What do you think of when you hear the word “robot?” Maybe it’s a gigantic mechanical arm that swoops down from the ceiling to tighten a lug nut as a car is being manufactured. Maybe the phrase “Danger, Will Robinson” comes to mind as you picture the robot from the television show “Lost in Space.”
The reality is that robots are being used in a myriad of industries. From welding, painting, labeling and testing products to providing surgical assistance, disinfecting equipment and dispensing prescriptions, robots are being used to cut costs and increase efficiencies in our daily lives.
For the financial industry, the use of robots doesn’t involve complicated or expensive pieces of machinery. Instead, high-volume and highly repetitive tasks can be performed by software bots running in the background while human employees work on more valuable tasks. The savings in terms of expenses and employee time adds up to impressive ROI statistics. That’s why MEMBERS Development Company (MDC), a network of nearly 70 leading credit unions dedicated to strengthening the cooperative movement by developing effective solutions to the problems facing our industry, broached the subject with its owner credit unions.
MDC first mentioned the subject of Robotic Process Automation (RPA) in a survey of its owners in late 2017. At that time, 36% of the respondents had not heard of this technology, 21% were interested in participating in a pilot program and 100% were extremely or moderately interested in hearing more at the February 2018 Owner Meeting. As a result of that meeting, three owner credit unions were selected to conduct pilot programs: Coastal Credit Union (Raleigh, N.C.; assets of $3.25 billion); Kinecta Federal Credit Union (Manhattan Beach, Calif.; assets of $4.5 billion); and Farmers Insurance Federal Credit Union (Los Angeles; assets of $913 million).
What is it?
Known as robots for white collar jobs, robotic process automation (RPA) is a relatively new technology to financial services. It can replicate keystrokes and mouse clicks, allowing a credit union to move data from one file or format to another. Examples would be entering data from a scanned document into a database or moving data between systems that don’t integrate. For instance, when setting up a new member account, the address field would be entered only once and then populated automatically in other systems, saving keystrokes, time and the possibility of errors. That’s good news when it comes to decreasing expenses. The fact that robots can work 24 hours a day, 365 days a year with no overtime pay is even better news.
How did it perform?
On behalf of its owners, MDC researched RPA providers and selected Pegasystems, an industry leader, to work with. With some training, the pilot credit unions analyzed their current processes and decided which would make a good candidate for automation. RPA is most effective when applied to highly repetitive, standardized transactions. Each of the three pilot credit unions selected a process to test, and each of them experienced remarkable results.
Coastal Federal Credit Union chose to automate the process of resetting employee passwords when employees call the help desk. Traditionally, this involves logging on to multiple systems to change passwords, monopolizing both the requestor’s and the help desk person’s time. The chart below shows the dramatic change in efficiency. Instead of logging on to multiple systems, the help desk employee can handle the request with one click and move on to the next caller.
Kinecta Federal Credit Union decided to set up an RPA process to update deposit rates across multiple internal and external systems. Not only does this task involve logging on to multiple systems, but the possibility of someone transposing digits can cause big problems, as the difference between 2.36% and 2.63% is significant. As the chart shows, this process is a 100% increase in efficiency as the RPA process automatically updates deposit rates without human intervention.
Farmers Insurance Federal Credit Union developed an RPA process to create automatic payroll deductions for payments on new loans. Again, this operation means transferring data between systems, requiring logging on to the various systems. The chart below displays the dramatic decrease in time and cost.
What are the benefits?
The results of these three tests were presented at MDC’s August 2018 Owner Meeting. Having three of our owner credit unions present such positive results reinforced to the rest of the owners the significant ROI that can be achieved with this technology.
As the statistics show, implementing RPA resulted in significant savings in terms of time and cost while showing tremendous leaps in efficiency. But there are additional benefits too:
- Bridge to the future. RPA processes are a great way to interface with legacy systems. Imagine the digital future you want and use automatic processing to bridge your legacy systems to that future.
- Increased job satisfaction. Few people want to sit at a desk performing mind-numbing tasks all day. Your employees’ personal life is filled with technology that makes their daily tasks more convenient. They don’t want to wrestle with old-fashioned technology. By employing robotics to perform the routine tasks, employees are freed to spend their time on more meaningful parts of their job, like serving your members.
Where do we go from here?
Building on the success of its pilot programs, MDC negotiated advantageous pricing with Pegasystems for credit unions within our network, and a dozen have signed up so far. We are also currently expanding our work in automation beyond RPA and into the AI space in the forms of chatbots and machine learning, working closely with almost 20 of our owner credit unions to identify and automate workflows with maximal ROI using a combination of these and other automation technologies.
In order to compete in the dynamic financial services marketplace, credit unions need to look for ways to control expenses while offering members the best service possible. These types of automations are easy wins to do so, and most credit unions are nimble enough to implement automation much more readily than the larger banks we compete against for market share.
MDC’s mission is to help credit unions grow and prosper by performing the research and development necessary to help them compete. Bringing this relatively new technology to the forefront of our industry is one way we accomplish our goal.
Kent Zimmer is the Senior Vice President of Operations for MEMBERS Development Company, an interactive network of industry leaders serving as a catalyst for success in the credit union industry by identifying and connecting disruptors in financial services. MDC’s owners pool resources to enable relevant research, develop innovative products and services, create valuable vendor relationships, share knowledge, provide economies of scale and keep a consistent focus on the horizon. Combined, our owners serve 14.5 million members, hold nearly $206 billion in assets, maintain over 1,800 branch locations across the nation and employ more than 37,000 employees. More information is available at www.membersdevelopment.com.