• June 19, 2024

By Christopher Vitek, RPA Industry Veteran and Contact Center Specialist

In 2021, the banking industry will be subjected to more profit-sucking regulations than ever before. The effects of Covid, the SolarWinds security debacle, and a new administration will have a profound impact on the banking industry. Many have already hired thousands of new employees to address the coming regulatory, security and customer-driven onslaught.

Software robots are an alternative; however, due to RPA’s negative impact on the employment of craft-developers in IT departments, there are not a lot of RPA technology fans in large banks’ IT operations. In other words, what professional software developer would recommend a solution that would put them out of work? Make no mistake, RPA/AI implementations are disruptive.

Responding to Challenges with RPA

SolarWinds: The hack affects at least 18,000 customers including several federal agencies and 400 of the Fortune 500. The earliest known breach was 14 months ago in October of 2019.

The security ramifications for banks and financial institutions are profound. Access to customer information and/or illicit access to banking systems for months will have every bank reviewing security policy and auditing their security infrastructure. Many will change their customer’s authentication processes. Many will invest in additional layers of security. Some will use AI and RPA to evaluate every attempt to logon to every system.

This last approach is the only way to create a layer of abstraction that looks and acts like a human traffic-cop without having to hire more humans. Further, given software robots ability to execute complex logic and securely access virtually any system, they can systematically lock out any user and send internal and external alters about the situation in real time. This can include real-time engagement of contact center agents to assist customers who may be subjected to a false-positive fraud rating.

Know Your Customer (KYC) was already a problem before the hack and before Covid. Given the high probability of new regulations, the amount of time needed to process a routine KYC investigation or fraud investigation will expand geometrically. Of the 22 major banks I have engaged in the last two years, all were hiring more people for KYC. Some have begun implementing RPA to assist investigators. Most, however, have not. They just keep hiring more people.

Covid-19: The impact of the pandemic will be more customer-centric in the banking business. There is an expectation that many banking customers will become insolvent. Statutorily required bankruptcy documentation and communications are mandated by local, state and federal governments. The variability at the state and local level will cause many disruptions. Automation of the processing of bankruptcy notifications with RPA is a very real solution. Look for some services companies to start building software robots for this purpose. None of the top three RPA companies have a bankruptcy automation solution on their marketplaces.

Mortgage and loan restructuring processes are going to get more complex and more frequent. These processes are mostly manual due to their historically low level of frequency. Again, many banks and mortgage servicers are hiring thousands of people to support this surge. UiPath has a solution on their marketplace.

New government regulation is always accompanied by document creation, enhanced reporting and notification processes. Federal regulators collectively employ 20,000 people. That is about one regulator for every 100 bankers. The great part about RPA is that it can be deployed 10 to 20 times faster than traditional IT solutions. A smart RPA program manager can counter any regulatory increase by being more agile than the regulators.

RPA and AI will be transformational for banks that adopt it. For those that do not, there will be an endless increase in cost to deliver basic services. Lack of automation will cause cost-of-service to increase like a winter-Covid-curve. RPA/AI, like hiring thousands of new employees, does not flatten this curve, it reverses it. Banker do have a choice, but only those who understand the utility of RPA and AI to solve for the impact of new regulations on their business processes and banking systems will flourish. 

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