Khurram Siddiqui, EY MENA

Khurram Siddiqui, EY MENA, explains why Robotic process automation is the Future, and Finance function needs to prepare for it.

Finance functions are under significant pressure across all industries but specifically in Financial services sector. Some of the major challenges are to shrink costs and support decreasing margins, to improve speed, volumes and quality of information provided, to focus on delivery of value adding insights to the business. Robotic process automation (RPA) is quickly evolving to a new hot topic in the Finance world. Its significant potential to become a differentiator also in Finance functions has become evident.

And most of large players in the Financial services sector are either assessing possibilities to benefit from this new solution or even proceeding with the first  implementations.

The RPA implementation burdens (costs and timelines) are relatively insignificant, compared to major IT platform updates. And therefore it is likely that RPA will quite quickly convert from a differentiator delivering a competitive advantage to a standard practice, that needs be followed for survival.

Robotic process automation provides a competitive advantage by helping to meet the key challenges today’s of Finance:

  • It radically improves cost efficiency under growing pressure on costs
  • It helps to remain in control in the constantly changing environment
  • It allows to focus skilled resources on driving value creation for the business

Cost efficiency

RPA realizes cost saving by replacing human workforce in high-frequency tasks and at the same time reduces processing time of those tasks – the cost reduction can reach 50%-70% for some of the automated activities. Moreover, it contributes to the optimization of finance processes by moving the processing of the robotized tasks from the critical path to the low operations time (e.g. overnight or weekend). The RPA software offers a relatively short implementation timeline and low implementation costs, because it can be applied to existing applications (i.e. without changing the current IT landscape) and emulates human execution of tasks via existing user interfaces. Being a business project rather than an IT project, RPA implementation is less dependent on IT function and its timelines, and gives more flexibility and control over the implementation and adaptation process to Finance.

 Remain in control

RPA serves as an alternative to further outsourcing and offshoring of Finance operations. Some of the benefits include: 

  • data doesn’t leave the country
  • no time lag between the head-office and the off-shore team
  • less coordination between teams needed
  • higher degree of compliance with internal controls frameworks

With these benefits RPA can even provide a business case to reclaim certain Finance activities from off-shore location and re-implement them on-shore. Regulatory pressure is an inevitable part of the financial institutions’ life cycle and It will remain in the foreseeable future. RPA supports regulatory change as a cost efficient tactical solution, that reduces pressure on roadmaps for strategic IT platform upgrades to cater for new regulatory requirements. It provides an alternative to inefficient and error-sensitive manual workarounds as well as to immediate IT platform customization, and therefore reduces deployment and upgrade cost.

RPA can support business environment and response to the market challenges: it can accelerate innovation by 9 – 12 months with tactical integration. This allows both product and service innovations to be rapidly created and piloted, without expensive legacy system upgrade or integration dependencies.

It stimulates agility of Finance. Operational processes change regularly with short lead times; this is generally, why they have not been automated using traditional methods. Furthermore, an agile approach allows rapid benefit delivery, incremental improvement, and rapid response to change.

Finally RPA can increase the overall quality and customer satisfaction and reduce exception cost, e.g. real-time processing improves service, reduces dependent process exceptions; batch processing out-of-hours windows reduces legacy platform load at peak.

Drive value creation

RPA can significantly enhance capabilities of Finance in providing analysis and insights to the business. For instance, it can substantially increase scope of data available to the organization. Cognitive RPA can extract and combine data from various sources, including external data providers, social networks, shared drives, recognize text and graphic information. It can also provide initial analysis and conclusions.

RPA can be most effectively utilized in such Finance processes as:

  • Operational accounting (billing and collections, accounts receivable)
  • General accounting (allocations and adjustments, journal entry processing, reconciliations, intercompany transactions and close)
  • Financial and external reporting
  • Planning, budgeting and forecasting
  • Treasury processes

So will robots completely take over the function?

No. Training and operational management of a robot is done by human specialists. A robot will further proactively involve humans for analysis and decision making at certain steps, where insights and subjective assessment should be used.

Finance personnel will face a change in required skillset. Core finance skillset changes, as more capacity will be used in tasks requiring more intelligence like advanced analysis and interpretation, review and approval, decision making. In addition new technical skills are needed to manage a robotized process. It will be a challenge to apply this change and retain accumulated finance technical knowledge and practical knowledge of organization.

Finally organizations will need to pay attention to psychological acceptance of cooperation with robots by personnel. This is trigged by robots ‘taking the human jobs’ but also by the effects like ‘uncanny valley’, where robots become more and more interactive.

RPA can be a quick win, bringing immediate benefit also in Finance functions. It is likely to stay for longer time and become an integral part of Finance processes. It triggers also broader changes in Finance function, its processes and people, which can maximize value of RPA and bring Finance to the next level.