Step Aside FinTechs, Make Way for RegTechs with Robotic Process Automation (RPA)

It’s Not Business as Usual

All banks?large or small?are working harder to attract and retain customers, as competition for share of wallet increases. Digital banking has been, and continues to be, the great disruptor, forcing you to change the way you do business. In many cases, this digital transformation has happened in the front office, but now needs to catch up to the mid and back office.

Management consulting firm, McKinsey & Company, found that the high rate of manual processes on the back-end of banks can be time-consuming and error-prone: “Often, back offices have thousands of people processing customer requests. This high degree of manual processing is costly and slow, and it can lead to inconsistent results and a high error rate.”

The fines for non-compliance alone should be enough to motivate implementation of technology to improve operations. In a letter to the shareholders at JP Morgan Chase, CEO Jamie Dimon wrote that their compliance department employed 13,000 people to ensure they were addressing regulatory issues and compliance after paying more than ￡1.6bn in penalties.

Not only do the fines have a direct monetary impact to the banks’ bottom line, they also impact customer trust and, perhaps even worse, there’s also the impact of trading restrictions imposed by the regulator.

RegTech versus FinTech

You are probably familiar with the term FinTech. FinTech typically refers to technologies designed to make the financial services industry more efficient. You might have also heard the phrase “Regulatory Technology” or RegTech, but not know what it means. In the simplest terms, it’s using technology specifically designed to improve and maintain regulatory compliance.

I won’t attempt to list all of the compliance issues that your bank is facing. Financial institutions across the globe are dealing with too many regulations to count. We can all agree, it’s permutated through every department, every process and every customer interaction.

And while the mere thought of compliance can make your eyes roll, shoulders shudder and create a generally unpleasant feeling in your stomach, there is good news to share about a cost-effective technology that can help.

Enter RPA into the Equation

Another term you might have heard recently is robotic process automation or RPA. RPA uses “intelligent software robots” to automate the repetitive, mundane tasks of collecting, inputting, and processing data between portals, website, internal applications and bank systems. This emerging technology can be used to improve compliance and risk management.

RPA is complementary to systems that your bank may already have in place—for example, the capture solutions you use today to automatically capture and extract data or route loan files—to further improve processes. RPA can also eliminate compliance activities that are still being handled manually by your employees that involve external websites and portals, such as complying with Know Your Customer (KYC) regulations.

Leveraging the Power of Robots

Say goodbye to frustrating information siloes that slow you down and make it hard to keep up with ever-changing regulatory requirements. With RPA, you can eliminate manual regulatory monitoring and data collection and integration activities. Software robots can be deployed to automatically extract information and updates from a multitude of websites and portals that are disconnected from your internal processes, and deliver it directly into the hands of your employees.

RPA empowers your compliance and risk management teams by giving them the information they need to their work done efficiently and effectively. Intelligent software robots can deliver critical data  in near real-time to your staff for compliance reporting via dashboards, databases, Excel spreadsheets and compliance reporting applications in any format required. You can eliminate days of delays and reduce the risk of hefty fines and reputational damage for non-compliance.

Audits can send your teams into time-consuming cycles, tracking down and collating the required information. RPA can be used to automatically access and integrate audit trail information for regulatory purposes and include any information that might potentially fall under an audit. This eliminates audit headaches by streamlining the process and ensuring all documentation is in good order.

Sending Robots into Regulatory Action

When it comes to monitoring regulatory changes to ensure a bank remains in compliance, the process for collecting, classifying, and delivering content to multiple banking teams can be overwhelming.

In one example, resources at a British global bank were needed to manually aggregate rules from more than 300 websites daily and normalise the data into a model for input to their regulatory compliance system. A typical compliance officer was spending 15% of their time tracking developments.

Most of this manual work was easily automated with the deployment of software robots. Your bank is now able to quickly and efficiently capture regulatory information from public websites, including new rules, rule changes and regulatory news. Robots work side-by-side with the bank’s employees to monitor sites—from stock exchanges (NYSE, Euronext) to federal regulatory agencies—to augment their internal compliance function, reduce the time spent tracking down information and ease their due-diligence burden.

By leveraging robots to do the job of collecting and cataloguing information versus relying on your highly paid and skilled compliance officers is a win for the bank in in keeping compliant. It’s also a win for your employees who no longer have to spend hours performing the manual collection of data.

Learn more how you can take advantage of RegTech and RPA to ease your compliance burden, download our free e-Paper: Forecasting Your Future: How Financial Institutions Are Improving Operations: 3 Ways to Transform Your Business Using Robotic Process Automation.