Robotic process automation (RPA) can help organisations navigate the increasingly complex compliance landscape.
As governments around the globe tighten online regulations, compliance is becoming increasingly challenging for businesses to navigate — and more expensive. Consultancy firm Duff & Phelps predicts that in banking for example regulatory costs will rise from 4% to 10% of banking revenue by 2021.
Corporate, legal and compliance departments therefore all have a critical role to play in protecting businesses from unnecessary risk and failure. No matter the industry, 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 regulatory burden. 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 technologies, including RPA which automates rules-based and repetitive tasks, freeing up professionals to concentrate on more strategic, creative and cognitive work.
Businesses should therefore look to adopt an ‘automation first’ mindset, addressing business challenges with a hybrid human/software workforce.
How can businesses navigate the increasingly complex EU compliance landscape?
Fluctuating compliance measures
Using technology to help with an organisation’s compliance measures 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% 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% of respondents claimed that these technological solutions were affecting how they managed this, whilst nearly a fifth (17%) 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% for carrying out internal processes for companies in the financial sector.
How to approach modern regulatory change management in financial services
RPA: The future of compliance
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, software 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 Group. 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 ten days laboriously combing through records before automating the process — which took a total of 60 minutes and represented a 98.75% reduction in time. Put simply, RPA has saved Landmark hours of work, whilst simultaneously boosting internal efficiency.
The new normal
One of the key drivers behind the rising cost of compliance is 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 ‘the new normal’, this is creating an onus for businesses to use technology to bring compliance under control. By using RPA, they can not only limit risk exposure, but also automate, streamline and optimise compliance management to create a competitive advantage.