In an edited version of a piece in CFO Middle East, EY MENA’s Khurram Siddiqui shares his thoughts on why robotic process automation is something that finance departments need to prepare for as part of their future.
With increasing mandates to reduce costs, improve the speed, volume and quality of information they provide, as well as delivering insight into the business, the region’s finance departments are under pressure – particularly within the financial services sector itself.
Robotic process automation (RPA) has rapidly become a new hot topic and many of the large players in the financial services sector are either assessing the possibilities or already benefitting from this new solution with their first implementations.
In terms of costs and timelines, the logistics of RPA implementation are relatively insignificant compared to major IT platform updates. It is therefore likely that RPA will quickly change from being ‘a differentiator that delivers competitive advantage’ to a standard practice that needs to be adapted for survival.
RPA competitive advantages for the finance sector include:
- Radical improvement of cost efficiency under growing pressure on costs
- Greater control in a constantly changing business environment
- Skilled resources are enabled to focus on driving value creation for the business
RPA achieves cost savings by replacing humans and reducing the processing time of high-frequency tasks. The cost savings can be 50-70% for some of the automated activities. This technology also contributes to the optimisation of finance processes by moving the processing of the robotised tasks from the critical path to low operation times, such as overnight or weekends. The software for RPA has relatively low implementation and timeline costs because it can be applied to existing applications without changing the current IT environment, as well as emulating the human execution of tasks via existing user interfaces. Viewed as a business project rather than an IT project, RPA implementation gives more flexibility and control over the adaptation process to the finance function.
Remain in control
RPA is an alternative to further outsourcing and offshoring finance operations and the benefits include:
- Data does not leave the country
- No time lag between the head office and the offshore team
- Less coordination between teams is needed
- Higher degree of compliance with internal control frameworks
With these benefits, RPA can even provide a business case to reclaim certain finance activities from offshore location and reimplement them on-shore.
RPA supports regulatory change as a cost efficient tactical solution that reduces pressure on roadmaps for the strategic IT platform upgrades needed for new regulatory requirements. It provides an alternative to inefficient manual workarounds, as well as to immediate IT platform customisation, and therefore reduces deployment and upgrade costs.
With tactical integration, RPA can support the business environment and response to market challenges and can accelerate innovation by 9-12 months.
RAP promotes the ability of finance functions, which provides rapid benefit delivery, incremental improvement and the ability to respond to change rapidly.
Finally, RPA can increase overall quality and customer satisfaction and reduce exception costs, as real-time processing improves service; reduces dependent process exceptions; and allows batch processing out-of-hours to reduce the legacy platform load at peak.
Drive value creation
RPA can help the finance sector significantly in providing analysis and insights into the business. Cognitive RPA can extract and combine data from various sources, including external data providers, social networks and shared drives, as well as recognise text and graphic information.
RPA is most effective in finance processes such as:
- Operational accounting: billing and collections, accounts receivable
- General accounting: allocations and adjustments, journal entry processing, reconciliations, intercompany transactions and close
- Financial and external reporting
- Planning, budgeting and forecasting
- Treasury processes
Will robots completely take over the finance function?
No. The training and operational management of a robot are handled by human specialists. A robot will need to proactively involve humans for analysis and decision making at certain steps, where insights and subjective assessment should be used.
Finance personnel will face a change in the skill sets required to achieve this, as more capacity will be used in tasks requiring additional intelligence, such as advanced analysis and interpretation, review and approval and decision making.
Finally, organisations will need to pay attention to psychological acceptance of humans cooperating with robots. This is triggered by robots ‘taking the human jobs’ but also by the effects like ‘uncanny valley’, where robots become more and more interactive.
RPA can be a quick win, bring immediate benefits and stay for the long haul, becoming an integral part of finance processes and bringing them to the next level.
The article was originally published in the CFO Magazine.
At the upcoming 11th CFO Strategies Forum MENA, regional CFOs and financial decision makers will meet to network, exchange thoughts on the value of technology adoption and learn more about new technologies to support the finance function.
The forum will be taking place on November 15th and 16th in Dubai, UAE.
To know more about the forum, visit www.cfomideast.com