Banking in Industry 4.0 Robotic Automation as answer to the challenges of tomorrow

Industry 4.0 is rapidly transforming not only IT, but business in general.

What lies behind this phenomenon, commonly referred to as the fourth industrial revolution, and what will be its impact on banks?

Before we go any further, I would like to point out one thing. Industry 4.0 is first and foremost a change. And facing change, positive or negative, causes fear. This is true not only for IT and the business world, but for all of us. Whether it’s changing jobs, moving to a new city or starting a new routine, we are always afraid of the unknown. But the simple truth is – change is necessary.Embracing change, adapting to it and making the most of it is essential to growing and moving forward. Because, where there is change, there is opportunity. Let’s see how we can apply this analogy to banking in Industry 4.0.

Industrial (r)evolution?

The fourth industrial revolution has been powered by the rise of digital technologies: cloud, Big Data, Internet of Things, Analytics, Machine Learning etc. As such, it’s rapidly transforming the world of work and process execution, and particularly human-technology relationships (technology no longer has a supporting role, it becomes a substitute for manual labor).

Industry 4.0 focuses on process automation, which speeds up product development and enables the emergence of new business models. From an operational perspective, automation allows organizations to achieve higher efficiency by automating the entire process production lifecycle – from idea, through design, development, marketing and sales.

As a result, Industry 4.0 gives enterprises the opportunity to drive efficiency, while saving time and resources. At the same time, it represents a kind of “technological Darwinism”, where companies must transform their processes or else will become extinct.

The digitalization of banking:  new challenges

For banks, process automation is not a new concept. With shrinking margins and intense competition from FinTech companies and digital startups, banks have been relying on technology for quite some time so as to reduce costs, optimize processes and speed up delivery time for products and services. Banks are also feeling more pressure from client’s growing expectations to offer new digital options.

Banking, from the perspective of industry 4.0, calls for an even greater level of digitalization. Just like autonomous cars promise to be the norm one day, “the bank of the future” will be mostly digital. But going down this road will bring with it many challenges.

Let’s start with the obvious. Banking is an industry which relies heavily on human resources. Many back-office processes and tasks are performed manually, which means higher expenses, error-prone and slow processes. This type of system affects the speed of digital transformation. Another common challenge is the complexity of legacy systems, which cannot be changed overnight.

But, the challenges don’t stop there:

• New market players: automation is the core element of Industry 4.0. Unlike banks, which have to adapt to change step-by-step, new financial players are automation natives.
• Omnichannel digitalization: customers expect a seamless experience across all channels. To be able to offer that, banks need to digitalize a whole range of processes, including back-office operations, which can be difficult to automate.
• Regulations: achieving industry and regulatory compliance requires time, resources, expertise and the use of new technologies.

Business process management vs. Robotic Process automation

As mentioned, banks are already familiar with process automation. Systems such as Business process management (BPM), which unify methodology and software tools for modeling, implementation, execution, monitoring and process optimization, are often implemented in banking institutions. These systems are aimed at redesigning existing processes and can be used as part of the process automation strategy. But there is a step further to go.

Robotic process automation (RPA) is a technology which replicates human-computer interactions. Unlike BPM and similar systems, RPA speeds up process by eliminating heavy human tasks. Its main purpose is to speed process execution through the automation of individual, repetitive tasks that would otherwise be performed manually. The two main differences between RPA and BPM are:

1. RPA is a software concept – BPM is a mixture of software platform and process implementation methodology
2. RPA can be easily adapted to any BPM system – BPM can apply RPA as one of the approaches to eliminate bottlenecks

The use of robots in banking

Robotic process automation is a quick and simple way for banks to automate a wide range of processes, and:

• Secure efficient interaction between different systems, thus eliminating the need for employees to manually source data
• Upgrade middle and back-office processes (faster execution, fewer errors)
• Speed up the processing of Big Data
• Free up employees to focus more on clients and provide a better customer experience
• Reduce time-to-market and total cost of ownership (TCO)
• Simplify regulatory compliance with greater transparency
• Pave the way for a new wave of transformation towards 100% digital bank

Some clients, as soon as they hear the word “robotic”, immediately think of some futuristic technologies that are complex to implement. This couldn’t be further from the truth. Deploying RPA is simple, inexpensive, carries zero risk and takes only a few days or weeks. There is also no need to hire expensive IT experts.

With RPA, banks can get a fast return on investment due to more efficient processes provided by automation.

Change brings opportunity

Robotic process automation can be thought of as a bridge between manual processes and full automation. As one of the core elements of Industry 4.0, it is the next step in the banking transformation journey.

Given the large number of our clients that are from the financial sector, we strive to always offer the latest technologies for digital banking, such as IBM RPA.  You can find out more about this technology at http://ibmhybridcloud.lookbookhq.com/rpa. I’d like to add one last thing:

The rule of the game in Industry 4.0 is unchanged –banks that are among the first to implement new technologies, will be more competitive. RPA should be viewed as an opportunity. A chance for faster, more efficient and profitable banking. An answer to the challenges of tomorrow.