What RPA Can and Can’t Do for Middle-Office Reconciliation Reporting

//What RPA Can and Can’t Do for Middle-Office Reconciliation Reporting

What RPA Can and Can’t Do for Middle-Office Reconciliation Reporting

RPA, or robotic process automation, helps investment managers speed up processing times for reconciliation reporting, as well as improve data accuracy.

And the benefits of RPA in terms of cost savings are there. According to a KPMG report, robotic process automation can cut costs for financial services by as much as 75%.

An Ernst & Young report further highlights the advantages of RPA when firms team up with an outsourcing provider. The provider’s expertise in improving business processes not only brings cost savings, but also it can increase productivity by as much as 50%.

But what can RPA specifically do for middle-office operational functions, and are there any limitations? And just “who” is actually doing the work? (We’ll answer the latter question first.)

This Is Not a Bot_Empaxis

This is not a bot.

Bots Perform RPA

A bot is an automated software, and it acts as a “digital employee.”

A bot is not a physical robot, nor is there an external device that is doing the reporting.

Bots perform tasks that are routine and predictable in nature, and they complete the work faster than it would take humans. Once they are programmed to “memorize” processes, it’s all smooth sailing, assuming everything was set up properly.

What RPA Does for Middle-Office Reconciliation Reporting

1. Log In to Accounts

RPA technology can automate the username and password login process for servers, VPNs, custodian sites, web portals, locked files and folders, etc.

2. Read Emails

The bot can identify emails sent from a specific sender, and it can read subject lines and content within the email.

The custodians generally send structured emails in terms of subject lines and content, so it’s easy to program the bot to identify and extrapolate key pieces of information.

Read More: Investment Manager Operations Profit from New Breed of Automation Tools

RPA Downloads Reconciliation Statement PDFs_Empaxis3. Download Custodian Files

In addition to reading emails, the bot can download attachments within the email.

Or once logged in to the custodian site, the RPA software can find file locations and begin downloading statement PDFs.

And within the portfolio accounting system itself, the bot can begin the daily custodial transaction data download.

The bot can convert downloaded files into a desired format and rename the files according to specifications.

4. Extract and Input Statement Data

RPA can extract data from fields and send the data to a desired location in a firm’s portfolio accounting software.

In the process, the bot can create a new price file, for example, and input all the necessary pricing data.

As long as everything has been set up correctly, RPA eliminates the human error element associated with manual data input.

Read More: Best Practices for Maintaining Clients’ Private Equity and Hedge Fund Data

5. Translate Data

When data is sent from the custodian, the information is not always formatted in a way that the portfolio accounting system can recognize what it means.

The good thing is these translation issues have predictable solutions, and a bot can follow a series of steps to translate data so that securities and security type info are properly accounted for.

6. Perform Quality Control Checks

If data is missing or formatted inaccurately, RPA can identify where those issues are. It can even show which accounts remain unreconciled.

Read More: What Should Operations Managers Do About Reconciliation Reporting Errors?

What RPA Can't Do_EmpaxisWhat RPA Doesn’t Do

Given the high context of cash and positions reconciliation breaks, RPA does not reconcile accounts.

But considering how a robotic process has automated the above functions, an investment firm could save so much time in their processes.

As a result, they can spend more time focusing on reconciliation proper and less on slower, manual steps.

But would it still be possible for reconciliation itself to be fully automated? Yes.

AI (artificial intelligence) would be that solution, and analyzing the reconciliation breaks in its very nature is not a function of RPA.

RPA is a matter of performing predictable functions, whereas AI requires thinking and decision-making based off context. AI-based solutions at this point are not yet in a mature and marketable position, but at least RPA can free up for identifying and fixing recon breaks in the meantime.

Read More: 
Reconciliation Automation Tools: Operational Efficiency Solutions for Investment Managers

Implementing RPA for Reconciliation Reporting Processes Is a Good Idea

In addition to knowing the benefits of RPA, one now understands just exactly what RPA is and specifically what it automates.

While RPA can’t do the actual reconciling of cash and positions, the time saved from not doing manual processes allows more time for identifying and fixing the breaks.

Wealth managers, asset managers, or hedge funds may be concerned they don’t have the resources or expertise to implement robotic process automation. In that case, they might want to consider the services of a middle-office outsourcing company.

In addition to their technical expertise, such companies should be experts in fund admin and accounting, doing the RPA setup and handling all reconciliation responsibilities for investment firms.

RPA creates opportunities for operational efficiency gains, and investment managers should not ignore those gains.

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You may also enjoy reading:

Reconciliation Reporting Specialists: A Training Guide for Operations Managers

Separately Managed Accounts: Benefits of Reconciliation Outsourcing

So You Say, “My Operations Are Just Fine.” Really?

 

By |2018-12-06T17:05:01+00:00December 6th, 2018|Blog|0 Comments