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Robotic Process Automation: Ruthless efficiency at any cost?

© metamorworks

The incessant barrage of new regulations is slowing. The fund industry finds itself with the ability to shift focus away from the resource intensive burden of implementing regulations, and look to ramping up innovation and improving efficiency. Although companies have done their utmost to maintain innovation during recent years, business efficiency has often taken a back seat due to the entangled complexity of new regulatory processes taking up IT development time. In an increasingly competitive environment with ever-growing data volumes, the fund industry is keen to understand the opportunities in terms of efficiency, and a key element in the search for efficiency gains is Robotic Process Automation, or RPA. 

Arnaud MissetSimply put, RPA is computer software that can use IT systems designed for humans. Clearly no automatons here, but instead, software that can operate with extensions such as Optical Character Recognition (OCR) to read hand-written entries such as in forms, Natural Language Processing (NLP) to extract data from unstructured text, Chatbots to respond to standard queries and possibly Artificial Intelligence. RPA’s ability to perform data entry, and use plug-ins to understand and respond to client queries makes it analogous to offshoring, and in some ways it is, but it has some key differences. 

CACEIS has decided to undertake very little offshoring, as the potential loss of control (through dealing with a far-off provider with cultural differences and being just one of a number of clients) is major factor that explains the reticence to pursue that avenue. RPA on the other hand, enables companies to maintain control of their business, especially if they create the competence centre internally rather than rely on an external provider that may itself become a source of issues due to the lack of required industry expertise. Many companies see this RPA technology as a key component of the future financial ecosystem and therefore choose to make the necessary investments internally. 

We are often said that RPA’s principal objectives are nothing more than the ruthless pursuit of pure efficiency, however the reality is different – and certainly not just marketing “spin”. The back-office, which is always the first area to go under the RPA spotlight, is where we find a glut of tedious, repetitive processes that are the source of a high level of operational risk and have low added value. RPA’s prime objectives in such an area are to 1) reduce operational risk stemming from human error, 2) improving client experience by increasing service quality and professionalism, and 3) freeing-up staff for tasks where human intervention is key, such as client contact and handling more complex transactions. 

Most RPA projects start in the back office, however prioritisation of the processes is an essential task both in terms of the project’s efficiency (picking the low hanging fruit first as opposed to simply branching out) and in terms of its image within the company, (targeting the tedious, repetitive processes where there is a low feeling of ownership). Here, RPA goes hand-in-hand with a “Lean Management” approach, which promotes continuous efficiency and quality improvement through small incremental changes over time. One should not forget that, whenever RPA is implemented on an isolated process, the impact on upstream and downstream processes must be carefully considered. Later on, as the patchwork of isolated tasks taken over by RPA start to interface with each other, efficiency levels can then further improve. On average, RPA increases business efficiency by some 10-12% for individual tasks, but this figure can rise significantly when several processes are daisy-chained, end-to-end. 

We have already established that an in-house RPA competence is preferable, but let’s take a look at an ideal structure that should ensure a successful RPA project within any company. Along with the RPA specialist, three other positions are essential within the piloting group – first, a business analyst to explain the processes to the RPA specialist and ensure everything is exhaustively documented to avoid loss of skills/expertise. Second, an operational representative ensuring all members have a complete understanding of the tasks involved and acting as a project sponsor for the Operational department. Finally, an IT representative responsible for the systems with which the RPA will interface is required. All three people should make up the core team from the project’s outset and ensure the project remains on track. 

The final point that should never be underestimated in any RPA project is communication. There is a lot of fear surrounding the topic, and it’s not limited to operational department employees. Management, IT, Compliance, Risk, Legal, HR and other areas may be impacted by RPA, and together with Operations they need a structured communication campaign to explain the technology, the benefits and goals in order to get them on-side. Liaising with staff representatives and trades unions is also a key part to ensure smooth implementation of what is a very promising technological innovation.