Robotic Process Automation: A taste of the future or repeating the past?

Robotic Process Automation (RPA) is being lauded by some as the next major trend for transformation in Financial Services.

RPA involves deploying software that imitates a ‘real’ user by performing repetitive manual work across applications and systems, without the need for complex systems integration. ‘Robots’ interact with a user interface the same way a human would, have their own logins and are able to toggle between programs to perform tasks like copying and pasting data.

RPA claims significant benefits: improved staff engagement by removing dull repetitive work; built-in audit trails; low cost and high speed implementation; heightened process accuracy; and improved productivity. It is of particular interest to Finance functions for use in repetitive, rules-based work such as reporting, reconciliations, accounting, expenses and invoicing. Robots do not take time off to eat or sleep, nor do they care for weekends and holidays. They are not prone to errors when tired.

However, whilst RPA may appear a ‘no-brainer’, Finance functions should take caution before proceeding en masse.

In particular there are three key areas Finance teams should consider before wholesale RPA adoption: the potential for missing bigger process improvement opportunities by focusing on short term RPA gains; the increased governance required to support RPA; and the danger of losing knowledge capital in favour of cost reduction. Failing to consider these areas properly could see RPA do more harm than good.

Solving the wrong problem

Where low-level processes can be improved by RPA, banks should first take a step back to see whether the end-to-end process requires attention and improvement. RPA may provide some short-term benefits within departments, but could result in wider and more beneficial process improvement opportunities being overlooked. As management guru Peter Drucker said: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.” Applying an army of robots to do menial work may have appeal in the short-term, but in doing so, greater opportunities to innovate and create the Finance function of the future may be missed.

Governing the robots

RPA will require extensive governance and maintenance to ensure that bots stay current and adhere to latest standards. Moreover, implementation could introduce additional and so far unanticipated forms of operational risk into processes if the robots go wrong. Whilst audit trails are an integral part of RPA and will provide some comfort, controls will need to be rigidly documented, implemented and monitored to ensure the robots are performing as expected.

Additionally, by its very nature RPA centres on low-level processes that are performed by individuals. This may require robots to be maintained at a local level, with central IT functions effectively handing over ownership and control. This risks adding greater complexity to the oft-sprawling IT architecture of big financial institutions, as new ‘off-piste’ and localised IT programmes are created.

Data lineage will come under even greater scrutiny as RPA will allow for the rapid transfer of large volumes of data from one application to another, without passing through the standard gateways and linkages between systems. This will create additional challenges at a time when data management at financial service organisations is already in the spotlight as a result of increasing regulatory obligations.

Replacement versus displacement

Although proponents of RPA say it will lead to job restructuring that will allow knowledge workers to focus on higher-value problem solving tasks, there is a risk that RPA may see the person who understood why the job was done replaced with something that only knows how the job is currently done.

Knowledge capital will be lost if RPA is indiscriminately applied and results in heavy FTE cuts; much of the value that individuals add to an organisation cannot be measured by simple process metrics alone. For example, knowing how to resolve a potentially costly process exception can be worth more than processing work items at an increased rate. Organisations must ensure that RPA is leveraged to free knowledge workers to do the work that robots cannot – innovation, creative thinking, problem solving – and not simply to trim the cost base.

RPA is undoubtedly a pioneering technology with vast potential, but its use should be considered carefully. Fashionable transformation initiatives of the past like offshoring and centralisation have created their own issues, something which financial services institutions must be mindful of. Service providers looking for the next cash-cow may trumpet RPA as the next big thing, but those that rush into RPA implementation are in danger of missed process improvement opportunities, increased IT complexity and lost knowledge capital.

Finance leaders will need to see through the hype to ensure that the technology becomes a true Finance enabler. Helping them to embrace the benefits of the future, not repeat the mistakes of the past.