Is Robotic Process Automation Worth The Hype ?
The squeeze on bank profitability due to reduced margins and increased regulatory costs has led to firms investing in robotic process automation, a digital workforce of software robots.
Nick Fry, director and lead post-trade subject matter expert, and Lukasz Hassa, manager, at consultancy Sapient Global Markets discussed in a paper whether RPA is the ultimate solution for enhancing control and reducing costs within operations or just another short-term quick fix. They said many banks still require multiple manual workarounds to maintain controls and quality due to incomplete upstream data feeds, poor quality reference data, multiple golden sources of data, evolving regulation and legacy IT infrastructure that is often tactically updated rather than strategically reviewed. RPA is one solution to these problems.
“These robots follow repetitive, rule-based processes in the same way that a human would for tasks such as logging onto user interfaces, processing items in queues, managing exceptions, and so on,” said Sapient.
The paper gave some benefits of automating operational processes. One of the biggest advantages is that robots will work 24/7, 365 days per year, without a break, sick time or a holiday.
“This not only decreases operational expenditure, but also diminishes office maintenance costs,” added Sapient. “Further, minimal staff attrition means that business and Human Resources can focus their time on other objectives.
In addition robots can usually be trained for repetitive processes in a matter of weeks rather than months and software dramatically improves the speed at which processes are performed leading to significant increases in productivity, fewer fixes and error corrections.
“With RPA, adjusting for increasing demand simply means changing software configurations,” said Sapient. “Additionally, firms can reuse robots across different parts of the organization without expensive revisions and IT architecture restructuring.”
The consultancy gave the example of a large investment bank that had manual checks to ensure that additions to the instrument database in external data feeds were reflected correctly in their own database. Robots can find data exceptions from the source system and automatically enter this information into the downstream system.
“This enabled headcount to be freed up for more valuable tasks within the division, such as improving customer service,” added Sapient.
However the report warned that RPA should not be seen as the “silver bullet” to enable firms to continue using broken, mismatching architecture. Sapient said: “If RPA will be used to cover a control gap inadequacy in the front-to-back infrastructure, firms should, in parallel with the definition of the business and functional requirements for the RPA implementation, produce a roadmap for how the process can be eliminated altogether.”
Last month Japan launched a utility for investment banks to incorporate robotic process automation in post-trade operations. Nomura Research Institute said in a statement that it’s Prime Settlement Service, Japan’s first utility for investment banks, will incorporate robotic process automation to replace manual processes for post-trade operations.
For payment record processing, each data file was received through email and manually uploaded to back-office systems before being manually reconciled. The process is being automated to remove the potential for human errors and increase volumes using technology from UK-based UiPath.
Michiko Matsubara, PSS Group Manager of Nomura Research Institute, said in a statement: “The automation of post-trade operations is one of most consistently in-demand upgrades that we receive from our customers. Investment banks are looking to create the most efficient environments possible, and freeing up their teams from grating and time-consuming tasks through innovative technology solutions is the first step towards upgrading a workforce.”
In January this year Accenture and Blue Prism, a provider of enterprise robotic process automation software, said more than 40 organizations are using them to introduce RPA.
Wipro, the IT services company, said in a paper that the use of RPA has resulted in a reduction in transaction times of between 30% and 70% and improvements in accuracy of between 70% and 90%. The paper identified areas within capital markets where RPA can play an important role across asset classes including stock borrowing and lending. For example, automating pre-matching in a stock borrowing and lending process led to 80% of the manual effort being eliminated.
“Apart from that, 100% pre-matching is being done on touchpoints and there has been a 70% reduction in trade fails through standardized approach and narrations,” said Wipro. “The pre-matching work was centralized by asset class and proactive pre-matching using RPA, thereby improving ability to focus on matched fails reduction.”
Distributed ledger technology is disrupting the legacy siloed approach to assets.
The public software code helps firms better understand their IT environments.
New products include the launch of a SONIA futures contract.
This is the French bank’s first equity investment in a fintech.
Short-term rise in share prices is valued more than sustainability.