The shared future of Robotic Automation (RPA) and Investment Banking Operations
Thursday 31 January 2019
“The prize for organisations that get RPA right is significant. Yet, to achieve it they need first to establish the right ambition, foundations and agility” (4)
With the constant focus on cost and sustainability, the operational efficiency of Investment Banks has never been more in the spotlight.
The traditional means of reducing cost within operations remains: reducing headcount. Since the financial crisis, Investment Banks have reduced headcount by:
Focusing on Process Improvement through methodologies such as Lean, Six Sigma – and utilising the capacity created.
Absorbing roles, resulting in longer hours and more risk of costly errors.
The focus on cost reduction has coincided with an ever-increasing focus on regulation (MiFID II, Dodd Frank etc.), placing a strain on existing staff within Operations to ensure their processes comply with these regulations.
The easy-sell solution to both reducing cost and satisfying regulations and control? Automation! Automation promises reduction in headcount and the ability to build rules that comply with regulatory requirements.
When the concept of Robotic Automation (RPA) was first presented in the boardrooms of Investment Banks, you can imagine the utopian vision of 2019: a back office fully staffed by an army of robots and, with the reality of this vision, the removal of the expense of both the cost of labour and manual errors brought to the process by humans. Why then, at the start of 2019, has RPA been delivered with limited success? Investment banks continue to operate with the burden of costly and non-revenue generating employees within Operations, and continue to invest time and money in attempts to become more efficient.
“Last year, Deloitte’s survey of 400 global firms found that 63 percent of surveyed organizations did not meet delivery deadlines for RPA projects.” “30 to 50 percent of initial RPA projects fail” (2)
Key questions need to be answered, before the full benefit of RPA can be realised within the Operations space.
Who owns, and is ultimately responsible for, the maintenance and governance of the robots?
“Many implementations fail because design and change are poorly managed” (3)
Before committing to an RPA project/solution, it is imperative that there is a clear plan on the on-going and future operating model. There are two obvious candidates for the ownership and governance of the robots:
The process owner
The technology department
If the first option is taken, and the ownership of the robot lies solely with the process owner, then there will be a clear benefit of having knowledge of the process and external factors which may trigger required changes to the robot’s process flows. However, an important point to note would be that any benefit of the implemented solution would only be realised locally, with no scalable benefit for others in the organisation who perform the same or similar tasks.
The second option also presents clear benefits and drawbacks. Whilst a technology department has the expertise of managing the plethora of systems used by Investment Banks, in most organisations these departments feel the burden of the many legacy systems which they continue to support – and would be unlikely to welcome the addition of managing robots on top of this workload.
Furthermore, technology departments would rarely be close enough to the process to be expected to fully understand the effect of regulatory changes on the processes which have been automated by the robot. For example, ensuring an RPA flow is fully GDPR compliant.
Neither option addresses the scenario of managing change in the robot’s flows that are required due to changes in any one or more of the systems which are integrated in the flow. For example, most technology systems are programmed to require users to change their passwords over a recurring period. Who monitors and ensures the necessary changes are being made to ensure the robot’s processes are updated accordingly to continue integrating with multiple systems?
Additionally, many RPA flows offer integration into email systems, involving reading/copying text from incoming emails, and compiling standard outreach/outgoing mails. In today’s environment, phishing emails are becoming more sophisticated in targeting firms for illicit purposes. Does a lack of formal governance present security concerns? Who ensures that the robot doesn’t allow hacking opportunities when processing incoming mails.
In Deloitte’s study of “The robots are ready. Are you?” (4), there is a suggestion of a “hybrid” of locally based support with knowledge of the underlying processes, and a centralised function which can integrate with connected systems and take leverage from other RPA solutions within the organisation, resulting in retaining “local ownership” and benefiting from “economies of scale and enterprise-wide co-ordination”, where applicable.
“Just as a human resources department seeks to get the best out of human employees, so a machine resources department, or RPA centre of excellence, should do the same for the organisation’s robots.” (4)
Is RPA a replacement of the continual improvement of Operations processes, or should the two be used in conjunction?
“Taking an end-to-end view of the outcome needed and measuring that delivered output is better than applying a robotic Band-Aid to a particular pain point” (1)
“RPA can’t fix bad processes – it just speeds them up” (2)
As organisations continue to strive for operational efficiency, RPA has the potential to play a very large part – however, it should not be the sole focus. Employees should continue to feel empowered to make improvements to their processes through traditional means, making further gains through the utilisation of RPA on an efficient process.
By utilising RPA for simple yet time consuming tasks, organisations will see a greater return on investment. If simple/repetitive tasks that are performed by many employees (for example, standard format outreach emails) are automated, skilled and expensive employees will be enabled to focus on complex and higher value tasks that are not possible or are more costly to automate.
Forward thinking employees within Operations should look to up-skill and learn the technical (coding of RPA) skills required for their future careers within their organisations.
Organisations need to stop treating RPA like an “experiment” (4) and fully commit to a strategy and a sustainable operating model that will enable them to deliver scalable automation in conjunction with operational efficiency.
By empowering employees to take ownership for the continual improvement of their processes, along with automating relevant and repetitive tasks, Investment Banking Operations will evolve into handling exceptions from RPA flows, and upskilling of employees to perform more complex and potentially revenue generating functions.
Vice President - KYC Delivery Manager
Graham has worked within Investment Banking Operations for over 11 years – with extensive experience across Asset Servicing, Settlements and Middle Office and has played a key role in the migration of several roles from London to Belfast based teams.
Graduating from Strathclyde University with a BSc Hons in Technology and Business Studies, Graham worked for Morgan Stanley in Fixed Income Settlements and Middle office roles before relocating from Glasgow to Belfast in 2011.
Prior to joining FinTrU, Graham worked with Citi where he was an established member of the management team within Asset Servicing.
At FinTrU, Graham is a member of the management team currently leading a team on a KYC remediation and refresh project for a Tier 1 Investment Bank Client.
Founded in December 2013, FinTrU is a multi-award winning financial services company that is committed to giving local talent the opportunity to work on a global stage with the largest international investment banks. FinTrU provides its clients with high quality, cost-effective, near-shore resourcing solutions. FinTrU’s products are: Legal, Risk, Compliance, KYC, Operations and Consultancy. Its clients are all Tier 1 Investment Banks based in London, New York, Tokyo, Frankfurt and Paris. FinTrU currently employs 330 staff at its two Belfast city centre offices and Derry/Londonderry.