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Momentum Growing for Robotics at Asset Servicers

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Across the asset servicing industry, software robots are already improving efficiency and de-risking manual processes. In fact, we’ve reached a point where every type of enterprise, from the largest asset servicers to the smaller boutique administrators, are adopting these technologies.

Other financial services firms such as insurers and banks were some of the first robotics process automation (RPA) adopters, first using the capabilities a few short years ago. Their successes supporting front-office client facing functions caught asset servicers’ attention and charged their resolve to get similar benefits.

Asset servicers have made their intentions known. For the past 18 months, they’ve been touting their plans for RPA application to the professional investor community as a way to save costs and eliminate manual processing and associated error rates. Many of the largest asset services have been proving the truth of those claims, and have installed hundreds of robot processes in that time.

Why Is This Capability so Compelling?

Relative to other data processing businesses, asset servicers have traditionally hired higher cost, high-value individuals to perform complicated activities such as accounting for derivatives or processing payments around the world. Yet, this talent has too often been relegated to manipulating spreadsheets, typing data from one system to another, or undertaking other activities that don’t leverage their skill sets to the full value of their compensation.

(Related: 5 Predictions for Advisor Fintech in 2017)

Now, the asset servicers have shown how these manual tasks can be performed with robotics software and are accelerating the technology’s deployment. And it’s not just about reducing cost and error rates.

Perhaps more importantly is what it frees up. By moving routine work to a virtual workforce, financial services firms are able to deploy human beings more carefully and strategically. Notably, when robotics and RPA start to take on more significant tasks, skilled employees can help facilitate even more advances by shifting into roles that only human cognition can handle, such as direct client service and relationship management, strategic technology and process improvements, and other top line growth initiatives that would have required incremental hiring.

All the while, the dollar savings created by the strategic use of robotics is hard to ignore. A simple transition from 80% onshore/20% offshore to 60% onshore/10% offshore with a 30% virtual workforce can cut costs by nearly 25%. Apply these savings across hundreds of staff and this equates to tens of millions of dollars in annual savings.

Best Practices to Realize Robotics’ Full Potential

Process automation is best executed within an enterprise operating model, when a company is committed to establishing a technology environment or a center of excellence that can prioritize and expedite the rollout of automation across businesses and operations. The next stage of maturity provides a federated model where the operating units assign talent close to the processes being automated to lead the RPA development, testing and release management.

Done under the guidelines of and using the tools from a center of excellence, this further accelerates the tool’s acceptance and benefit realization. Building such an environment across the business enables an enterprise to implement a formal design authority organization and process, create reusable objects and leverage experience from project to project across the company.

Another best practice that has emerged is ongoing evaluation and prioritization of the benefits achieved through automation. Centers of excellence help establish the criteria for applying robots to asset servicers’ processes. It’s not just about counting the number of staff removed from a process, but how the process fits into strategic and tactical plans for systems upgrades and other business transformations. 

One example of a robotics transformation that cut a process timeline from weeks to hours was an accounting system conversion from a legacy environment to a strategic investment accounting platform. The software robots that were developed for a single client conversion will be used repeatedly across the rest of the asset servicer’s domestic client base, significantly reducing the end-to-end timeline for migrating its client book. The resulting benefit is the reallocation of newly freed resources to client-facing value-added activities, such as improving the operating model for service and information delivery.

Final Thoughts

The CEOs of asset servicers are espousing the benefits and their plans for this technology. The industry is making big bets on robotics, and it’s no longer a choice to be competitive. Many areas are already benefitting from robotics, including reconciliations, trade processing, cash management, billing, regulatory reporting and reporting consolidation.

With all of these possibilities, leading practices have emerged to prioritize opportunities; manage rapid deployment; implement centers of excellence; and empower talent to reassign the rote aspects of their jobs to a virtual workforce. As more use cases are identified and tested, other best practices will emerge, and more benefits will be achieved.

— Read Technology Is Your Firm’s Central Nervous System on ThinkAdvisor. 

Keith Caplan is a principal in the financial services organization at Ernst & Young LLP. Alan Schneider is a senior manager in the financial services organization at Ernst & Young LLP.