integrates legacy solutions to newer IT systems. This gives banks and other financial organizations the opportunity to expand their fintech footprint gradually and with minimal disruptions to existing processes. Rather than uprooting and replacing existing legacy tools, bots can push and pull data between new and old applications to orchestrate workflows that might otherwise dwell in silos.

Robotic process automation can also reduce the testing surface of new custom developments and fintech applications. Software robots, which have roots in software QA automation, can be used to validate the output of new custom developments. Consequently, new financial services can be developed with minimal risk to existing processes.

Applied to customer-facing services, RPA is directly responsible for some of the most common fintech utilities. Case in point, bots can automatically populate data fields based on photos of documents that are uploaded via a mobile camera to a fintech application. This works for basic banking functions, such as mobile deposits, but also more advanced processes such as applying for a loan or even initiating peer-to-peer lending.

Robotic process automation can also catalyze new classes of fintech products. Consider the example of what American Banker calls "robo-advisory services" for wealth management. Investment values and information can change by the minute. Software bots can continuously interface with various data sources to track market conditions, and customers can automatically receive recommendations based on the most up-to-date information.

For the "more mature and astute investors," American Banker noted that financial institutions can build on RPA's capabilities to offer a "hybrid robo-adviser service." Bots and algorithms track the quantitative aspects of wealth management. Human financial advisers supply the qualitative consultations. This is a perfect example of adding value to a customer relationship by liberating human workers to focus on judgment-based services.

What's next: IoT, blockchain and more

Putting RPA at the helm of quantifiable data-driven workflows will be especially important for innovation enablement in the years ahead. The Internet of Things is expanding the realm of financial technology services. Customers can now link their financial data to wearable technology and even household appliances. Software bots' ability to interface with the front ends of many application types can help automate the real-time movement of information between systems.

Likewise, RPA is an enabler of blockchain technology. Blockchain uses a distributed digital ledger system to verify data inputs through a consensus. No single source controls the ledger, which makes it difficult for any one contributor to commit fraud. For this to work properly, financial organizations will need to continuously record data entries and attributes such as time stamps, geo-location and more from many disparate APIs and IT systems. The benefit of RPA bots is that they can operate as fluidly as humans can across IT infrastructure. This means RPA can effectively bridge multiple disparate systems to the blockchain.

Robotic process automation may also be important for blockchain security. According to PwC, financial services organizations will still need to prove the validity of their blockchain applications. Auditors must answer important questions such as "Who controls the blockchain?," "Who gets access?" and "Who monitors activity?" Rather than manually auditing the blockchain, PwC proposes automating these verification processes. And just as RPA can be used to validate data for compliance purposes, we anticipate that it will have a role to play in auditing the blockchain.

Many businesses are already using bots to enable fintech innovation. But like we said at the beginning of this post, most financial organizations have only skimmed the service of RPA's potential.

Fintech is a goldmine of value, and it's up for the taking. Get there first with RPA.