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POV

RPA – a Compliance Enabler?

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by Craig Nelson

Financial Services organizations face a daunting challenge in complying with increasingly stringent regulatory compliance standards regarding oversight of third-party relationships. Following the global financial crisis of 2008, regulatory agencies and legislative bodies issued guidelines that, among other things, put the onus of oversight on client organizations. Put simply, a breach in the service delivery chain – wherever or however it occurs – is ultimately the responsibility of the contracting party (the bank).

In response to these regulatory pressures, banks are scrambling to bolster their oversight capabilities throughout the sourcing lifecycle. Specific areas of focus include enhancing contract discipline and defining better processes around compliance. And in many cases, banks are turning to Robotic Process Automation to develop more effective and robust compliance strategies.

Robotic Process Automation (RPA) solutions are software platforms that use “virtual robots” to manipulate existing application software in the same way that a person today processes a transaction or completes a process. By performing rote and routine functions faster, cheaper and more efficiently than human workers, RPA tools offer the potential to drive significant cost savings. Perhaps more important for banking organizations, RPA directly addresses some of the key imperatives of regulatory compliance.

Consider: in contrast to a human worker, an RPA solution not only performs a process function exactly the same way every time, it provides a more detailed and sustainable audit log of activity—an essential criterion of compliance readiness. Another advantage of RPA is that tools can be easily scaled as well as quickly reconfigured or “taught” to perform a wide range of functions—ranging from invoice reconciliation to document review to data consolidation—without any need for training.  Finally, by altering the fundamental premise of labor arbitrage, RPA redefines how sourcing location decisions are reached. This makes onshoring increasingly viable from a cost standpoint—and gives banks operating in high-risk offshore locations an additional lower-risk sourcing option.

About the Author

Craig Nelson has brokered shared services ITO/BPO deals of $400M to more than $1B. His background in process redesign, vendor governance and performance optimization provides a unique blend of operational, transformational and vendor management (VM) expertise giving him a strategic perspective on outsourcing effectiveness.