Emerging Technology: Robotic Process Automation

Executive summary: impact of robotic process automation on Mitchell B&T

Objective

The following report seeks to lay out the potential benefits of Robotic Process Automation implementation (RPA) on Mitchell B&T, the technology's alignment with the organization's strategic vision, and practical steps as how such an implementation would be conducted.

Business and Industry Overview

Mitchell B&T operates in the banking and financial services industry. The organization has over 250 branches across 3 states and upwards of $19 billion in assets. Mitchell B&T faces competitive pressures from FinTech startups, as well as significant regulation. Current services include:

• Checking and savings accounts

• Business and personal loans

• Mortgages

• Credit and debit cards

• Term deposits

The Current Business Obstacle

Mitchell B&T's strategic priority is growth driven by increased consumer satisfaction. The speed at which new accounts are opened, old accounts are closed, and loan/mortgage applications are processed are key drivers of consumer satisfaction. These processes are dependent upon the receipt and accuracy of consumer information, as well as the communication of this information between departments. Checking for and obtaining missing information is a manual and labor-intensive task . Growth also comes with increased regulatory oversight. Inaccurate or untimely reporting draws scrutiny and can result in fines while hindering growth.

The Proposed Solution

RPA offers the potential to address these issues via the automation of consumer record management, account monitoring/processing, compliance measures, forecasting, and quality assurance. This proposal implementation relies upon IBM Automation Anywhere RPA services due to its expected ease of integration with existing organizational architecture and low infrastructure costs.

Key Metrics Expected to Improve

• Consumer satisfaction

• Employee satisfaction

• Completion time and accuracy of back-office processes

• Rate of compliance reporting violations

• Labor costs

Evaluation and overview of RPA application for Mitchell B&T

The banking and financial services industry is heavily regulated and extremely competitive due to the increasing prevalence and popularity of FinTech companies and online banking. The regulation necessitates thorough documentation and reporting, while the competitive nature of the industry means that banks must continuously innovate and provide a high level of customer service. RPA is the right choice for our organization to achieve these goals. RPA has natural language processing (NLP) capabilities that can read through compliance forms, extract relevant info, and automatically generate accurate compliance reports to save time and decrease regulatory fines, which some estimate to be more than 10% of a bank's operating cost. RPA's NLP ability can also be to process documents more quickly for new customer accounts as well as loan and mortgage applications, which should improve operating performance, increase consumer satisfaction, and decrease losses from fraudulent activity. Furthermore, the use of RPA to automate rules-based processes will free up employees to focus on high-value, strategic objectives and greatly increase the bank's operating capabilities without a similar increase in operating expenses.

This document evaluates the application of RPA to Mitchell B&T banking processes. Our history of how we became one of the largest banks in Arkansas will indicate the reasons why we intend to keep a competitive advantage in the financial industry by using RPA. It is important to document what RPA is and how it aligns with our strategic core values. We will highlight the following:

• Mitchell B&T History and continuous innovation and disruption

• Our current business, organizational, IS strategy alignment

• Business Processes and current technology impacted by RPA

• Identify the emergence of the RPA as a technology

• Identify the Architecture and Infrastructure requirements for implementation

• Evaluate Mitchell B&T Return on Investment (ROI) and balance scorecard

About the organization

Mitchell Bank and Trust, your #1 choice for all things finance

The story of Mitchell B&T is one of commitment started by our founders, an intense dedication to focusing on the customer. This philosophy has remained the same during our growth from a small bank to a group of community banks able to provide a complete range of financial services. The following series of acquisitions has catapulted Mitchell B&T to its current position within the financial services industry:

• The Mitchell B&T story begins with The Bank of Bentonville, which had $3.5 million in deposits when purchased in 1961.

• In 1963, Mitchell B&T acquired an even smaller bank in the nearby town of Pea Ridge, AR.

• In 1975, another bank was purchased in the neighboring town of Rogers, and for almost a decade afterwards, these banks, each locally managed, were the entire banking network now known as Mitchell B&T.

• In 1984, the company entered an expansion phase by purchasing First National Bank of Siloam Springs, AR.

• In 1986, it purchased the McIlroy Bank & Trust in Fayetteville, AR.

During the next two decades, the bank expanded its presence within its home state and in neighboring states through acquisitions in Arkansas, Missouri and Oklahoma. By 2006, Mitchell B&T was operating more than 200 branches and grew assets to more than $7 billion. Since that time, the bank further expanded, including the Springfield, Mo., and Greater Kansas City markets. Most recently, Mitchell B&T acquired Bear State Bank, which introduced the bank to new communities in northeast and southwest Arkansas, southern Missouri and southeast Oklahoma. Today, Mitchell B&T has more than 260 locations that are part of 14 locally managed banks in more than 135 communities. Total assets now exceed $19 billion, and Mitchell B&T is the largest bank in Arkansas in terms of deposit market share.

Continuous innovation & disruption will safeguard our relevance in the modern banking industry

The banking industry is in a much healthier place now than it was after the financial crisis of 2008. The total amount of global assets climbed to $124 trillion in 2018, according to The Banker's Top 1000 World Banks Ranking for 2018. With there being so much more money to manage, the industry's major players such as JPMorgan Chase, Bank of America, Wells Fargo, and more are innovating and creating new features to keep attracting new customers and hold on to their current ones (Meola, 2012).

Since 2008 the banking industry has also been saturated by a large number of new competitors. Startups, social financing apps and neo-banks have flooded the scene with disruptive technologies. The traditional brick and mortar banks are now faced with an interesting decision of either competing with these new entities or merging with them to improve the services that they offer. The most prevalent trend in the banking industry today is the shift to digital platforms, namely mobile and online banking:

• Mobile Banking Mobile banking has essentially become a requirement for consumers at this point. In Business Insider Intelligence's Mobile Banking Competitive Edge Study in 2018, 89% of respondents said that they engage in mobile banking.

• Online Banking Due to its convenient nature, Online banking is one of two main ways that consumers interact with their banks (along with mobile banking). There is still a significant number of customers who prefer standard branches but there is no denying the rising demand for online banking.

Strategic alignment of the technology

Current Business strategy:

Mitchell B&T current business strategy is to improve client satisfaction and deepening the relationships by speeding up the process of mundane and repetitive tasks thanks to our user-friendly services.

Current organization strategy:

Our organization's main purpose and strategy is based on the concentration strategy. This strategy will allow Mitchell B&T to invest more resources in producing and developing our RPA technology. Once the RPA technology is fully operational, it will help speed up the paperwork process for our current customers and attract new customers unpleased with the current process offered at other banks.

Current IS strategy:

The IT department is focused on developing a tailored RPA technology in response to corporate business initiatives. This initiative is being led by the Mortgage and Loans line of business. The adoption of this new RPA technology is expected to provide Mitchell B&T a competitive advantage in the retail banking industry.

Alignment of IS strategy with business strategy and organizational strategy:

Currently the use of computers has helped with the storage and helped bypass the documents from being handwritten by eliminating the use of papers, and reducing the costs associated with it. RPA will be the next step to help speed up the process and improve customer satisfaction. Mitchell B&T current maturity model is at the optimizing/innovating level, aiming at continuous improvement of their business processes, products and services. This is achieved thanks to defect and problem prevention, by continuously improving our capabilities and through structural innovation.

Business process and the technology

Primary business processes impacted by RPA:

• Invoicing

• Orders receptions

• File maintenance (updating/modification of customers information)

• Loan applications

• Audit

Current technology's impact on primary business process:

The biggest technology impact on Mitchell B&T's primary business process, and in the banking industry in general is Digitization. Thanks to Digitization, the banking process has become more reliable and faster than ever before. It has simplified the storage and navigation of files and data. The computerization of the banking industry also helped improve our core banking system. All branches now have access to common centralized data and are interconnected. Finally, the introduction of mobile banking has revolutionized the way banks interact with their customers. It has facilitated our customer's interaction, and they can now access their bank from anywhere and at any time leading to better services and customer satisfaction.

Detailed overview of RPA

What is Robotic Process Automation?

Robotic Process Automation is, at its most basic level, the programming and use of software to automate simple, rules-based business processes that employees would traditionally handle manually on a computer. Known as "bots", these programs are relatively cheap and generally don't require heavy integration into existing enterprise systems, which makes it easy for companies to deploy them. Similar to the way an Excel macro can be programmed to replicate the steps that an individual takes within or across worksheets, RPA can be used to emulate the actions of an individual across any number of digital systems. These programs are able to move files, manipulate databases, open emails and attachments, make calculations, extract all manner of data, and many other functions that are traditionally undertaken via human interaction. More advanced enterprises can also combine RPA software with other emerging technologies such as Artificial Intelligence (AI) or Natural Language Processing (NLP) capabilities to create programs that can not only repeat simple steps but can also skim information from written documents or make decisions about the data they process.

The Emergence of RPA

The emergence of RPA as a major trend in IT shouldn't come as a surprise. The modern business landscape contains a nearly limitless supply of simple, recurring tasks such as data entry, claims processing, report generation, or even customer support functions that can all be boiled down into a number of routine steps. While these sorts of mundane tasks are often very important to the day-to-day functioning of a company, they present issues to both the company and the employee tasked with carrying them out. For the company, these low-value processes represent a significant waste of labor that could either be eliminated or, as many companies claim to be doing, redirected towards more strategically oriented projects, customer-facing roles, or generally higher-value pursuits. For the employee, these tasks are time-consuming and often mind-numbing to the point of damaging morale. Walmart CIO Clay Johnson told CIO Magazine that of the roughly 500 bots that Walmart had deployed as of mid-2018, "A lot of those came from people who are tired of the work (Boulton 2018.)"

Examples of RPA Use Cases

The potential uses and benefits of a successful RPA implementation are immense. One large bank referenced in a Deloitte report deployed 85 bots in order to automate 13 different processes and in doing so added the capacity equivalent of 250 employees at just 30% of the cost while reducing errors by 27%. The same report notes how the UK retailer Shop Direct was able to set up a system that identified customers affected by floods and automatically removed late payment charges from their accounts. This sort of process would have proven incredibly slow and extremely manual for the company without the use of RPA, to the point that it would have been downright impractical. Other sorts of use cases of RPA include Virgin Trains automatically refunding consumers for late trains, a bank using it to automate its billing system and reduce revenue leakage, and an information services firm using RPA paired with machine learning to automatically extract data from millions of faxes annually and categorize them accordingly. The myriad applications of a technology that can increase output, decrease errors, and do so at a fraction of the cost of traditional methods are easy to imagine and directly contribute to the emergence of RPA as a force multiplier in the world of modern business (Schatsky et al, 2016.)

Impact of implementing emerging technology

RPA is the essential step between Customer Service and Customer Satisfaction

Mitchell B&T launched its internet banking presence with mitchellbankandtrust.com in 1995. Its customers were able to access the bank's website 24 hours a day, view their account information and perform basic banking services. However, with the rapid development of mobile phone technology, we have been able to further create and design better products and apps to meet our customer's needs. These developments include:

• Ability to view recurring charges

• Facial/Fingerprint recognition to log into an account

• Ability to deposit funds via check imaging

• Ability to transfer funds amongst different accounts

Now at Mitchell B&T we have reached the point where just having a mobile app isn't going to be enough to keep and attract new customers to our financial institution. We must continue to innovate and develop processes and procedures to create and sustain a strategic competitive advantage. We have always been at the forefront of innovation within the banking industry and we will continue to do so with the implementation of RPA.

Strategy to architecture to infrastructure

The Process Begins with Strategic Goals that Inspire Innovation

Mitchell B&T starts the journey toward implementing RPA by developing strategic goals that the organization intends to achieve through this project. After days of deliberation, we settled on six key goals that Mitchell B&T would like to reach by using RPA to improve our processes. We settled on these goals because these are some of the main stress points for the business that can realistically be improved upon by the IT department.

• We need a way to standardize journaling methods across the organization.

• Mitchell B&T desires to automate integration with United States treasury systems.

• To improve onboarding customer efficiency, we want to streamline the card activation process.

• We need a method to increase reconciliation efficiency, which is one of the most cited tedious tasks at many branches of Mitchell B&T.

• Mitchell B&T needs ways to improve financial planning and analysis for executive members.

• Finally, we need to automate regulatory compliance tracking to reduce or eliminate costly regulatory errors and fines.

Business Requirements Define What Needs to be Done to Produce Strategic Outcomes

Next, we take our core strategic goals and determine what would be required of the business to reach these goals. This gives us an idea of what general processes will be performed by the system, which will enable our systems designers to formulate an architecture that can perform these tasks with RPA. Mitchell B&T needs a system to do the following:

• Perform validation analytics to ensure accuracy of journaling reports

• Format bank data to generate reports to integrate with the US Treasury system

• Check for exceptions between accounts for review and approval

• Coordinate between departments to reduce data inconsistency when performing reconciliations

• Populate forecast models and variance reports with historic and market data

• Populate regulatory reports with data from across the organization and create audit trails

Business Requirements into Architecture

Once we have specified what processes we need RPA to be able to handle, the systems designers were able to develop the RPA framework that will be implemented at Mitchell B&T. We will be implementing an IBM RPA with Automation Anywhere solution. This system runs on a decentralized server-client based architecture, which integrates well into Mitchell B&T's existing systems. Key aspects of RPA Automation Anywhere include the following (IBM, 2020):

• (Un)attended RPA : Robots work around the clock as much as possible, only requiring end user input when necessary.

• Control Room : This is the central enterprise hub that manages and controls access to the entire system. Bot creators and runners are authorized from the control room, and unattended processes are triggered from the control room.

• Robot Automation Portal (Bot Creators): Bot Creators are authorized from the Control Room. Robots can be created in a simple fashion by recording end user workflows or can be programmed in a more advanced fashion.

• Robot Runner : Runners execute and control individual bots, which run on individual workstations, where previously loads of human labor was executed.

• Workflow Application : The existing applications that end users currently spend most of their time in. The goal is to have bots executing as much of the nitty gritty tasks in these end user applications.

• Data Capturing : Automation Anywhere enables extraction of data from unstructured documents collected from daily workflow processes. This is one of the more advanced features that can standardize data from sources of varying quality and consistency.

Architecture to infrastructure

Mitchell B&T decided to go with IBM RPA due to its simplicity in integrating with our existing systems. Since we already have a server-client architecture across all our branches, minimal hardware investment would be required. Most branches would require an expansion of disk space on the server for the control room, which requires 500GB minimum to operate (IBM, 2018). Our servers already run compatible Windows Server 2019 with clients running Windows Enterprise. IBM RPA even interfaces seamlessly with SQL Server. The system will require investment in specialists at each branch to operate the control center and administrate Bot Creator and Runner authorization. Overall, IBM RPA is a highly deployable solution that can be integrated into our existing infrastructure without much front-end investment.

Architectural Principles Considered

The architecture for Mitchell B&T's RPA architecture design is based on a set of principles that align with our operational strategy and best industry practices. These principles reflect the abstract view above strategic goals of what our organization tries to achieve.

• Interoperability: aspects of the system must play well with existing systems and be able to integrate with future applications easily and effectively (Guimarães, 2012)

• Usability: the system must be easy and intuitive to use; ease of use boosts adoption rate and underscores the mission of the product: namely, productivity

• Flexibility: the system must not be rigid in its design; it should be able to adapt to future use cases and unforeseeable obstacles

• Information Accessibility: information should be easy to produce, access, and share when it is required to do so

• Data Quality: data must maintain a standard of quality to be useful. It should be structured in meaningful ways that allow it to be compiled into insightful information.

• Reusability: components of the system should be replicated and used across the organization whenever possible instead of being reinvented many times over

• Compliance with Regulations: The system should comply with the above standards as well as industry regulations in place

Other Managerial Considerations

Beyond the detailed considerations that apply to this specific project, there are broader elements to consider that would apply to any system. Managers must understand what to expect from the system to make full and productive use of the system. The impact of this system on the future at Mitchell B&T has several considerations:

Strategic Time Frame

The IBM RPA system, with its low front-end investment and ease of integration into existing systems allows the system to get up and running very quickly. This means that the company can begin earning an ROI as soon as employees are able to start using it. Process automation is an important asset that will remain relevant many years into the future.

Agility

IBM RPA is designed to be adaptable for many applications and future improvements to the system. Since bots are essentially performing activities that would be completed by human labor, the use cases for this technology are numerous and changeable. There are minimal requisites for this system, and bots can be trained as easily as recording processes that are already being performed in our organization.

Scalability

One of the reasons that Mitchell B&T chose IBM RPA is its ease of scalability. The server-client architecture allows it to interface with as many machines that our organization needs to operate at each of our branches. The central repositories in the Control Center at each branch can be easily replication and spread as our organization grows.

Standardization

Since available processes and process designers are authorized from the control center, this system allows for flexibility while maintaining enterprise standards. RPA will enable users to complete the processes that they need to do efficiently and effectively without allowing chaos to ensue.

Maintainability

Maintainability is central to the IBM RPA system, but this is one area where Mitchell B&T will need to invest in additional employment to ensure that the system remains in high working order. There may need to be dedicated Control Room operators and bot designers, but the benefits gained by implementing this system should more than cover maintenance costs almost immediately.

Security

Security considerations are baked into IBM RPA. This is one of the most important requirements of any system at a financial institution and adherence to security standards was one of the first reasons that led us to IBM RPA. Using a minimum access security model, this system only exposes as much of the system as is required for each user to make use of what they need.

Staff Experience

Mitchell B&T and all its executives, employees, and customers stand to benefit greatly from IBM RPA. The system is designed to require minimal training from the employees on the ground floor who are face to face with customers. We are planning to implement extensive training for managers and Control Room operators in the IT department to ensure that the system is implemented effectively. Intuitive interfaces will allow executives to make use of reports and insights almost immediately. We hope that customers will benefit the most from this system by experiencing an enhanced experience when they come to Mitchell B&T, although they may never know that our improved processes were enabled through IBM RPA.

Business of IT

Effective ROI Measuring Methods is critical to the success of RPA

To remain competitive, RPA is a strong solution to help us deliver the best possible experience to our customers. This will maximize efficiency and keep costs as low as possible while also maintaining maximum security levels. The method used to measure this technology at Mitchell Bank is the most popular and well-known ROI (Return on Investment). This measure will be used to understand the gain or loss generated in RPA, relative to the amount of money invested, saved and the hours performed. Robots can accomplish grueling manual tasks in minutes or even seconds. There are a few effective measures using ROI to measure the success of the bots:

1. Measure the start time versus stop time of a back-office process before and after an RPA deployment and compare

2. Measure the length of time of an employee spent on a task versus how quickly robots complete that same task

3. Measure output accuracy before and after RPA deployment

4. Measure compliance before and after RPA deployment

From here, it is easy to calculate the time saved by an automation. You can do the same thing to find financial savings by attaching a dollar value to an employee's time. Keeping the time in hours is the easiest calculation since most jobs have an hourly pay rate.

Resulting Operational Efficiencies Will Ensure Strong ROI After RPA Implementation

RPA has proven to reduce employee workload, significantly lowering the amount of time it takes to complete manual tasks and reduce costs. With artificial intelligence technology becoming more prominent across the banking industry, RPA has become a meaningful investment for banks and financial institutions. Most bots are ready (out of the box) to deploy solutions at a much less cost and take a shorter time to implement. Customization can significantly increase the cost and time to implement the project but the resulting operational efficiencies will increase quality of life and productivity. Mitchell is seeking a more customized solution. This cost will be incurred in the development costs, which includes initial design and configuration of the system, testing and validation, installation, and extensive training and maintenance. As the organizations grows, other departments can adapt the technology for their purposes as well.

Balanced Scorecard for RPA Must Align with The Strategic Goals

As we are measuring the success and value that RPA will produce for Mitchell Bank, we want to ensure that it stays in alignment with our Strategic goals. Since the balanced scorecard approach focuses on the organization's value drivers, we will assess the full impact using this methodology from the different perspectives:

• Financial impact: considers the financial performance and the use of financial resources such as the return on investment (ROI) of RPA

• Customer impact: considers the customer or other key stakeholders (vendors, suppliers, employees, and contractors) that the we serve through optimal customer service quality and response time

• Internal Impact: considers the performance of RPA by measuring quality, efficiency, governance, and ease of adoption

• People & Learning Impact: considers the performance of RPA by measuring learnability, adoption, technology, culture, and other capacities

Measuring the success of RPA as the Bank's technology for intelligent automation is still new. Having clear benchmarks and key performance indicators, Mitchell will not struggle to plan the RPA for maximum effectiveness. Further, evaluating the impact of bots on the workforce and roll out relevant change management programs, which may lead to better adoption and successful projects. The RPA Balanced Scorecard Framework helps address challenges using a comprehensive set of measures. By identifying the financial and customer impact as well as internal & learning impact management processes, this framework acts as a one-stop tool that tracks and evaluates the short-term and long-term health and benefits of RPA. Through proper planning and execution, this tool helps benefit from continuous process automation, productivity improvements and cost savings.

Summary

For nearly 60 years, Mitchell Bank and Trust has been committed to serving our clients the best banking experience. With a growing network of branches across the Central United States, Mitchell B&T needed a solution to increase our commitment to our customers and continue to give them the superb banking experience that they have come to know us for. Having adopted modern trends like mobile and online banking, our organization continues to find ways to stay ahead of the innovation curve and increase our quality of service for our clients. Despite our large investment throughout the years in digital technologies, a large portion of many of our employee's time is still spent on tedious and mundane low-value tasks. This let do our executive teams to find a way to allow our employees to increase customer interaction time and quality, while we continue to focus on providing the high level of customer service that we have always been known for.

Following the economic crisis of 2008, the financial industry has been on an ever-accelerating path toward innovative technologies. Mitchell Bank & Trust wanted a solution to allow the company to improve and focus on one of the most valuable aspects of the business as well as the most difficult to replicate: its relationships with clients. To do this, we needed to find a way to free up more of our time from the tedious and mundane paperwork, filing, and data processing. RPA looks like the solution that we have been looking for to solve these problems. The low value processes that most people find tedious to perform are ideal to be performed by software bots. IBM RPA Automation Anywhere proves to be an easily integrated RPA platform that would mesh well with our current architecture. With such a low front end investment and virtually no additional machines necessary to get the system up and running, this new automation system should allow us to free up valuable time to focus on providing value to our clients almost immediately.

References

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Guimarães, T. S. (2012, November 20). 21 principles of enterprise architecture for the financial sector. IBM Developer. https://developer.ibm.com/articles/enterprise-architecture-financial-sector/

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IBM Corporation (2018). IBM Robotic Process Automation with Automation Anywhere V11 Solution Overview. IBM Software Product Compatibility Reports. https://www.ibm.com/downloads/cas/KBYZGDXX

IBM Corporation (2020). IBM Robotic Process Automation with Automation Anywhere 11 Detailed System Requirements. IBM Robotic Process Automation. https://www.ibm.com/software/reports/compatibility/clarity-reports/report/html/softwareReqsForProduct?deliverableId=F5C83A6027A411E8A2420CE43E9EE286#hyperOsFamily-0

Meola, A. (2019, August 8). The digital trends disrupting the banking industry in 2020. Business Insider. https://www.businessinsider.com/banking-industry-trends

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