Banking and Financial Services. White Paper. Robotic Process Automation: Possibilities for the Financial Services Industry

Transcription

1 Bakig ad Fiacial Services White Paper Robotic Process Automatio: Possibilities for the Fiacial Services Idustry

2 About the Author Vikas Srivastava Vikas Srivastava is a Vice Presidet with the Busiess Process Services (BPS) busiess uit at Tata Cosultacy Services (TCS) ad leads the coceptualizatio ad developmet of solutios ad offerigs for the fiace ad accoutig (F&A) space. He has over 19 years of experiece i fiace ad accoutig, fiacial plaig ad aalysis, trasitios, fiace trasformatio, cost cotrol, compliace, iteral audit, ad cross-fuctioal project maagemet.

3 Abstract A typical fiacial services firm has multiple systems held together by iterfaces that eable the flow of trasactio related data. These iterfaces eed to be moitored regularly to esure seamless executio of trasactios ad to fix loopholes if ay this traslates to sigificat work for a orgaizatio's operatios team. Robotics ca immesely improve the accuracy ad efficiecy across such processes. Other areas where robotics ca help are regulatory reportig ad balace sheet recociliatio, which ivolve collatig data from multiple systems ad coductig a host of validatio checks to prepare the iformatio for detailed aalysis. Robotics ca ot oly help improve the speed of data collectio ad preparatio but ca also detect errors well i time, thereby improvig the overall effectiveess of data aalysis. This article discusses the power of robotics i the busiess process services (BPS) sector, especially for fiacial firms. We propose a framework to segregate tasks ito routie versus o-routie, ad simple versus complex. This will allow a orgaizatio to idetify the tasks that qualify for Robotic Process Automatio (RPA).

4 Cotets Itroductio 5 RPA versus Desktop Automatio 5 How RPA ca Help 5 Assessig the Applicability of RPA i the Fiacial Services Idustry 6 Coclusio 8

5 Itroductio I the recet past, techological evolutio across domais, ad i the busiess process services space i particular, has bee othig short of breathtakig. What was oce cosidered complex ad subjective has suddely become 'automatable'. The key to this chage has bee the emergece of Robotic Process Automatio (RPA), which has drastically trasformed the otio of what all ca be automated. RPA may create a image of a army of robots doig repetitive tasks, but this is quite far from the reality. For a start, there is o 'physical' robot (hece the word 'process' i the ame). Secodly, RPA is ot about repetitive tasks aloe but also pertais to complex tasks that require cosiderable amout of discretio ad judgmet o the part of the doer, which is why they have't bee automated yet. RPA versus Desktop Automatio Traditioally, automatio has bee associated with macros ad Visual Basic drive programs that were desiged to execute repetitive tasks o desktop computers. These programs typically carried out a set of tasks ad could ot take process-related decisios. It is atural to thik about RPA as aother form of desktop automatio, however, it is much more tha that. RPA comes ito play whe the followig two elemets are preset: a) Decisio makig evet: Which path do we follow for a trasactio? For istace, a mismatch betwee the ivoice value from a exchage ad the amout accrued for the same could either be pushed through as a accepted aomaly or pulled out for further ivestigatio ad correctio. Aother example could be a mismatch betwee the market value of ivestmets made by a bak as reflected i its sub ledgers versus the iformatio provided by the treasury based o exteral reports. b) Set of steps to follow to execute a task: For istace, whether a correctio is to be doe based o other fields i the trasactio or the trasactio is routed to a differet set of people i case it eeds more detailed ivestigatio. Typical automatio comes ito play oce a decisio has bee made, but RPA essetially has the ability to take a decisio based o rules (brai compoet) ad the carry out the tasks as defied (arm compoet). This however is a simplistic defiitio, as eve the tasks that ca be automated by the arm compoet are sigificatly more complex tha what systems ca do without RPA. How RPA ca Help The most oteworthy beefit of RPA is that it ca potetially elimiate huma effort ivolved i a previously oautomatable activity. While some huma itervetio will be required to moitor ad update the RPA tool, there are sufficiet examples ad case studies where productivity of over 90 percet has bee achieved by deployig RPA i thikig situatios. 5

6 Let us look at the accouts payable process for example. The accouts payable process performs the task of recocilig vedor statemets with the statemets of buyig orgaizatios. Higher ed resources (above the level of trasactioal data etry resources) typically perform this task as it ivolves rule-based decisio-makig. A typical mismatch could be where the vedor shows a ivoice as upaid ad iteral systems show it as paid. The processor the idetifies the root cause of the mismatch ad carries out oe of the followig actios: provide paymet details (if already paid), provide reasos for o-paymet (if processed), or ask for a duplicate ivoice (i case the ivoice has ot bee received). This is a classic use case for RPA as the task is repetitive ad more complex tha a routie trasactio. Whe deployed, the RPA tool reads data from the vedor s statemet ad matches it to iteral fiacial systems. The robot is the able to isolate mismatches, provide commets for each ivoice raised by the vedor, ad iitiate a follow-up actio, if required. Itervetios like these ca drive productivity to over 90 percet with early 100 percet accuracy. Fiacial services firms also have umerous occasios where huge volumes of data across systems eed to be matched. These could be ideal exploratio poits for applicability of RPA. The possibility of a itervetio like this ca be evaluated for ay recociliatio across sub-systems, for example, matchig fees ad commissio ivoices agaist accruals. Aother example could be the process of creatig schedules for filig aual ad quarterly reports to regulators. This ivolves matchig iformatio across umerous sub-systems, as well as agaist the geeral ledger. I additio, some of this iformatio eeds to be validated with exteral data (like ivestmet market value) as well. Robotics ca be extremely useful i this case as it ca pull iformatio from idetified systems (iteral ad exteral) ad process it to idetify mismatches across datasets. It ca further trigger a series of correctio steps like remiders or error alerts. Robotics ca also be deployed to extract iformatio from exteral data sources, compare it with iterally-sourced iformatio, ad the highlight the variaces. The claim validatio process i the isurace idustry is a critical process ad a potetial RPA use case. It ivolves coductig a comprehesive secodary check before makig a disbursemet ad requires the firm to compare data across sub-systems based o a commo field like policy umber, ad match multiple related fields before the payout. I a regular setup, where the compariso ad extractio of data is doe by persoel, errors are boud to creep i. Implemetig RPA i such a process ca reduce trasactio times by as much as 70 to 80 percet ad more importatly, provide 100 percet accuracy. The robot will extract iformatio from the two sub-systems, compare them ad either authorize the disbursemet or reject it. It will also geerate maagemet reports to provide updates ad complete trasparecy to the process owers. Assessig the Applicability of RPA i the Fiacial Services Idustry The grid depicted i Figure 1 provides a simple way to idetify the tasks that ca be cadidates for a RPA itervetio. Tasks that fall ito the bottom right quadrat repetitive ad complex (like the accouts payable process) are the oes that will beefit from RPA. 6

7 Aother way to idetify the tasks that are ideal for RPA is to check if a task is carried out by learig ad followig a set of rules. The ext step is to examie if the people who performs such tasks uderstad ad execute these based o complex rules. Some tasks based o this classificatio are recociliatio activities, exceptio maagemet workflows, sedig trigger-based mails i a exceptio maagemet process, ad hadlig aomalies i subledger recociliatio (which ivolves huge volumes of data pertaiig to fees ad exchage). I additio to classifyig tasks accordig to the grid show i Figure 1, it is ecessary to uderstad the saliet features of the fiacial services sector before embarkig o a RPA iitiative. These iclude: High trasactio volumes: Other tha the traditioal Figure 1: Idetifyig Tasks for RPA Itervetio accouts payable fuctio of maufacturig (Source: TCS iteral) compaies, fiacial services orgaizatios record expoetially large umber of trasactios. So, RPA deploymet i the fiacial sector should come with the capability to hadle existig ad future volumes. Repetitive No-repetitive Very low volume Typical automatio with macros Simple Difficult to set up automatio rules Robotic Process Automatio Complex Uique IT ladscape: I geeral, the IT systems i most fiacial firms have multiple sub-systems feedig ito a geeral ledger ad have itricate likages with each other. I may cases, these are legacy systems i place, which are difficult to alter. It is therefore extremely importat for the RPA program to have miimal or egligible impact o the existig techology ladscape. Heighteed data security eeds: While data security is paramout for all orgaizatios, it is eve more critical i the fiacial services sector because it ca directly cause moetary damages to customers ad/or other stakeholders. This elemet restrais fiacial orgaizatios from adoptig techology that is ot housed withi their premises. Thus, RPA solutios for the fiacial services idustry should be flexible eough to be deployed withi a orgaizatio's IT eviromet. Striget regulatory framework: The fiacial services sector is subject to a series of evolvig regulatory requiremets. This is of prime importace, especially whe implemetig a ew techology, because the cost of error ca be catastrophic. Robotic tools should therefore be carefully evaluated, keepig i mid various regulatory requiremets ad the possibility of o-compliace that may arise from a switch to a RPA setup. Cost of error: Various aspects such as high trasactio volumes, complex legacy IT systems, ad security ad regulatory requiremets have a direct or idirect bearig o the 'cost of error'. This is a vital dimesio i the fiacial services idustry because at ay give poit, a cosiderably high volume of trasactios are i process ad the miutest of error ca have far-reachig impacts i the movemet of fuds across stakeholders. 7

8 Ay implemetatio of RPA i the fiacial services sector therefore, will eed to be strategized keepig i mid these additioal factors. As a guidace, we recommed that tasks related to regulatory compliace ad fud movemet should ot be the first cadidates for RPA, as the potetial damage i the ulikely evet of a failure could be very high. For starters, cosider tasks ivolvig high volumes of data ad exceptio maagemet as RPA projects.. Coclusio The ability to automate maual tasks for improved process ad cost efficiecies is drivig robotics to gai promiece across idustries, ad eterprises ca oly igore it at their ow peril. That said, there are specific issues ad areas i the fiacial services sector that will eed to be carefully examied before deploymet of robotic processes, to esure miimal disruptios to busiess ad full compliace with regulatory stadards. The oly dictum to remember is that if it ca be writte dow as a set of rules, the there is o eed for huma itervetio other tha to write the rules! 8

9 About TCS' Bakig ad Fiacial Services Busiess Uit With over four decades of experiece workig with the world's leadig baks ad fiacial istitutios, TCS offers a comprehesive portfolio of domai-focused processes, frameworks, ad solutios that empower orgaizatios to respod to market chages quickly, maage customer relatioships profitably, ad stay ahead of competitio. Our offerigs combie customizable solutio accelerators with expertise gaied from egagig with global baks, regulatory ad developmet istitutios, ad diversified ad specialty fiacial istitutios. TCS helps leadig orgaizatios achieve key operatioal ad strategic objectives across retail ad corporate bakig, capital markets, market ifrastructure, cards, risk maagemet, ad treasury. TCS has bee raked #2 i the 2014 FiTech Rakigs Top 100 of global techology providers to the fiacial services idustry, by both - FiTech Forward (a collaboratio of America Baker ad BAI) ad IDC Fiacial Isights. TCS has also bee recogized as a 'Leader' ad a 'Star Performer' i Everest Group's 2014 PEAK Matrix reports for Bakig ad Capital Markets Applicatio Outsourcig (AO). Cotact For more iformatio about TCS Bakig ad Fiacial Services Uit, visit: bfs.marketig@tcs.com Subscribe to TCS White Papers TCS.com RSS: Feedburer: About Tata Cosultacy Services (TCS) Tata Cosultacy Services is a IT services, cosultig ad busiess solutios orgaizatio that delivers real results to global busiess, esurig a level of certaity o other firm ca match. TCS offers a cosultig-led, itegrated portfolio of IT ad IT-eabled ifrastructure, egieerig ad TM assurace services. This is delivered through its uique Global Network Delivery Model, recogized as the bechmark of excellece i software developmet. A part of the Tata Group, Idia s largest idustrial coglomerate, TCS has a global footprit ad is listed o the Natioal Stock Exchage ad Bombay Stock Exchage i Idia. For more iformatio, visit us at IT Services Busiess Solutios Cosultig All cotet / iformatio preset here is the exclusive property of Tata Cosultacy Services Limited (TCS). The cotet / iformatio cotaied here is correct at the time of publishig. No material from here may be copied, modified, reproduced, republished, uploaded, trasmitted, posted or distributed i ay form without prior writte permissio from TCS. Uauthorized use of the cotet / iformatio appearig here may violate copyright, trademark ad other applicable laws, ad could result i crimial or civil pealties. Copyright 2015 Tata Cosultacy Services Limited TCS Desig Services I M I 10 I 15