Automation is changing the way businesses work in this digital era. One impactful technology today is Robotic Process Automation (RPA), which uses software bots to perform routine as well as repetitive tasks. Accuracy, speed and compliance are highly important in the finance industry and RPA is proving to be just a perfect game-changer.

RPA is helping financial organizations to become more agile, reduce costs, improve productivity and offer better services as well. It is fast becoming a must-have tool in the finance world amid the pressure of doing more with less.

What Is RPA? How Does RPA Works in Finance?

RPA is a type of software that can be easily programmed to do basic and repetitive tasks. It mimics human actions like logging into systems, copying and pasting data, sending emails as well as performing calculations. Data entry, reconciliations, invoicing, compliance reporting and other such tasks in finance are done daily and RPA fits perfectly to it.

The bots work 24/7 and never take breaks. The bots also do not make typing errors. Hence, RPA is ideal for such jobs which are boring but still are important. RPA frees up finance professionals to focus on strategy, planning and decision-making by handling repetitive works.

RPA Use Cases in Finance

Let us have a look at some of the primary areas where RPA is making a difference in the finance industry.

1. Automated Data Entry, Reconciliation

One common use of RPA is the entering and matching of data. Finance teams often collects data from various sources such as spreadsheets, emails and invoices. The data are thereafter fed into financial systems. RPA does the job automatically and accurately. The bots also are capable of reconciling records to ensure that the data matches across systems.

2. Fraud Detection, Compliance Reporting

Banks and financial institutions follow strict rules. They also keep a close watch on frauds. RPA bots are capable in helping in this matter by constantly monitoring transactions and flagging things which looks unusual. They can prepare detailed compliance reports by pulling together data from various systems. All these saves time and also ensures that the reports are accurate as well as made ready on time.

3. Invoice Processing, Accounts Payable

Managing invoices manually is usually a slow process and prone to errors. RPA is capable of scanning invoice documents, extracting the data, matching those with purchase orders and processing the payment. This helps in speeding up the payment process and simultaneously reduces the chance of mistakes.

4. Customer Service, Support

Finance teams deal with a plethora of customer queries every day such as checking balances, updating account information and processing refunds. RPA bots are capable of handling many of such simple tasks through emails or chatbots. This frees human agents to focus more on complex queries and less on these.

5. Internal Audits, Reporting

RPA helps with audits as it can automatically gather and organize the necessary data. Bots can track every transaction and thereafter generate detailed logs. This makes it easier to make audit reports. Hence, burden on the audit team is released and simultaneously it speeds up the entire process.

6. Payroll Management

Processing payroll involves collecting employee data, calculating salaries, managing taxes and generating payslips. RPA is capable of automating each of these steps and ensures timely as well as accurate salary payments.

7. Financial Forecasting

It is true that RPA cannot replace human judgment in making forecasts. It can help in collect historical data, formatting it and running the basic calculations. It gives analysts a head start in creating more accurate financial forecasts.

Benefits of RPA in Finance

We have just discussed the use cases. Let us now talk about the benefits of RPA in finance.

1. Improved Accuracy

Humans are prone to errors and especially in repetitive tasks. RPA bots follow instructions exactly as trained and do not make mistakes unless the rules are wrong. This ensures a higher level of accuracy in financial operations.

2. Faster Processing

It is a fact that a bot can work continuously and without taking breaks. It can make financial processes faster like closing books at the end of a month or quarter. The bots do most of the data gathering and checking quickly.

3. Cost Efficiency

RPA lowers operational costs as it reduces the need for manual work. Companies can do more work with fewer employees now. The employees can now be reassigned to higher-value roles. The cost savings are significant over time.

4. Better Compliance

It is to note here that the RPA bots follow pre-defined rules and leave an audit trail of every task they perform. This makes compliance easier and simultaneously ensures that the regulatory requirements are met without delays or missing data.

5. Scalability, Flexibility

RPA can scale up the handling of workload as the volume of financial transactions grows. Fewer bots may be needed during quiet periods. The flexibility allows companies to adjust operations without hiring staff or else firing staff.

6. Employee Satisfaction

Nobody enjoys boring and repetitive tasks. RPA allows employees to do more meaningful work by taking over these tasks. This boosts morale and reduces staff turnover.

Real-World Examples

Several top financial institutions have lately adopted RPA and the results are impressive. JPMorgan Chase has developed its own AI and RPA platform to improve internal workflows. More than 200,000 employees are using the platform today. It has helped in reducing time spent on routine tasks.

AI and RPA have cut servicing costs by nearly 30% in banking. Bots are helping in reducing operational headcounts by taking over jobs in fraud detection, back-office processing and data entry.

American Express is using RPA to manage customer transactions, fraud checks and compliance tasks. The bots have improved speed and reduced cost of operations for the company.

RPA & Challenges

Implementing RPA is not always easy even though we understand it comes with a plethora of benefits. Here are some common challenges being faced by businesses:

1. High Initial Investment

Setting up RPA needs a decent investment for software licenses, infrastructure and training. The long-term savings are of course good, but the upfront cost often turns up to be a barrier for small businesses.

2. Integration Issues

RPA bots need to work with existing systems and it may not support outdated software. It may therefore take extra effort to make things work smoothly.

3. Change Management

People often resist change and particularly in fear of losing jobs due to automation. Companies should manage the change carefully. Companies should provide training and reassure the employees about their future roles.

4. Maintenance, Oversight

RPA can never be a “set it and forget it” solution. Bots need regular updates as well as regular monitoring. They can start making mistakes if the process changes and bots are not updated.