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Robotic Compliance- A Dynamic Change

The unfolding of the 21st century established the arena of digitalization and automation. Virtually every sector is looking for the deployment and support of computing and digitalization for the up-gradation as well as the betterment of the businesses. This need leads to the evolvement of a lot of special automation software or bots, robots, tools, etc. Finance companies have also set digitalization as the top priority.

Modern innovations like Robotic process automation (RPA) is rapidly transforming the way businesses work and grow. The disruption will gradually spread across the planet, making organizations perform at rocket speed. Considering this transformation in the finance and accounting sectors, RPA can transform all middle- and back-office operations.

Robots (bots) perform to imitate rules-based and process-oriented manual execution activities such as document gathering, data retrieval and performing calculations, thereby automating workflow and making decisions for a variety of processes such as loan origination, collections, etc.

RPA has been implemented widely across organizations to promote efficiency and effectiveness. Moreover, the apparent benefits of RPA is a plus point for financial institutions and are helping them to embrace bots. Financial institutions and companies are elevating their corporate performance by leveraging this technology in innovative ways. As financial services companies and businesses consider various functions that are benefiting from robotic process automation, compliance comes out as a powerful candidate, especially in the sphere of monitoring and testing.

“RPA in test execution may improve efficiency by significantly reducing time to execute the test,” says Dilip Krishna, chief technology officer for Deloitte Risk and Financial Advisory, Deloitte & Touche LLP.

“By understanding the opportunities for compliance automation, taking important preparatory steps, and addressing key implementation considerations, including performing appropriate cost/benefit analyses, financial services institutions can be better prepared to tap into RPA’s potential,” says Thomas Nicolosi, Principal- Deloitte Risk and Financial Advisory, compliance modernization leader with Deloitte & Touche LLP.

“Leveraging RPA in compliance processes can lead to several benefits, including expanded resource capacity, improved outcomes through greater quality and consistency, and expanded scope of coverage in—for example—the breadth of transactions sample size and product coverage,”  states Mr. Nicolosi.

The Benefits of Modernizing Compliance

“Modernization makes the compliance function more flexible to scale up or down as needs change, and it creates capacity in the system. It can help not only to reduce the potential cost of regulatory scrutiny but also to reduce the level of scrutiny. It elevates compliance professionals to a true partnership with the businesses,” says Thomas Nicolosi, Compliance modernization leader, and Deloitte Risk and Financial Advisory principal at Deloitte & Touche LLP.

  • The compliance process is one of the most data-driven and analytics-rich components of the businesses. Organizations usually invest a substantial amount of money and time in capturing and processing the data, which eventually ends up serving the requirements of regulators. The renewed compliance function has a greater ability to analyze data that not only enables risk detection (that can jeopardize the company or business somehow) but also drive new opportunities within the business or company.
  • Modernizing compliance can result in re-engineered core processes to make the compliance process more sustainable, more effective, and repeatable.
  • To leverage compliance modernization, executives or CFOs should have the clarity of implementing bots and automation in suitable, best-fit strategy and leadership picture that can certainly add value to decisions.
  • Leveraging RPA to administer monitoring activities, testing, and other compliance-related processes can produce ample benefits.
  • RPA executes processes more efficiently than humans, thus expanding resource capacity.
  • It enables personnel productivity and allows them to focus on higher-value tasks.
  • With a greater consistency in the execution of the business processes, expected, improved, and enriched outcomes can be achieved.
  • It ensures cost-reduction through a 24-hour work model that doesn’t get weary or charge more for working overtime.
  • RPA streamlines sampling by extracting information from multiple systems with different data structures across the company and selecting sample populations using predefined sampling norms.

“RPA can help institutions expand their sample size or move to full-population monitoring and testing without significantly increasing total execution time,” Mr. Krishna adds.

Insights From Modernizing Compliance

Compliance automation offers various benefits and opportunities to the businesses. Taking pre-compliance preparatory steps and considering key implementation including conducting relevant cost and benefit investigations, financial services companies can tap into RPA’s potential. Here are 5 insights on how RPA can facilitate compliance modernization in financial services:

Insight #1: RPA enables a more effective and dynamic compliance process.

Robot implementation enhances and improves various aspects of error-prone compliance. As mentioned above, monitoring and testing are the main candidates when considering compliance modernization. RPA is fully capable to draw and aggregate data from varied sources. It can also enhance the performance of regulatory, non-financial, and uncertainty reporting as it can help eliminate or diminish the time-consuming processes of collecting, analyzing, and interpreting, and summarizing large amounts of information. Other potential automation nominees comprise the risk evaluation process, infirmities management, and investigative analysis processes.

Insight #2: The best way to examine RPA’s potential in the compliance process is to assess monitoring and testing results on the modernization of the process. 

For instance, financial service companies perform a collection of unusual tests to conclude if their diverse services are compliant with regulatory requirements (such as specific laws, rules, ordinances and, internal policy directives). The financial institutions execute ample tests annually with diverse frequencies, sample sizes, and it takes time to complete. Each test is planned (inclusive of sampling), collecting documents and evidence, executing the test, and reporting. Bots help in performing repetitive, manual, and exhaustive monitoring and testing activities, thus, empowering companies to divert personnel towards higher-value areas such as complexities, decision-making, experience-based monitoring/testing activities, quality assurance investigations of results, and root cause study of anomalies.

Insight #3: As per the findings and observations so far, a zeal and willingness for RPA can enhance and stimulate the implementation process.

An important factor of RPA planning is evaluating the aptness of existing methods, data, operations, and the overall governance structure for the installation of automation. Processes should be evaluated to discover if they are durable or require any remedy before automating. If there is a need to re-design, fix, or upgrade the processes, an assessment should be conducted to conclude whether process re-engineering should occur during the expansion of automation or whether automation of those processes should be done at the earliest stage?

RPA’s heavy dependence on data to automate compliance processes makes data quality supreme. It’s also important to resolve whether the technology base can support RPA, current systems are harmonious with the new automation tools, and system immunity can be preserved in the automated environment. For many financial services companies, augmentations to their current governance base are likely to be expected before the modernization of compliance monitoring and testing. The key components required to efficiently operationalize modernization include:-

  • Enhanced governance – This includes administration routines, clearly outlined roles and responsibilities, and updated policies and systems
  • Problem management, danger management, and broadcasting – Regulated issue reports populated by robots and approved by humans with a specified feedback loop and escalation process for broadcasting or reporting problems experienced during automation.
  • Shift management – Established management systems for recognizing, managing, and approving analysis and associated automation changes.
  • Skillset advancement and training – This includes open-ended capability evaluations and role-based training.

Insight #4: RPA is all-set!

While bots are exemplifying its potential to boost process cogency and efficiency, broaden capability, improve quality and viscosity of results, enable a tremendous spectrum of coverage, and potentially reduce expenditures, process automation with bots also indicates more to come. Today, cognitive automation, AI (artificial intelligence), and other tools profess to automate ever-more judgment-based, entangled tasks. For example, cognitive automation’s capacity to facilitate investigation and interpretation of formless data can further broaden the coverage for additionally complicated compliance monitoring and testing actions. Opportunities are also arising from using RPA together with cognitive tools and different rising technologies.

Insight #5: Technical implementation of robotic process automation sometimes remains unanswered in a face-off round leaving a few questions unanswered.

Even though digitization of workflow and the technology-based decision-making has been growing over the past few years, there are still some challenges that bot deployment usually face and need to be considered by the organizations before modernizing their business processes through RPA. These questions are:

Q1: How will RPA handle the dependencies among various automated processes?

Since automated business processes within a system or organization may depend on the actions or results that other bot triggers, the dependency factor can be an issue here. Moreover, at times more resources and extra time can be demanded by the implementation of robots.

Q2: Which department within the organization will be put to the deployment of automation?

Usually, robotics are being deployed in the information technology department or divisions that require to automate their processes. But, regardless of the technical hold of bots in any of the departments, RPA implementation will surely be a success when IT and all other business processes are integrated seamlessly and consistently.

Q3: How to handle post-implementation processes and requirements?

Once RPA is implemented, there’s a lot to manage, Not only at the execution level but also at the management level as personnel will need clarity on how to handle issues to achieve timely and effective solutions.

Risks Of Leaving Compliance Functions Out

As accounting and finance companies have been constantly broadening their digital footprint using automated accounting software, artificial intelligence, RPA, and emerging technologies, their risk profiles have also changed through more instances of possible vulnerability and the growing threat of cyberattacks. A lack of flow and consistency among security actions in the organization can make these susceptibilities worse still. Therefore, the absence of an effective compliance process and in-house audit programs can increase the possibilities of hidden threats that may go undetected sometimes.

Likewise, it is also possible that other nearly aligned roles are homing in on digital change. The CLO (chief legal officer) and CIO (chief integrity officer) roles might need to move slightly lateral with compliance and internal audit. Separate, unplugged actions can create redundant duplications, costs, and additional vulnerabilities.

In the same way, another hazard to count is financial. The exorbitant expense may start accruing if the technology resources already exist elsewhere in the organization.

Deferring Digital Change May Put Compliance Function On Risk

Non-digitalization or delaying compliance-modernization can obsolete compliance functions. Since RPA can handle exponentially more activities than humans, it must be leveraged to provide compliance and internal audit. The bots have not fallen into disuse, rather more companies are using them every year. Compliance and internal audit may have a narrow window to jump from the old and conventional models to digital models. In the meantime, low digital capabilities could further impair relationships among compliance, internal audit and the rest of the business.


RPA, if implemented with the right strategy, can be a valuable tool. The 2 main considerations worth keeping in mind in investigating RPA’s probable use in compliance are-

  1. RPA is not an elix but, it can be a highly beneficial tool for enriching procedure efficiency and it is earning vast acknowledgment in financial services organizations.
  2. It’s futile and foolish to embark and automate everything. Organizations should conduct a cost-benefit analysis to infer whether attempting an RPA action makes businesses grow.

Other controls such as people and procedure initiatives can also deliver big retrievals. Ultimately, it can be helpful to recognize new tools and techniques that may provide formerly unimagined opportunities. Whatever is impossible today may not be impossible tomorrow!

Compliance modernization confers a more imperative aspect of the compliance function that contributes to creating value within the organization. Modernization involves a comprehensive mandate that spans people, processes, technology, and analytics, with an influence on new efficiencies and intermediary points in other parts of the company. Modernized compliance can be an organization’s most harmonized way to monitor, prognosticate and analyze what’s transpiring inside the organization’s system and what’s coming from outside. It can be seen as a magical power stimulating the sixth sense that lets the businesses see risks and opportunities unusually and more proactively, as it stirs the compliance risk management program to a more efficient, effective and productive methodology.

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