Robotics has picked up in the last 3-4 years with a rapid growth in off-the-shelf configurable platforms. With significantly reduced timelines to automate manual processes and low investment, Robotic Process Automation (RPA) has become a part of cost and efficiency programs across back office operations and shared services. RPA fits in well to provide a secure and controlled environment, making the processes error-free.
In capital market firms, complexity cannot be avoided — it is a natural by-product of growth and success. There is an emerging need to solve deep-rooted operational inefficiencies in a fundamental way. Some of the reasons for operational inefficiency are
- Gamut of applications, data movement in multiple applications requiring reconciliation
- High capex requirement, long gestation period to enhance or replace aged applications
- Complex processes, changing regulatory requirements resulting in change in business rules
- Labor intensive processes, leading to operational risk and higher cycle time and errors
To succeed in today’s challenging and complex environment, capital market firms need to act swiftly with precision to maximize economies of scale and reduce cost per trade to penetrate new customers. In order to reduce costs in middle and back office operations, capital market firms have been using the traditional method of offshoring work from high cost location to low cost locations. However, since labor arbitrage has become institutionalized, it is no longer sustainable to achieve further cost reductions. Therefore, there has been a major focus on new digital technologies in the capital market industry. Most of the capital market firms are resorting to RPA as a quick and tactical solution to transform their back office to achieve cost reduction and higher efficiency.
In this paper, we have presented RPA’s applicability in the context of capital market back office operations (excluding front office) for sell-side firms (Investment banks and brokerage houses) based on our experience in performing these operations for leading clients.
Robotic Process Automation in Capital Markets
Most of the large financial institutions have successfully completed robotic pilots leveraging multi-product vendors and service providers in the last 12 months. They have now shortlisted RPA as the tool of choice and have carried out due diligence exercises to identify right opportunity areas for robotics within their back office operations, either outsourced or captive.
Our initial assessment of the process landscape in capital market firms suggest multiple process areas wherein value can be derived from robotics, subject to scale of operations, level of consolidation and nature of information (See Figure 1).