How Robotics and AI Could Instigate a Revolution In The Finance Sector
Witten by Marieke Saeij at Onguard
A major revolution seems to be taking place within the world of finance. The introduction of new technology in the form of Robotic Process Automation (RPA) and AI looks set to overhaul the way we work. Businesses have traditionally been limited to IT departments to detect security breaches, deal with user issues and to automate tasks. So far, financial services are utilising AI for stock trading, predicting fraudulent transactions and determining risks. However, this is only the tip of the iceberg. Organisations are recognising the opportunities and benefits robotics and AI present to finance departments, particularly through automation.
There are several major benefits of RPA. Not only does it perform tasks accurately, but it does so faster and without the risk of human errors. Although tasks have to be simple and repetitive, RPA allows for the automation of mundane tasks. Though the finance sector is yet to widely implement it, RPA presents the opportunity to automate tasks such as invoicing. Hundreds of invoices would be automatically inputted and processed within the system. This would free up countless hours usually spent by individuals on the task. Similarly, there is potential to automate the processing of mortgage applications with automatic financial advice, provided based on algorithms. Other processes that could be automated include processing bank mutations and compiling reports. All of these tasks are regular features within the sector.
Jobs which have previously been automated will be able to go one step further. For example, it is currently possible to automate the process of segmenting customers into groups based on established rules. Thanks to new technology, AI’s capabilities can now extend to improving the assessment of a customer’s creditworthiness. Previously, this assessment involved rules that were very black and white, with credit managers assessing any grey areas. However, the introduction of AI enables an automated assessment of these grey areas. This makes it easier to make informed decisions on credit risks.
With RPA proven to have greater accuracy than people, its use could lead to increased quality and lower costs. Thanks to this accuracy and ability to carry out automated tasks, financial professionals will find that they have more free time which they can spend on bigger tasks. This would allow them to focus more closely on other priorities as well as their customers, rather than on smaller, time-consuming tasks.
Benefits for Credit Managers
Robotics and AI could also improve the transparency of financial processes for credit managers, particularly the Order to Cash process. One of the main processes in a financial firm is the Order to Cash chain – a collection of business processes for the receipt and processing of orders and ultimately their payments. Without this process, continuous cash flow is not possible, and this has consequences for an organisation’s survival. This is one particular area that AI and RPA could be put to good use. Automating the simpler, more repetitive tasks allows finance professionals to focus on the exceptional cases that can’t be processed by RPA. Additionally, the technology will ensure all financial information is up-to-date and comprehensible in real-time so that focus can be placed on analysis and strategy.
This new technology will make it possible to achieve more with the data collected by finance departments. One such example is performing reliable predictions based on customer history. For example, AI can analyse data in software solutions and establish any patterns in order to predict certain events. It can predict which customers are likely to fall into payment arrears. This will allow credit managers to determine when to take action and whether to approve credit. In turn, this is likely to increase cash flow as finance teams have an increased awareness of which customers should or shouldn’t have their credit approved. Predictions made by AI also applies to other processes, such as the invoicing method. AI can predict which payment method will result in the invoice being paid quickest, and transferring customers to collection agencies.
The Future for Financial Professionals
It is clear that a large number of the benefits of AI and robotics in the financial field stem from the ability to automate processes. This reduces time spent on time-consuming task and increases the potential of financial professionals to focus on more important tasks. These technologies also remove risks of human error, which in the financial sector can be costly. It can also improve job satisfaction as workers focus on “bigger picture” issues, while machines work with more mundane day-to-day tasks.
“The current use of RPA and AI is the tip of the iceberg as organisations begin to realise the opportunities they present to finance departments, particularly through the use of automation.” ~ MARIEKE SAEIJ
Despite the many benefits, there is another way in which robotics and AI could instigate a revolution within the sector – and this one might be a harder pill to swallow. Unlike humans, robots are productive 24 hours a day, seven days a week; they never tire and are never sick. They are also getting smarter and more affordable. Ultimately, they sound like the ideal ‘employee’ and this could have a wider impact on the sector with research suggesting 230,000 finance jobs could disappear by 2025. Although this presents a major concern for job security, it will be up to the sector to create new jobs which can be added to this new world of robotics and algorithms.
Should There be Concerns?
While concerning, this trend has parallels with the Industrial Revolution. Looking back through history, the Industrial Revolution meant new machinery replaced many jobs previously held my blue collar workers. Although not on the same scale, and now replacing brainpower rather than physical labour, financial professionals should look to this period for inspiration and find ways to compliment and work alongside the new technology. It isn’t a surprise that workers feel slightly vulnerable.
That said, job losses are simply theoretical at this stage. Despite the concerns, AI isn’t about replacing workers but about aiding them to do their jobs better. In the immediate future automation presents the financial sector more benefits than risks. There is no doubt that robotics and AI will revolutionise the finance sector in the coming years’ thanks to its ability to automate, simplify and increase the speed of processes. Change is undoubtedly a risk but failing to change is the greater risk for companies. Failing to adapt to these new technologies is likely to mean being left behind by the competition. https://www.finextra.com/newsarticle/30236/capital-markets-jobs-on-the-line-as-banks-raise-ai