The Rise of Robotic Process Automation in Fintech: A Guide to RPA

Robotic process automation is rapidly changing the financial landscape, and for good reason. This transformative technology offers a powerful solution for streamlining back-office tasks, boosting efficiency, and enhancing the customer experience in the dynamic world of fintech. This guide will equip you with everything you need to understand the potential of robotic process automation in fintech. We’ll explore what RPA is, how it works, and the specific benefits it brings to the financial technology industry. Now, let’s get started!

What is Robotic Process Automation in Fintech?

Robotic Process Automation (RPA) in fintech refers to the use of software robots, or “bots,” to automate routine and repetitive financial tasks that are typically performed by humans. This technology leverages algorithms and programmed instructions to mimic human actions within digital systems, thereby enhancing efficiency, accuracy, and speed in financial operations. 

When we talk about ‘RPA’ within the banking sector, we’re referring to the use of sophisticated software and tools designed to handle every day, rule-governed, and high-volume tasks. By taking over these routine operations, RPA allows human employees to focus their efforts on more complex activities such as data analysis, decision-making, and nurturing customer relationships—areas where the human touch is irreplaceable and critical. This shift not only streamlines processes but also optimizes the workforce by reallocating human skills to where they are most needed and effective.

How Does Robotic Process Automation Work?

Robotic Process Automation in fintech functions by following a clearly defined workflow, which equips the robotic software with precise instructions on what needs to be accomplished at each stage. After the robotic process automation software is set up with this structured plan, or “roadmap,” it is capable of independently operating the necessary programs and executing tasks according to specified requirements.

In the contemporary financial landscape, numerous banks and financial institutions are adopting RPA tools to streamline a variety of routine operations. These automated tools are particularly useful in managing the opening of new accounts, conducting Know Your Customer (KYC) procedures, implementing anti-money laundering (AML) policies, processing client requests, and handling other repetitive tasks. By using RPA, these organizations can significantly enhance their efficiency, reduce errors, and ensure compliance with regulatory standards, all while freeing up human employees to focus on more complex and strategic issues.

> Related: Beyond Limits: How Robotic Process Automation (RPA) is Transforming Industries

Benefits of Robotic Process Automation in Fintech

#1 Enhanced Efficiency and Productivity

One of the primary benefits of robotic process automation in fintech is the significant boost in efficiency it provides. RPA can handle tasks such as data entry, reconciliation, and report generation automatically. This not only speeds up the processes but also frees up human employees to focus on more complex, value-added activities. With bots working 24/7 without breaks, productivity skyrockets, allowing companies to achieve more with the same resources.

#2 Improved Accuracy and Compliance

Accuracy is critical in the financial sector, especially given the strict regulatory requirements. RPA reduces the risk of human error in financial transactions and record-keeping. Since bots follow precise instructions and rules, the output is consistent and error-free. This automation also supports compliance efforts by maintaining clear, auditable records and performing regular compliance checks without human intervention.

#3 Cost Reduction

By automating routine tasks, fintech companies can reduce the labor costs associated with these processes. RPA not only lowers the need for additional staff to handle peak loads but also reduces the likelihood of costly errors. Over time, the initial investment in RPA technology can lead to substantial cost savings, driving down operational expenses.

#4 Scalability and Flexibility

Robotic process automation in fintech provides the scalability needed to handle varying workloads without the need to hire additional staff. Bots can be quickly deployed or repurposed to different tasks based on changing business needs. This flexibility allows fintech companies to adapt to market changes more effectively and seize new opportunities as they arise.

#5 Enhanced Customer Experience

RPA improves the customer experience by speeding up service delivery and ensuring accuracy in customer interactions. Automated processes like customer verification, credit checks, and account updates are completed swiftly, leading to faster service delivery. This responsiveness can significantly enhance customer satisfaction and loyalty, giving fintech companies a competitive edge.

Four Robot Archetypes To Transform Your Operations And Fuel Banking Automation

Having already explored the concept of intelligent automation in financial services and its operational mechanics, virtual assistants can assume repetitive tasks traditionally handled by humans, thereby freeing up individuals to tackle more complex and mission-critical responsibilities. This shift allows employees to dedicate more time to leveraging their expertise and skills to enhance user experiences, drive innovation, and manage risks more effectively.

In this section, we will examine four specific types of Robotic Process Automation (RPA) in the banking and fintech sectors that could represent significant additions to your team:

#1 Verification & Validation Robots

In our extensive collaboration with leading banks and fintech companies on financial software development, we’ve observed that employees often spend considerable time verifying and approving data from customers, employees, providers, and partners. RPA can streamline these tasks by:

• Automating real-time data authentication requests to both external and internal systems during Know Your Customer (KYC), Customer Due Diligence, and other procedures.
• Transforming error-prone operations into efficient banking automation projects.
• Alerting human colleagues to any confirmation issues that arise, enabling quick resolution by experienced personnel.

#2 System Interoperability Robots

Many companies still rely on outdated systems that have been heavily customized over time. When businesses merge or are acquired, these legacy systems continue to operate in isolation, creating additional manual tasks. RPA tools can help by:

• Facilitating communication between systems that are traditionally incompatible.
• Enhancing operational efficiency and managing data flow more effectively.
• Linking customer databases with payment systems to automate transaction processing.
• Integrating older software with newer tools to accelerate functions like account management.

#3 Scheduled Robots

Regularly scheduled events such as buying gifts for birthdays and holidays, renewing licenses or subscriptions, and other recurring tasks can be overlooked during busy periods. Scheduled robots can prevent these oversights by:

• Automating routine tasks based on pre-set schedules or triggers.
• Ensuring tasks are completed on time without human oversight.
• Handling license renewals, regular maintenance, and compliance checks to prevent missed deadlines.
• Generating reports automatically at each month’s end and managing fund transfers for recurring payments.
• Sending loan repayment reminders to customers on a scheduled basis.

#4 Data Input Robots

Manual data entry, such as transferring information from one application to another, is not only time-consuming and prone to errors but also costly. With most financial institutions relying on legacy systems, implementing fintech solutions can be prohibitively expensive. RPA offers a more efficient alternative by:

• Automating data entry to ensure accuracy and reduce the likelihood of errors.
• Streamlining the data input process to save time and improve reliability.
• Facilitating the seamless transfer of customer data from online forms to CRM systems.
• Populating forms, such as loan applications, with relevant data automatically.
• Updating inventory records in real-time by syncing data from sales platforms.

By adopting these RPA technologies, financial institutions can significantly enhance operational efficiency, reduce costs, and improve service delivery, positioning themselves as more responsive and innovative in the competitive financial services landscape.

> Related: Top 10 Leading RPA Developer That Will Transform Your Business

Robotic Process Automation in Fintech Use Cases

In the broader perspective, about 80% of tasks can be systematized as they are driven by specific rules. Such tasks lend themselves well to being managed through financial automation tools. Particularly in the banking, financial services, and insurance (BFSI) sector, which adheres to stringent regulatory, data quality, and security requirements, there’s been a significant uptick in the adoption of robotics process automation (RPA) within financial organizations.

#1 Automation of the Account Opening Process

One of the significant advantages of employing robotic automation in financial services is its ability to eliminate data errors and expedite the process of opening new accounts. This automation ensures the accuracy of information while also reducing operational costs.

For instance, banks are increasingly turning to RPA to streamline their account opening procedures by automatically inputting customer data into their central banking systems. This approach not only diminishes the waiting period for new account holders but also guarantees the precision of the data being entered.

#2 KYC and AML Automation

The integration of RPA and AI significantly accelerates and enhances the accuracy of verifying customer identities and screening for money laundering activities. Utilizing Optical Character Recognition (OCR) technology, these automated systems extract information from KYC documents and verify it against data in application forms.

This efficient process ensures the correctness of onboarding data and reduces the burden on staff members, who would otherwise process these details manually.

#3 Q&A and Support Automation

In customer service operations, RPA is instrumental in automating responses to frequently asked questions and providing assistance. By handling these repetitive inquiries, RPA offers quicker responses and improves customer satisfaction.

Banks and fintech firms are implementing RPA to autonomously manage common queries through chatbots on their websites and other digital platforms. This automation allows human employees to concentrate on more complex issues, thereby enhancing the overall customer service experience.

#4 Fraud Detection and SAR Creation

Identifying suspicious activities and generating Suspicious Activity Reports (SARs) can be complex. However, the combination of RPA and AI in the banking sector can streamline these tasks by analyzing transaction data and automatically producing SARs upon detecting anomalies.

This automation not only simplifies adherence to regulatory standards but also bolsters the detection of potential fraud, making the process more efficient.

#5 Mortgage Lending Automation

In mortgage lending, RPA can automate various functions such as credit evaluation, document processing, and quality checks. Integrating RPA into these processes helps smooth operations and shortens the duration needed to approve loans.

Furthermore, RPA supports the accurate assessment of creditworthiness and document verification, which leads to quicker loan approvals and enhances the customer experience in mortgage lending.

> Related: What Is Fintech? A Complete Guide For Beginners

Examples of Robotic Process Automation in Fintech

RPA and AI have been transforming the financial services sector for some time now. By speeding up processes, cutting costs, and improving customer experiences, these technologies are making a significant impact. The various applications of RPA in finance, as outlined earlier, show that this momentum is likely to continue.

When looking at companies leading the way in financial technology and accounting automation, several notable examples stand out:

• Bank of America has implemented the Pega Robotic Automation solution. This sophisticated software combines AI, OCR, and ML technologies to bridge gaps in the bank’s outdated systems and improve data integration without overhauling the existing infrastructure. This has enabled the bank to manage global payments, handle customer disputes regarding cards and mortgages, manipulate data, and process exceptions efficiently.
• Deutsche Bank has formed a powerful alliance with RPA technologies, enhanced by cognitive capabilities. This partnership has led to significant improvements in the quality of the bank’s services across various domains, including lending operations, taxation, trade financing, cash payments, and employee training.
• Nordea Bank leverages AI-driven tools to sort and analyze customer inquiries, automatically directing them to the correct departments for faster processing. This system can handle hundreds of queries per second, which enhances customer service and reduces response times.
• OCBC Bank utilizes RPA in its lending and finance departments through software robots named Bob and Zac. These robots perform repetitive tasks that do not require human decision-making. Zac is tasked with creating daily sales efficiency reports, while Bob assists with housing loans by checking customer eligibility for loan repricing, suggesting options, and drafting recommendations. This automation has reduced the time to reprice a housing loan from 45 minutes to just one minute.
• AXA Insurance has developed a solution that combines a neural network and ML techniques to predict certain events with 78 percent accuracy. Additionally, its UK branch uses 13 robots to handle routine administrative tasks, saving 18,000 staff-hours and about £140,000 over six months.

Best Robotic Process Automation Tools for Fintechs and Banks

The effectiveness of robotic process automation in fintech heavily depends on the quality of the software chosen. Currently, some of the most effective and widely recognized RPA tools include:

1. UiPath

UiPath stands out in the RPA market due to its durability and comprehensive support system. It offers Citrix compatibility and is well-suited for businesses of any size. A major benefit of UiPath is its ability to seamlessly integrate with existing systems without necessitating modifications.

UiPath supports various frameworks such as .Net, SAP, and Java. It excels in automating data entry and is effective for both desktop and web applications, making it an ideal option for banking and fintech automation.

Additional benefits:

• UiPath’s suite includes multiple applications like Platform, Explorer, Orchestrator, Studio, Connect Enterprise, Robots, and Insight, all working in harmony.
• The company offers extensive training and tutorials for both technical and non-technical users to facilitate the adoption of IT process automation and RPA accounting.
• UiPath has partnered with numerous BFSI companies such as Heritage Bank, PZU, Federal Bank, and many others, underscoring its widespread acceptance.

2. Automation Anywhere

Automation Anywhere is another top-tier RPA tool, renowned for its flexibility and the option of cloud-based or on-premise deployments. It offers advanced security, real-time analytics, and platform adaptability, making it ideal for medium to large financial institutions.

This tool blends traditional automation with intelligent features, enabling natural language processing and the efficient management of unstructured data.

Additional benefits:

• Products include Bot Store, IQ Bot, Bot Insight, and the Automation Anywhere Enterprise platform, addressing a variety of automation needs.
• The company provides an online training center to enhance learning and adoption of RPA.
• Automation Anywhere is used by major BFSI players like PGGM and St. James’s Place, demonstrating its success in the sector.

3. Blue Prism

Blue Prism is suited for medium to large financial institutions and employs machine learning (ML) and artificial intelligence (AI) to continuously train its bots, improving their ability to comprehend user requirements, mimic human actions, and execute tasks effectively.

Additional benefits:

• Blue Prism features a platform-independent RPA system with components like Control Room, Object Studio, and Digital Workforce.
• It boasts advanced security, rapid integration (taking 4 to 6 weeks), comprehensive analytics, and load-balancing capabilities.
• Notable clients include Barclays Bank, ATB Financial, and The Co-operative Bank, highlighting its effectiveness in the financial sector.
• These tools represent the forefront of RPA technology in the banking and fintech industries, each offering unique advantages to enhance business operations and drive digital progress.

> Related: Top 10 Best Fintech Apps You Need to Watch Out [2024 Edition]

How to Get Started with AI & RPA for Fintechs?

To fully harness the benefits of financial robotic process automation, companies operating within the finance transformation technology sector need to carefully develop an initial strategic plan that outlines the steps of their automation journey:

1. Establish a clear vision and secure leadership support to recognize that intelligent automation is an essential objective. It’s important to identify the specific business challenges you aim to address. What goals are you pursuing through automation—increased growth, reduced operational costs, or enhanced data quality?
2. Consider the impact on processing times, transaction volumes, and staff productivity by creating a use case. Start with straightforward tasks such as payment reconciliation, analyzing and categorizing customer inquiries, or managing accounts. Setting realistic expectations for cost savings and ROI is crucial to avoid disappointment.
3. Analyze the outcomes and plan for expansion. Robotic process automation in the banking industry transcends a typical IT project, as it profoundly affects the entire organization. Begin by sharing the strategy and explaining the benefits of RPA in the fintech sector, and discuss how this technology can enhance employee roles. Progress to more complex business scenarios. At this point, it’s vital to either partner with a reliable implementation expert or establish an automation center of excellence (CoE). This center should help guide, regulate, maintain, expand, and optimize all automation processes.

Conclusion

Robotic process automation in fintech is not just a passing trend; it’s a powerful force shaping the future of financial services. By automating repetitive tasks, RPA empowers institutions to streamline operations, reduce costs, and enhance customer satisfaction. As RPA continues to evolve and integrate with artificial intelligence, we can expect even more exciting advancements in the years to come.

Whether you’re a seasoned fintech professional or just starting to explore this dynamic field, understanding robotic process automation in fintech is crucial. By embracing this technology, financial institutions can unlock a future of unparalleled efficiency, innovation, and growth.

Editor: AMELA Technology