In recent years we’ve seen governments around the globe regulate their nation’s online activity with more restrictive rules, producing greater - and more expensive - challenges for businesses. Consultancy firm Duff & Phelps predicts that banking regulatory costs will rise from 4 per cent to 10 per cent of banking revenue in the next year. Protecting businesses from unnecessary risk and failure is the responsibility of the legal, corporate, and compliance departments, which all have critical roles to play. By working together they can ensure that businesses are complying to the new regulations set out in each country. The type of industry is irrelevant - all companies must take an active role in ensuring they meet legal compliance standards and rules in order to produce their operations, employees, and customers.
However, hiring more people is not the solution to reducing the regulatory burden as the need for compliance remains a human led issue. What’s needed to crack compliance management efficiency is the automation of complex workflows. To solve this challenge long-term, compliance leaders must look to technology, including Robotic Process Automation (RPA), which automates rule-based and repetitive tasks, freeing up professionals to concentrate on more strategic, creative, and cognitive work.
And indeed they are. A recent study by Forrester Consulting titled, The Future of Work Is Still Being Written, But Who Is Holding the Pen? has revealed that in the next twelve months it’s predicted that 66 per cent of organisations will increase their RPA software spend, to free up their employee’s from administration task. It states that automation – namely RPA – will enable businesses to deliver better service to their customers, which will drive conversions and revenue. Furthermore, automation is also enabling businesses to reduce costs, differentiate themselves in the marketplace and improve employee experience.
Its influence is growing too, helping the creation of complex workflows needed to achieve compliance management. Indeed, Nearly one-in-ten businesses (88 per cent) worldwide believe that automation will accelerate human achievement by enabling them to focus on more strategic initiatives. Businesses should therefore look to adopt an ’automation first’ mindset, addressing business challenges with a hybrid human/software workforce.
Increasing compliance measures
Using technology to help with an organisation’s compliance measures and efforts is becoming more crucial, given the rising scrutiny from governments – who are themselves using RPA to maximise and increase their monitoring efforts.
As law firm Allen & Overy has noted, due to the higher pressures of regulatory scrutiny today, compliance has moved up the corporate boardroom agenda. For organisations, it’s crucial that they’re using RPA to ensure that they’re meeting the necessary requirements. There are very few places to hide any more, and the financial risks for businesses are high. Between January and April 2019, the UK imposed over £935 million in fines, representing a significant increase in regulatory activity as, up to this year, it had imposed only £334 million fines in total. In addition, for companies falling foul of General Data Protection Regulation (GDPR) rules, the maximum fine is up to 4 per cent of annual global turnover or €20 million – whichever is greater.
Unfortunately, many companies still don’t know if their processes are not meeting compliance standards, or how to remedy non-compliant operations before it’s too late. This is where “RegTech” can play a crucial role. RegTech refers to the management of regulatory processes within the financial industry through technology, including regulatory monitoring, reporting, and compliance. A Thomson Reuters survey found that RegTech is shaping regulatory compliance: 52 per cent of respondents claimed that these technological solutions were affecting how they managed this, whilst nearly a fifth (17 per cent) reported they had already implemented one or more RegTech solutions. RegTech solutions integrated with automation technologies such as RPA have been shown to deliver savings of up to 75 per cent for carrying out internal processes for companies in the financial sector.
Robotic Process Automation: the answer to ensuring compliance standards
RPA can assist with compliance by helping create more robust and effective compliance programs. From a reduced volume of legal issues, better retention of employees and customers, and improved business operations, RPA can help in many ways. It enables organisations to take greater control over their own operations and deal with compliance issues more easily if they arise. It also offers higher levels of compliance as, once a process is established as an automated workflow with RPA, it is executed in the same way every time without errors, regardless of whether the process concerns data transfer and migration, invoice processing, or purchase order issuing. This means that RPA empowers companies to establish unparalleled levels of process accuracy, especially compared to the work that can be done by human employees. Consequently, businesses can better maintain higher levels of compliance across all business processes. And, for any unexpected compliance audits, robots save their actions – and human employees’ actions – into an activity log, creating an audit trail that provides an accurate recording of which processes were executed and how.
One such company that has used RPA to improve business operations in the context of compliance is Landmark. Following value-added tax (VAT) being introduced to the Middle East, Landmark needed to process 47,000 records to ensure that the company met strict compliance standards. Its team spent 10 days laboriously combing through records before automating the process – which took a total of 60 minutes and represented a 98.75 per cent reduction in time. Put simply, RPA has saved Landmark hours of work, whilst simultaneously boosting internal efficiency.
The new status quo
The rising cost of compliance is one of the key drivers behind the volume of regulations. Each week sees an average of 45 new regulatory related documents being issued. And with experts calling this level of change ‘normal’, the obligation to bring compliance under control has meant there is a greater dependency on technology. By using RPA, they can not only limit risk exposure, but also automate, streamline and optimise compliance management to create a competitive advantage.
Chris Duddridge, Area Vice President and Managing Director of UKI, UiPath