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RPA in Financial Markets: Everything You Need to Know

During the past decade, the global economy and financial markets have witnessed a rally of peaks and troughs.

Needless to say, the volatility is created largely by the infusion of technology which is making sweeping changes across all industries and verticals. 

Further, financial markets themselves have become habitual users of technology.

Automation, specifically Robotic Process Automation (RPA) which has been reserved for use by a handful of industries have become potent tools for financial trading as well. 

There are several reasons why RPA could become an indispensable technology in financial markets:

  • Large volume of transactions with repetitive operations incorporated into them
  • Need for accurate calculations and predictions based on financial models
  • Shorter cycle times to complete time-bound transactions

For all these reasons and several others, RPA has become a necessity in financial trading.

But, how exactly can RPA help?

That forms the discussion of this article.

Let’s take a look at some of the possible use cases from around the world.

4 Areas Where RPA Can Turnaround Fortune for Financial Markets

While RPA applications are endless in count and diverse in nature, there are specific RPA use cases that financial markets can utilize to improve their operational efficiency, their bottom line, and even the customer experience. 

Here are four of them:

  1. Ensuring legal compliance
  2. Automating trade settlements
  3. Fraud detection and risk mitigation
  4. Improving customer service

Ensuring Legal Compliance

Financial markets are governed by strict legal compliance measures that are imposed not by a single institution but by several institutions.

Keeping a tab on the latest developments and ensuring compliance is a nerve-racking task for the average human.

With the help of RPA, compliance across the board can be automated and continuously monitored.

Take for example the need for ensuring customer identification and documentation.

Every player in the financial markets is required to validate the user’s personal identification details before they are allowed to transact.

However, vetting documents manually can prove to be an almost impossible task when there is a huge volume of IDs to be verified. 

With RPA, a customer’s personal identification documents can be quickly validated using Optical Character Recognition (OCR) and Image Recognition technologies.

Optical scanning and machine reading ensures that there is minimal error and maximum time savings.

Automating Trade Settlements

Once upon a time in the banking industry, inter-bank cheques were manually exchanged between agents and then processed for payments and trade settlements.

The advent of internet banking, RTGS, IMPS, etc. changed those processes forever.

Today, the same technology can be used effectively for facilitating trade settlements.

With RPA, it is possible to transact bulk transactions in one go and thus save significant time and effort.

Since these transactions are rule-based there is minimal chance of error. As a result, it improves the trust and transparency in financial trading.

Fraud Detection and Risk Mitigation

One of the challenges that capital markets across the globe face is detecting frauds and eliminating loopholes in the system that leads to frauds.

While errors can be easily prevented by optimizing process workflows, frauds are deliberate in nature and deviate from preset workflows to attain some personal gain.

Until technology became an active force, fraud detection and risk mitigation was largely done with the help of risk analysts.

However, in today’s times, given the volume and velocity of transactions, a human-led risk analysis and risk mitigation process is not feasible.

There is the need for technologies like Robotic Process Automation which can flag process deviations on a real-time basis and aid in fraud detection and risk mitigation.

Improving Customer Service

The financial market is one industry that has remained infamous for inferior customer service.

Stock traders, brokers, and rest of the service providers do not deliberately make customers wait or delay settlements.

The sheer volume of transactions and the velocity of ongoing transactions make it difficult to provide support to existing customers on a real-time basis. 

However, RPA can change that negative label that the industry has automating customer service. chatbots , which is the basic form of RPA at work, can be used to provide customers with account information, solutions, or even answers to basic questions about transactions.

This will reduce the load on human agents enabling them to focus on customer support tickets that are complex in nature and require elaborate investigation. 

Success Story from the Wall Street: Nasdaq Builds a Scalable Automation Infrastructure with RPA

It is almost five years since Nasdaq has incorporated RPA into its tech stack. The leading US stock exchange has always been at the frontier of using technology to foster a digitally-enabled trading platform.

Today, it uses RPA as a service to automate processes that were earlier led by manual agents. 

To reap maximum benefits of RPA, Nasdaq also trained its employees with training from the Digital Workforce Academy which helped them scale the automation process quickly. 

With the inclusion of RPA, they were able to build a scalable IT infrastructure which delivered tangible benefits like:

  • Savings in time and effort by automating manual tasks
  • Creating optimal workflows that will eliminate redundant situations 
  • Hard dollar savings due to augmented productivity and reduction of errors
  • Improved risk mitigation, maximum compliance, and tightened security

The Bottom Line – RPA in the Financial Markets

The visual of a robot sitting next to a stock broker might seem like a scene out of a Hollywood sci-fi movie. Unfortunately, this is not how RPA infusion in financial markets will look like.

Instead, it will be more of a system improvement or transformation from within.

It will take the form and shape of process improvements, automated workflows, and rule-based automation with minimal manual intervention. 

So, does that mean human workers will lose their jobs? Absolutely not.

On the contrary, it will create new job roles and responsibilities that will demand the existing workforce to upskill and acquire new skill sets.

All said, the future of financial markets will involve a lot of automation along with human involvement. 

Do You Have Any RPA Needs to Fulfill?

RPA solutions offered by Perfomatix can benefit businesses of all sizes in the financial markets sector.

Whether you are a startup or a fully-fledged enterprise, RPA can bring these benefits to your business.

Get in touch with us to set up a meeting with our RPA experts.

Perfomatix | Product Engineering Services Company