Published 07. Oct. 2019
How RPA Is Transforming Banking And Insurance
Robotic process automation (RPA) has become a mainstream technology in the banking and insurance industries for its role as a 'digital workforce'.
The adoption of robotic process automation (RPA) is quickly becoming an integral part of business processes among Nordics companies, and is an especially hot topic in the banking and insurance industries. Digitally transforming their legacy systems, RPA is set to drive banking and insurance companies into smarter and more efficient organizations.
RPA In Insurance
Technology advancement moves slowly in the insurance sector due to its conservative culture towards disruptive business models. However, in 2018, Statista reported that 30% of insurance companies were implementing RPA, showing the industry’s willingness to integrate innovation into their organizations.
- Claims Processing
Claims adjusters are tasked with collecting information from various sources to determine insurance liability. Speed is critical in claims processing, and manually inputting data of varying formats can lead to missing data, errors and delays.
Using pre-defined rules, RPA speeds up the claims process by accurately extracting and writing data into the insurance systems. It also assists in verifying information located in different sources to detect the right data and prevent fraud.
With disparate sources to analyze insurance risks, underwriters can take 2 to 3 weeks on average to make informed decisions about their customers’ risks. This results in loss of customers due to the lengthy delay.
RPA accurately collects relevant data from third-party and public databases, reducing data collection time. By combining artificial intelligence (AI) and machine learning with RPA, insurers can also utilize predictive analytics to manage their customers’ risks better.
- Regulatory Compliance
The insurance industry has strict guidelines for documentation and audit trails, but compliance standards change frequently with the time. Moreover, the tedious processes are prone to errors, leading to risks of regulatory breach.
RPA improves regulatory processes through workflow automation, replacing employees who have to go through the operations manually. The solution also ensures data accuracy with a complete log of changes that allows companies to monitor their regulatory compliance on regular internal reviews.
RPA In Banking
RPA is gaining momentum in the banking industry as well. Aside from gaining competitive advantage, banking firms are also maximizing efficiency and reducing costs with RPA. Furthermore, shifting the multitude of manual tasks from their employees to machines has allowed banks to minimize errors and decrease processing time.
- Accounts Payable
A simply yet monotonous task, accounts payable take up more than 80% of practitioners’ time on repetitive data entry and manual filing. In fact, based on an article by SoftCo, manual data entry and manual routing of invoices for approval are two of the biggest challenges within the accounts payable process.
Coupled with optical character recognition (OCR), RPA extracts information accurately into the system, reducing human errors and preventing potential financial loss. RPA also removes inefficiencies of complicated invoice approval workflows through a pre-configured automated process with set deadlines for each stage of the workflow.
- Loan Processing
Loan application has long been considered a slow process, which is contrary to modern customer’s expectations for fast and seamless loan services. The highly repetitive task of processing loans can cause employees to become unmotivated, which will then lead to slower processing time and errors.
RPA bots embedded with complex business logic assist to automate part of the loan decisions and manual processes. It helps to reduce the cycle time, closing loans faster and giving the organization an edge over the competition. Automating the loan processes also allows employees to focus on more productive tasks.
- Customer Service
Dealing with hundreds to thousands of customers daily, the banking industry is challenged with providing increasing low turnaround time. Know Your Customer (KYC), for example, is a process that takes a considerable amount of time to validate the customer’s identity.
RPA tools help to quickly and accurately validate a customer’s data by matching it with previous records, reducing turnaround time to seconds. For edge cases that require intervention, RPA rules will re-route the case to a staff. Automating rule-based processes enables banks to provide real-time optimal customer service.
In a nutshell, the benefits of RPA include:
- Automating repetitive manual tasks
- Optimizing operational efficiency
- Reducing costs and errors
- Enhancing customer experience
- Enabling more productive employees
- Compliance with regulations and standards
With a market size forecast of almost US$ 4 billion by 2025, RPA is the future of enterprise automation and a key pillar in the digital transformation strategy of the Nordic banking and insurance sectors.