29/01/2017
While most of the trading in financial markets today is done by machines or high-frequency software algorithms, and the customer-facing front end of banks is automated, in the back and middle offices, human workers are still shuffling paper and doing manual, repetitive, error-prone work that has long been assumed by robots in manufacturing industries.
That could soon change. Next-generation business process outsourcing (BPO) providers like Genfour in the UK and Finland’s OpusCapita, which helps companies streamline their purchase-to-pay processes, are using robots instead of humans to automate firms’ finance, accounting and human resource functions. As James Hall, Genfour’s founder and CEO, puts it, he is “trying to build a BPO company without any people in it.”
Genfour, based in Wales in the UK, operates a virtual workforce of software robots—not physical robots like the ones found in factories—that perform mundane, repetitive, rules-based tasks, such as claims management, bank reconciliation, direct debit processing, checking and auditing processes and new business quotes. Genfour and OpusCapita promise firms a cheaper, more efficient way to increase automation of their business, so they can compete with the likes of Google, Amazon and Uber in an increasingly automated and digitized world.
The term “robotic process automation” refers to software robots or virtual machines that do the work of humans in the back office.
A software robot uses a virtual machine and log-in to interact with a firm’s back-office systems, much like a human does, except it can process much larger volumes of data than the human brain, runs 24/7 and costs a lot less (about $2.70 per hour by Hall’s estimate). “The software makes decisions based on defined business rules,” explains Genfour’s Hall. “You can schedule [programs] to start at certain times, finish the process and go on to another. They can run all night, so when your team come in the next morning, they only have to deal with the exceptions.”
In a 2015 white paper on RPA, Indian BPO provider Tata Consultancy Services (TCS), which has built its own robotic processing tools, says robots can improve the accuracy and efficiency of balance sheet reconciliation, regulatory reporting or any process that requires multiple validation checks. It says the accounts payable process is a classic use case for RPA. The robot can read data from a vendor’s statement and match it to internal financial systems. According to TCS, this kind of activity can result in productivity gains of more than 90% with 100% accuracy. In the area of claims validation by insurance companies, TCS estimates that RPA can reduce transaction times by as much as 80%.
But the rise of robotics does impact cybersecurity. The more processes a company automates, the more susceptible it becomes to cyberattacks.
“Robots are only taking the worst work, the laborious and mundane stuff [humans] can only get wrong, which frees them up to do high-value work,” says Petri Karjalainen from OpusCapita. Humans will still be needed to program and supervise the robots. “It will require new skills,” he says. “It’s not that different from the Industrial Revolution. Information workers will change in the same way farmers moved to factories and desks. Work will not disappear, it will only change.”
From "The Rise of the Machines", Global Finance Magazine, 07-08/2016.
