ROBOTICS AND AI TRANSFORMING THE INDIAN BANKING SYSTEM

By Sneha Bose

With the advent of Robotic Process Automation (RPA), Artificial Intelligence (AI) and Machine Learning (ML), India has been seeing radical changes in the workflows of various sectors and industries. The financial and banking system in India is not an exclusion. From ATMs, Cash Depositing Machines, Chatbots, and Fraud Detection Algorithms to many other automated AI-based applications, today these technologies have become an inevitable part of our banking system.

The need for improved efficiency, reduced operational cost and digitisation has forced banking in India to introduce automation in various banking operations. The recent initiatives taken by the Government of India such as Jan Dhan Yojana and Cashless India to bring huge economic reforms have further pushed the banking sector toward a Digital India.

Withdrawing and depositing money through ATMs and Cash Depositing machines, getting updates on financials and performing transactions on Mobile apps and Online Banking, getting customer assistance over calls through automated voice recognition and chatbots, and biometric access to important pieces of information all are done through RPA.

 Unique Efficiencies that RPA brings to the Financial Sector.

Operational Efficiencies: RPA is designed to perform tasks faster than a person can. It addresses the monotonous, tedious and repetitive tasks that can be handled efficiently by the use of robotics and AI without any human involvement. RPA works the best with rules-based repetitive processes without facing problems such as fatigue or tiredness as in a human counterpart. It can work 24x7 until commanded to stop. This bridges legacy systems to streamline data management and processes. Plus, it does not require any IT architecture changes and deployment can be easily scaled as required.

Cost-Effectiveness: The cost of robot software represents one-fifth of a full-time employee onshore and one-third of a full-time employee offshore. Plus, overhead and fixed costs associated with housing and employing a person are reduced when replaced by a robot.

Accuracy: RPA are programmed to follow rules, so their productivity is higher and error rates are minimal hence, reducing risks and increasing customer satisfaction.

Risk Mitigation: Since RPA technologies track and monitor all the tasks that they automate, they also help companies to become more audit and regulatory compliant. This also reduces the chance of fraud, human manipulation and corruption.

Flexibility and Scalability: Robots are scalable and easy to switch on and off. They can work through the nights, weekends and holidays, offering maximum flexibility to cover the peak periods like the month-ends.

Time-Saving: RPA is designed to work faster based on the rules. It can replicate human intelligence and can do the task repetitively in a much faster and more efficient manner. Thus, saving the time of the human resources or employees so that they can be put to use in more important tasks that require a high level of cognitive capability.

Increased Customer Satisfaction: Where RPA acts as the body, AI performs as the brain, very similar to that of a human being, only with a faster accurate response. Hence, it provides timely rapid solutions to the customers while properly analysing the content and intent of the customer demands or grievances.

Robotics is expected to have lasting impacts on improving efficiencies. KPMG predicts that robotics and AI can bring down costs in financial service firms by 75%, while IRPA believes that it can cut costs up to 25%-50%.

Ever-increasing Applications across the Financial sector.

India has witnessed high volumes of AI applications in recent years in its financial sector. The high volume of manually intensive repetitive tasks, prone to human errors and risks are being rapidly replaced by these technologies in the banks and financial firms of India.

For e.g., ICICI Bank uses RPA to perform over 1 million banking transactions in backend operations per day, reducing response time by 60% and improving accuracy.

One of the leading Indian banks, in its Bangaluru branch, has deployed a robot named “Mitra”, manufactured in China, that can identify nationalities of and guide customers in a bank.

Robo Advisory, which uses Intelligent Analytics and Machine Learning, is used to assist decision makings such as advice for various investments.

Banking in India has to scale up for the Adoption of Robotics and AI.

Even if AI and RPA are used in many operations of the banking system, there are many banks still in the early stage of adopting these technologies.

Indian Banking faces 3 major challenges in the adoption of AI and Robotics: -

First, an upfront Capital Investment is required which has to be justified and promoted within the organisation for the adoption of AI and Robotics.

Second, need for a complete restructuring of the deployment process and change management required to cope up with the re-training and re-deployment of the staff.

Third, and probably the biggest challenge that these banks are going to face in adopting AI and Robotics is the further exposure to the Cyber Security Threats. As the robot workforce gets merged and interconnected through IoT (Internet of Things), threats of potential security lapses and hacks may increase.

“The biggest bottlenecks we see today are –lack of trained resources capable of delivering RPA, internal inertia that requires a change management process, and heavy scrutiny and concerns by the institutions with regards to data security. There is also a perception that robots will lead to staff attrition but the truth is that robots replace humans in dull processes and empower the same human to do high-value processes. However, this message needs to be well articulated by the key stakeholders and sent across the institution,” explained Daniel Dines, CEO and Founder of RPA Software Company, UiPath.

 Future of Indian Banking

It is evident that AI and Robotics will keep growing and advancing in the banking sector of India. The banking industry has to anticipate and proactively shape how automation brings innovation, increases demand and alters the competitive dynamics beyond operational changes. With the visualization of future India, the banking sector has to prepare the ground where humans and machines can complement each other and work towards the betterment of the organisation and society. The sooner they traverse the path, the easier it would become even for those whose jobs would be impacted the most due to robotics and AI.