What’s the most enduring lesson you’ve learned from managing your operations in the pandemic-ravaged business environment? That’s a question I posed to several high-powered CXOs from the banking industry.
Well, guess what? The most consistently identified lessons trend towards a laser-sharp focus on operational efficiency and process improvement.
Does this signal a radical shift towards a new permeating culture of doing more, much more with less? Sure. Looks, feels, and smells like it.
And this is probably the most opportune time to put these hard-learned lessons to good use.
An anemic economy, budgets cut to the bone, and shrinking RoI windows. Phew!! The avowed objective of extracting value through process efficiency is justifiably gaining a great deal of mindshare with CXOs.
But if your processes are manual, mundane – and dare I say- error-prone? – you’ve got something worth a long, hard look. RPA like warp and woof of a fabric, needs to be woven in and out of the digital strategy of your bank.
Over the past many months and years, it’s been well-nigh impossible to ignore a barrage of reports, articles, and high decibel marketing campaigns by RPA vendors touting the swiss knife-like capabilities of this technology.
RPA has now graduated from the realm of a buzzword to a high-priority strategy for banks. If industry reports are anything to go by, the global RPA market is expected to reach USD 25.66 billion by 2027, expanding at a CAGR of 40.6% over the forecast period. The BFSI segment is anticipated to grow at a CAGR of 40.1% over the forecast period.
High street banks are avidly implementing RPA in a concerted effort to squeeze efficiencies out of their operations. Investing in RPA makes ample sense. What you may well ask?
First off, it adds muscle around the IT backbone to help your organization lockstep with digital capabilities. It, then, goes on to improve process efficiency, productivity, eliminate manual intervention, save manhours, enhance service availability, reduce risk, inconsistency, and inaccuracy.
Taking the first crack at RPA
Success in business depends on anticipating the future. That’s just the way it is.
ICICI Bank knows this only too well. In 2016, the bank set itself apart in the industry by becoming the acknowledged pioneer for RPA adoption. The bank applied RPA in over 200 business processes cutting across multiple functions including retail banking operations, agri-business, trade and forex, treasury, and human resource management.
It was, in retrospect, a brilliant idea. It led ICICI Bank to muse on the possibility of extending it beyond the initial use cases. Today the bank has approximately 1,500 RPA projects handling around 700 manpower worth of activities to enhance efficiency and improve response time.
This was the beginning of a trend and not an isolated incident unto itself. Banking is a dynamic sector with industry peers who are either early adopters or fast followers. And witnessing the emergence of such a potent new solution was pretty darn interesting for the other banks. Oh boy, would they find themselves watching the action from the sidelines! By 2017, most if not all top banks in India started to dip a toe in the rushing wave of RPA.
This was a time when banks were scrambling to do their crucial bit in giving their operations a sorely needed digital makeover. RPA blends well with this mandate and movement to transform a germ of an idea, or a hint of a process improvement need into an efficient, intuitive, responsive, and secure process. And it’s precisely this need that motivated banks to embed RPA into their operations.
The strategic intent was to first identify the processes that lend themselves well to the application of RPA. “All repetitive operational processes which are outside the core banking platform and are currently performed through manual activity are ideal candidates for RPA deployment,” recommends Zuzar Tinwalla, COO- India and South Asia markets, Standard Chartered Bank.
As is often the case with digital initiatives, selecting the right process can ensure that the low-hanging fruit comes in bunches. Deepak Sharma, President & Chief Digital Officer, Kotak Mahindra Bank couldn’t agree more. He employed the same tack when he kickstarted the RPA project at Kotak Mahindra Bank by identifying 10-odd processes consisting of simple, medium, and complex nature.
Delving deeper into the top considerations for RPA process selection, Sharma shares that apart from being manually optimized, the process should be evaluated on the parameters of scale, risk mitigation, impact to customer experience, and the technical feasibility to gauge if it can be substituted by source system’s APIs.
Mahesh Ramamoorthy, CIO, Yes Bank shares that in the initial stages of deployment, the bank focussed on automating back-office processes. It is now trying to create efficiency from a risk management and productivity enhancement perspective.
Similarly, RBL Bank has a pipeline of more than 25 RPA initiatives. Pankaj Sharma, Chief Operations Officer, RBL Bank is using RPA across functions like operations, card services, IT support, and customer query management.
RPA becomes the order of the day
The most consistently identified use case for RPA in Indian banks is back-office operations. Customer onboarding/account closure and service automation is a distinct but not too distant second. Several others that were cited include reconciliation, fraud and risk, quality assurance processing, regulatory monitoring, and compliance reporting.
Axis Bank started off its RPA journey with a slew of seemingly easy processes and identified the initial use cases around salary processing through STP upload, cheque processing, and clearing activity, and service request processing for address change or nominations. Subsequently, the bank applied RPA to some of its internal banking processes like invoice processing in the finance department, automating complex reports for managing day to day operations, reconciliation activities for operational control, risk-based triggers for general ledger monitoring, voucher processing for vendor payments, and employee travel claim processing.
For every bank, onboarding of customers across savings and current accounts, loan products, credit cards and wealth products require multiple checks and balances including data capture, validation, and communication. Furthermore, a large number of customers reach out to the bank with post onboarding service requests like demographic change, nomination, upgrade of debit card, chequebook request etc. Earlier, all of this was handled through manual processes. But banks have now realized that these processes if driven through RPA can provide straight-through processing.
“There were 10-12 such service requests catering to roughly 45% of total service requests which were automated in the first phase of RPA deployment,” says Ratan Kesh, EVP and Head – Retail Operations and Service at Axis Bank.
Reconciliation, data upload, and transaction processing are the areas where RPA has shown the biggest business impact for RBL Bank. “In one of the customer payment processes, where PAN data needs to be uploaded and validated across multiple systems, bots are now handling it end to end. This amounts to approximately 75,000 transactions per day leading to over 80% savings in manual efforts. Additionally, the bot is handling over 20,000 customer requests per month for the customer debit card servicing process. This alone has resulted in a 90% reduction in manual efforts at the bank’s back office,” contends Pankaj Sharma, Chief Operations Officer, RBL Bank.
And then there are some complex processes where RPA can provide accuracy and efficiency. “Secured and unsecured dispute resolution for transactions carried out via digital and direct banking channels like ATM is fairly complex due to the multiple parties involved in providing settlement and visibility but with RPA it can be simplified and made more efficient. The settlement and reconciliation and communication to players in the network as well as to customers for all digital transactions can be automated completely using RPA. Thereby enhancing customer satisfaction,” elaborates Ratan Kesh.
He is quick to add that the bank has reduced its TAT for dispute resolution from 90 days to less than 7 days with RPA. Axis Bank has also deployed RPA for end-to-end automation of complex processes like diseased claim processing, trade processing, and trade finance transactions.
Similarly, Kotak Mahindra Bank identified inward remittances, trade processing, regulatory automation and reporting, reconciliation and operations processes as the top use cases for RPA.
And there have also been some well-conceived initiatives in the area of risk mitigation. RPA can take a big bite out of fraud incidents. “Our enterprise risk and fraud system are sufficiently automated. It helps us get alerts on the specific risk factors emerging from different channels. We are then able to percolate those alerts across different frontend channels,” avers Ramamoorthy.
Banking on RPA
RPA is getting ingrained in the operations environment in such a manner that it is becoming ubiquitous. “The internal role-based access controls are automated. Processes that took 5-6 days are now self- service. “One of the key benefits has been in handling scale and risk. It helped eliminate all potential points of failure. The human element only comes in for validation. From the initial 15, we have now graduated to 40 use cases from RPA within Yes Bank. We are now trying to achieve the ambitious goal of ZeroOps. Any new product or capability that we are now trying to create is based on this,” he adds.
RPA has moved out of the back office and into the spotlight as it begins to support frontline operations. “For Kotak Mahindra Bank, RPA 1.0 was more about automating simpler tasks whereas with RPA 2.0, we started integrating with APIs, micro-services and intelligent cognitive platforms like ML OCR platforms,” proclaims Deepak Sharma.
Riding the pandemic tailwinds, RPA bolstered its position within banks. To a bank consistent experience is a defining characteristic by which it would like to be known to its customers. This is where RPA stood them in good stead. Ratan Kesh proudly proclaims that during the pandemic Axis Bank’s customer onboarding and service requests were processed seamlessly in a touchless manner through RPA. “The digital frontend was ready, and RPA acted as a facilitator to strengthen it. The front-end digital solutions when coupled with RPA created an ultimate technology and creative symbiosis leading to a jugalbandi of sorts,” he quips.
Quite evidently, customer service channels have come of age with the usage of bots. During the pandemic, when banks were faced with a shortage of staff onground, RPA came to their rescue by ensuring that this did not cause any downstream impact and provided better control on risks. Besides, customer service wasn’t impaired either. “RPA helped us a great deal, especially for reconciliation. The timely movement of files from one system to another through process reconciliation data helped us minimize our overall risk, reducing the impact associated with people’s non-availability. Yes Bank also managed to reduce the incidents of dispute management. The automated process became fairly streamlined and did not result in escalations,” gushes Ramamoorthy.
The pandemic tilted the scales of power in favor of RPA. Ratan Kesh shares somewhat smugly that Axis Bank launched its automated voice assistant ‘AXAA’, an AI-powered conversational voice bot in July 2020. “If we were able to address the customer queries effectively and promptly, it was thanks largely to these carefully cultivated and meticulously executed RPA initiatives. Problem resolution is now faster, easier, and more accurate than ever before,” he claims.
Every so often, concerns about the project payback surface- as well it should. “The typical RoI for RPA in banks varies from 12-18 months. But benefits around better TAT and reduced manual risks are seen immediately,” clarifies Deepak Sharma.
However, CXOs believe that the value of RPA initiatives is multi-faceted. Banks should not quantify the payback in monetary terms only. RPA projects justify their cost soon enough- and in several ways.
CXOs cite numerous benefits, led off by process improvement and efficiency. However, the most dramatic and effective impact has been on the operations front. Zuzar Tinwalla, COO- India and South Asia markets, Standard Chartered Bank is enthused. For him, so far, the outcome of RPA seems to be going in the direction he’d hoped. “In operations, our bank saved 10,000 manhours a month by deploying bots. Operational processes that took 10 manhours every day were reduced to about 1-2 minutes of computation,” he affirms.
Success stories from some of the major banks will lead you to believe there’s something there. “Kotak Mahindra Bank,” Sharma informs, “can now take customer requests directly and validate them for appropriate processing without branch network in the middle.”
The bank now boasts of an impressive roster of achievements: reduced turnaround time for customers with 100% security validations, 25 % reduction in development cycle time with an agile integrated framework, 15% improvement in CX, and 60% optimization in business efficiencies. Kotak Mahindra Bank is scaling up 2X Y-o-Y on the RPA program.
Stick and stay, make it pay
Standard Chartered Bank has seen sustainable gains in operational efficiency by transforming the operations staff into a customer-driven, market-oriented bunch. “RPA freed up people to refocus their energy on value-enhancing, customer-facing, frontend roles thereby increasing our overall service proposition,” states Zuzar Tinwalla.
With RPA, banks have also been able to make a quantum leap forward in their digital dexterity. Axis Bank has seen RPA deliver immediate benefits. Over 3.5 lakh manhours were saved by the end of 2019-2020 through 114 odd RPA projects. “Currently, we have over 1000 bots deployed across various functions,” says Ratan Kesh. And the bank is brimming with plans to expand its RPA initiative.
Clearly, Axis Bank is basking in the benefits of its multiple RPA initiatives. The numbers are in favor of a significant impact. Service request processing which took 2-3 days now takes 2-3 hours. NRI service request processing for address change or nomination has seen a 50% improvement in TAT and cost of operations. The rate of Not first time right (NFTR) reduced drastically from 38% to less than 8%. More than 78% of credit cards post onboarding requests are in STP mode. Salary Processing, and government banking processing is a glitch-free end-to-end automated service with RPA. The bank has seen an 80% reduction in Trade Processing TAT. A new solution around Biometric Locker Operations is at a noteworthy 98%. Another first- Transactions routed through Automated Teller have moved to 67%. Pretty smart, huh?
But that’s not all. Leaner and economical operations enhanced customer experience. Account opening for certain types of accounts is instantaneous. Yet it maintains stringent validation measures by conducting 40+ types of validation including internal and external data sets. Bots respond to 26% of the calls at call centres. “Our sustained growth exhorts us to stay invested on the RPA path,” Ratan Kesh declares.
While efficiency tops the chart when it comes to measurable business impact, Pankaj Sharma reflects that RPA is immensely beneficial in knowledge management within a bank. “RPA journey forces banks to document their past experiences in the form of logic trees, validation rules which mainly resides in the minds of hands-on process owners. This documentation brings clarity for the on-ground staff and also eliminates guesswork ensuring consistent process outcomes,” he explains.
With the steady march of RPA into the banks, a new charter for efficiency is being hammered out. As their business grows, automation can grow right along with it. RPA is not a final destination but a route to an intelligent and smart future. A future that fully realizes the potential of intelligent automation.
Meanwhile, it is sure to help you realize efficiency on multiple fronts. With RPA, it doesn’t lie very far off.