Robotics In Wealth Management

Published: 3 August, 2017

The professional services firm examines what is at stake for wealth managers in this era of robots and automation of key business processes.

Robots are on the march everywhere, it seems. The automation of parts of wealth management and advice has been one of the hot trends over the past few years. Driven, at least initially, by a desire for a solution to the so-called “advice gap” in certain countries as regulatory costs encouraged firms to hike investment minimums, these robo platforms are also finding favour with some in the high net worth space. As this publication has been told, some wealth firms don’t see automation as a threat, more as a way of augmenting what advisors can do and enabling them to handle more clients and take out some of the more tedious tasks. In this article, Andrew Kettle, senior manager, and Thomas Morley, also a senior manager at EY, aka Ernst & Young, examine the terrain. The editors of this news service are pleased to share such views and invite readers to respond. Email

What is robotics?
Robotics, or robotic process automation, is software that mimics the interaction of humans with core systems, web and desktop applications to execute processes. By reducing the need for manual interventions, it can lead to improved efficiency, increased scalability, and increased processing quality, or a combination of all three outcomes.

Whereas core platform enhancement can be complex and costly, and reliance on end-user software such as Excel macros can be fragile, robotics sits in between both approaches to deliver often the same results and more. Robotics achieves this by navigating through existing systems and interacting with the user interface; basically acting as an automated human.

Why should I care?
RPA software can work 24/7, with significantly reduced error rates and exponentially improved output. In many cases, a robotic solution will cost 10 per cent of the existing processing resource in addition to cutting data entry costs by up to 70 per cent. The decision to use robotics can be motivated by multiple factors, but cost savings is often the main driver.

As an industry, wealth management has seen general cost pressure lead to offshoring, lean processing transformation and re-platforming (some successful, some abandoned). But these solutions are limited in number, potentially risky and sometimes costly even in the long-run. Robotics can therefore fill the demand for an agile, cost-effective solution to many of the industry’s cost concerns, as well as meeting the FCA’s ever diminishing acceptance of high error rates.

This demand has naturally led to the emergence of a number of robotics software providers and a resulting acceleration of technology sophistication. Some wealth managers who have been initially interested in robotics software are now moving away from proof of concepts to full implementation.

In summary, the benefits which robotics can help wealth managers unlock are:

–    Cost efficiency through reduced resource and/or error rates;
–    Improved customer satisfaction and regulatory adherence (e.g., reduced error rates);
–    Autonomy over operational efficiency and spend to market (e.g., avoidance of vendor change road map delays or internal IT release schedules);
–    Enhanced governance, control and audit over core processes;
–    Support for target operating model programmes via an agile and low-cost solution; and
–    Business friendly, non-disruptive and code-free.

How should I start the journey?
As with all change initiatives, implementing RPA is not without its challenges. First, it is key to define the target operating model, including which function will own the robotics capability. Many firms have found that a Robotics Centre of Excellence is a good approach. Second, it is important that the correct processes are chosen for an initial proof of concept, as not all are suitable for robotics. Generally speaking, ideal candidate processes should be:

–    Rules based;
–    High volume, repetitive and resource intensive;
–    Manual and requiring enhanced control;
–    Aligned to the target operating model;
–    Interruptive (i.e., the user needs to leave them to run in the background) or investigatory (e.g., result in a problem being diagnosed) processes;
–    Dependent on multiple or legacy systems; and
–    In need of urgent regulatory adherence.

Ideally, the chosen processes meet several of the above criteria. For example, a monthly reconciliation that takes two hours and requires a significant amount of human interpretation will not be suitable. But a daily, four-hour stock reconciliation process that requires two separate data sources to be compared in a rules-based fashion and exceptions reported to senior management would be.

Once the ownership has been agreed, and the target processes have been chosen, the success criteria should be agreed (e.g., reduced cost vs. increased processing times vs. reduced error rates), and a suitable robotics partner identified.

What should I look out for?
In the first instance and as with many process improvement initiatives, internal scepticism may be encountered so it is vital the key stakeholders are on-board from the start of the process. Part of this is recognising that robotics is not a silver bullet and will not solve all problems (e.g. legacy IT system issues will need to be addressed at some point). Similarly, the processes robotics is applied to must be part of the firm’s long-term strategy so that there is a clear commitment to deliver success (and what tangible success looks like). This is fundamental to the business case and the quality of outcomes delivered.

Moving from proof of concept to implementation is a pivotal milestone. It is important to have the correct platform in place not just for delivery but sustained robotics use (e.g., ongoing support that needs to be agile and respond to changing operational requirements). This often means ensuring there is a collegiate relationship between those who maintain robotics (e.g. the Robotics Centre of Excellence) and the end users, including the constant updating of operating procedures and a flexible testing approach.

Post-delivery, wealth managers should be prepared to immediately realise the benefits of their new- found resource capacity, otherwise any efficiency gains can quickly dissipate as resources are redeployed toward other non-value added tasks.

In conclusion, despite the pitfalls there are already multiple case studies that prove the value of robotics within the financial industry. These include, but are not limited to, the following:

–    Matching and reconciliation processes; high data quantity capabilities, investigation and assignment based on pre-defined rules, instant processing to assist with regulatory needs, e.g., CASS [Clients Assets Sourcebook] etc;
–    Asset pricing; sourcing of prices from multiple data sources, staleness and tolerance checks and exception report creation;
–    Corporate action matching; receiving data from multiple vendors and creating a golden source, comparing against client positions, automatic notification to clients and tracking of responses, aggregation of elections and subsequent allocation to client accounts; and
–    Client on-boarding; from client data entry to systematic anti-money laundering/know your clinet due diligence checks, e.g., highlighting source of wealth risks, automated gap analysis of documents and archive management.

DisclaimerThe views reflected in this article are the views of the authors and do not necessarily reflect the views of the global EY organization or its member firms


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