Is The Future Of Finance Robotic?

by Rohit Ambosta, Associate Director & CIO, Angel Broking Ltd

Technology is shaping the future of almost all industries, and finance is no different. The technological evolution in finance has rendered processes to become considerably simpler and more standardized to an extent that was uncommon a decade ago. However, the sector is still dealing with some of the significant challenges involving cost-efficiency, decreasing margins, and the improvement of volume, speed, and quantity of information that could add substantial value to the business.

While finance has automated ERP and general ledger systems, many corporate finance processes are still following an inflexible methodology. According to a report, most finance teams still spend 80% of their time in manually collecting, consolidating, and verifying data, which leaves only 20% of the available time for intensive tasks such as data analysis and decision making.

This gap in efficiency has led enterprises to resort to alternate methods to make better use of their resources. A survey conducted by Grant Thornton revealed that financial executives are now embracing automation, and are ranking robotics and artificial intelligence as their highest-priority investments. In this regard, RPA is expected to set forth a new wave of change in the corporate finance industry:

Robotic Process Automation:

Ernst and Young define RPA as software that operates as a virtual workforce controlled by business operation teams. It is a robot or software that emulates human execution in its tasks through an existing user interface that captures and interprets applications, manipulates enterprise data, and triggers communication with other systems. RPA makes use of AI methodology to train software bots to audit processes, monitor compliance, and to automatically process transactions.

RPA can provide financial firms with a competitive advantage by helping them in realizing some of the critical challenges in today’s finance:

Improved cost-efficiency under increasing cost pressures:

RPA will promote cost-saving by replacing human workforce in the tasks that demand high-frequency while at the same time reducing the time taken to process those tasks. Efficient incorporation of RPA can influence as much as 50-70 percent cost reduction for some automated activities. In addition to this, RPA can also contribute to the optimization of financial processes by shifting robotic action from critical tasks to those that require low operation time that can be achieved overnight or during the weekend.

"RPA has a significant potential to become a key differentiator in essential financial functions, and most of the prominent players in the industry are now assessing the various possibilities in which they implement RPA solutions to their operational framework"

RPA also has a relatively shorter implementation timeline and low costs and thus can be applied to existing landscapes without making changes to them. Since it is more of a business project and is less dependent on the need of an IT workforce, RPA provides financial organizations with more control and flexibility over the adaptation and implementation of financial processes.

Maintained control in a constantly changing environment:

RPA also provides an alternative to off-shoring and outsourcing financial operations. It can ensure that critical financial data is not leveraged to other organizations, that there is no time lag between the offshore team and the head office, improved coordination is achieved between teams, and internal controls and frameworks are met with a higher degree of compliance. These benefits can provide financial firms with the flexibility to reclaim certain activities from the offshore locations and re-implement those in onshore offices. In addition to this, RPA can also support regulatory change as a cost-efficient solution that doesn’t require periodic IT platform upgrades to incorporate new regulatory requirements.

RPA can also support a business environment in responding to market challenges. With RPA, innovation can be accelerated by 9 to 12 months through tactical integration. This would allow both service and product innovations to be rapidly piloted and created, without the enterprise having to resort to expensive system upgrades. RPA can also increase the overall quality and customer satisfaction, while also reducing additional costs. For instance, real-time processing provided by RPA can improve service, and batch processing can reduce the load from legacy platforms during peak hours.

Allows skilled resources to create value for the business.

RPA can also enhance financial firms’ capabilities by providing them with insights and analysis that are relevant to the business. For instance, RPA can substantially increase the scope of data available to a particular organization. The cognitive nature of RPA can further extract and then combine data from a variety of sources, including social networks, external data providers, and shared drives. In addition to this, RPA can also be incorporated to provide analysis and results regarding individual strategies, thus helping key decision makers take more calculated and informed decisions.