Avery Fisher
Venture Leader
HPA, A Cognizant Company

Asset-based lenders can reduce costs, improve efficiencies and maximize prospects during these uncertain times and beyond by automating routine, rule-based processes. However, automation can often be difficult to implement, which makes Robotic Process Automation-as-a-Service an attractive means to enhance efficiency and better serve borrowers. 

The true impact of the COVID-19 pandemic on the U.S. economy is finally becoming clearer. Initial estimates appeared to be more optimistic in terms of recovery, but America’s inability to keep the virus under control continues to hinder any chance of a short-term recovery. Consumer spending remains down, which is fueling the suspended downturn along with abysmal job numbers and a forecasted 17% drop in GDP in the first two quarters of 2020. At this point, the speed of recovery is expected to be slow, as continued uncertainty will likely

impact consumer spending for the foreseeable future. At this rate, experts have signaled that a turnaround of the U.S. economy will not begin until around mid-2021 at the earliest.

While the current economic state appears bleak, asset-based lenders have opportunities to expand their client base now and in the near future. The industries impacted most by this pandemic are the industries for which asset-based lending is ideal: service, wholesale, distribution and manufacturing.

Steven Connor
Waller Law

For many of the companies in these industries, federal, state and local relief programs have been helpful in weathering the storm. However, as the far-reaching consequences of the pandemic continue to unfold, many of these companies will be seeking lending products, such as asset-based loans, that provide more flexibility and liquidity than traditional cash flow loans or lines of credit. Additionally, companies at risk of violating the financial covenants of their existing cash flow-based secured loans or revolving lines of credit are proactively converting to asset-based loans.

Enter Robotic Process Automation Adoption

Robotic Process Automation (RPA) is a tool that can help asset-based lenders capitalize on prospective opportunities in the wake of COVID-19. RPA refers to the use of software robots to emulate and integrate the action of a person interacting with digital systems to execute routine, rule-based processes. Reallocating such processes to robots can enable a company’s workforce to focus on more impactful, revenue-generating tasks. Many financial institutions are already discovering that during these challenging times, RPA provides greater business continuity while their employees work remotely. Robots can complete rules-based tasks and decision-making with speed and precision, 24 hours a day, seven days a week. Also, robots utilize the same target applications and systems as employees to execute on work assigned to them. Every step is traced and stored in the financial institution’s technical environment for increased security and regulatory compliance.

A recent Cognizant study of 302 financial executives indicated that nearly 90% feel that automation is important or critical to their business now and in the future.1 According to Forrester Research, enterprises can expect to receive two to four full-time equivalents returned per robot for high-volume, low-complexity tasks, and 2.5 full-time equivalents for more complex, lower-volume tasks.2 For asset-based lenders, RPA can be applied across the loan lifecycle to reduce the need for human intervention, accelerate processing and reduce operational costs. However, for all the benefits RPA offers, financial institutions (including asset-based lenders) who choose to implement RPA independently continue to experience stalled or failed implementations.

There are four critical points of failure in RPA initiatives:

  • RPA efforts are under-resourced. The amount of business process knowledge required to capture the value of RPA cannot be understated. Initiatives must be driven by personnel who are knowledgeable of the business and automation. An industry-wide shortage of experienced automation professionals further hinders initiatives.
  • Financial institutions continue to struggle with security and risk. There is great uncertainty and a lack of standardization around privacy, security, legal and compliance issues when applied to RPA. These elements are not intrinsic to RPA platforms and must be designed and built by the platform user, which increases the risk for the financial institution.
  • Post-deployment operating models are not well-established. Continued change management and governance are common features of RPA, yet they are often overlooked or underestimated. The business, and specifically the automation Center of Excellence, or COE, must drive process selection, prioritization, design standards and tracking mechanisms for the life of the program.
  • IT and operations owners are disconnected. While operations owners typically initiate RPA programs, IT departments are usually tasked with implementing them. As with all projects assigned to IT, RPA programs fall into the mix of competing business priorities. This often can lead to slow or stalled implementations as there are not enough resources dedicated to keeping the momentum going. All these factors complicate the cost/benefit analysis, internal buy-in and evaluation of results.

The Value of RPA-as-a-Service

RPA technology providers primarily offer their software via licensed models. The technology set is typically broken down into separately-licensed modules dedicated to a specific use — robot builders, robot orchestrators, robot dashboards and advanced analytics hubs. License models can be annual, perpetual, consumption-based or software-as-a-service. Licensing costs can vary between unattended (back-of-house, autonomous robots) and attended automation (working alongside humans), number of users, number of robots, number of machines and run-time. Some vendors even carry per-robot or license minimums. While this approach is traditional, the difficulty of achieving success with RPA and the long-term total cost of ownership is grossly underestimated, leading to stalled or failed implementations.

The software-as-a-service, or SaaS, model has become a popular method of technology consumption in recent years. SaaS is ideal because it allows companies to reap the benefits of technology while avoiding all the complications associated with development and maintenance. HPA, A Cognizant company, is one of only a few providers applying the concept of SaaS in the RPA space. HPA specializes in RPA-as-a-Service, coupling RPA technology with more than 10 years of expert implementation to drive faster, more stable implementations, as well as greater program success for its clients. HPA’s unique, fully managed RPA-as-a-Service model can be especially attractive for asset-based lenders seeking the convenience of SaaS technology consumption and the reduced risk of a professionally-managed automation program.

Applying RPA-as-a-Service to Asset-Based Lending

There are significant opportunities for automation across the loan lifecycle, from origination to performance and default servicing. For example, RPA-as-a-Service can significantly improve regulatory compliance and reporting in addition to client onboarding. Reporting regulations, such as the KYC regulations, impose an excessive number of requirements that asset-based lenders and other financial institutions must fulfill before entering and maintaining a business relationship with a borrower. These requirements are largely repetitive and labor-intensive, and automation of the associated tasks will be considerably less expensive and error-prone and faster than what can be attained with human workers. Other loan processes that are excellent candidates for RPA-as-a-Service are initial loan booking, borrowing base certificate intake and workflow routing.

Also, with an increasingly competitive landscape and evolving borrower expectations, many asset-based lenders are shifting to digital loan experiences with regards to small- and medium- sized enterprise (SME) lending that deliver greater accuracy and faster lending decisions. The increase in speed and the ease of the digital process, bolstered by RPA-as-a-Service, can translate to a significantly improved borrower experience. Financial institutions, including asset-based lenders, are more motivated than ever to deliver an overwhelmingly positive experience for borrowers throughout the life of the loan.

For HPA’s lending clients, automation has yielded an average cost savings of 86% and accelerated the loan cycle, which has allowed such financial institutions and their clients to be more competitive in the marketplace. In the face of increased demand and rapidly changing environments during the COVID-19 pandemic and beyond, it is vital that asset-based lenders capitalize on the benefits that RPA-based services provide. •

  1. “Financial services automation: Taking off the training wheels.” Cognizant. 2018.

  2. “Forrester’s Automation Framework.” Forrester. Research. 2019.

By Avery Fisher (Venture Leader, HPA, A Cognizant Company) and Steven Connor (Partner, Waller Law)