Global Fintech Interview with Chaz Perera, Co-founder and CEO at Roots Automation

Hi, Chaz! Welcome to the FinTech Interview Series. Please tell us about your current role in the company and how you co-started Roots Automation?

My name is Chaz Perera and I am the co-founder & CEO of Roots Automation.

My Co-Founder John Cottongim, our CTO, and I started Roots Automation four years ago because of our frustration with the limits of automation technology. Essentially, tools like RPA, AI, etc., were expensive to leverage, created a poor CX and EX, and rarely returned the intended value. Most companies were making multi-year investments but not seeing multi-year returns. This holds true even today. We solve this problem.

What is Roots Automation? What are your core offerings and for which markets? Could you please tell us a little bit about your “Ideal Customer Profile”?

We combine machine intelligence and human ingenuity to create intelligent Digital Coworkers, providing organizations with AI-powered, digitized employees that can think, read and intuit like people.

Digital Coworkers dramatically improve efficiency and increase capacity within stretched insurance companies by providing business leaders a turn-key, experienced worker in digital form to support their daily operations.

We serve midmarket and enterprise companies at all stages of the insurance value chain (e.g., MGAs, Brokers, Carriers, TPAs, etc.) across the US, UK, and English speaking Canada.

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Can you please highlight a great advantage of working with Automation that is yet to be fully-utilized in the current context of Digital transformation?

The insurance industry has maintained a 10% vacancy rate, and its year-over-year cost to onboard talent is 20% higher than planned. When you consider the regulated nature of the industry prevents insurance companies from raising rates on pace with their rising cost, succeeding in this environment requires rapid transformation that Digital Coworkers afford. The era of the multi-year, multi-million dollar, homegrown transformation is an exercise of the past. Companies like Roots Automation can help companies rapidly realize real value.

Additionally, our Digital Coworkers aren’t a stop gap to a more modern, mature system. They are the modern, mature system because they are constantly learning from humans, and they federate that knowledge so that everyone can benefit from the learning.

What are the most excruciating challenges faced by the financial services industry? How does Roots Automation solve these for customers?

Besides the hiring challenge I referenced earlier, the other big challenge for insurance companies is improving – or should I say reducing – leakage (i.e., revenue they’ve lost as a result of mistake/inefficiencies in underwriting or claims handling). It’s a 100B+ annual problem for the industry.

The root cause: talent focused on the wrong things. The average insurance professional spends 60% of their day on non-value add, low complexity tasks.

If you could harness their energy to engaging with the customer, understanding the edges of a risk, or challenging the merits of a claim, leakage would shrink. Even a few basis points of improvement per company will make a big difference to the bottomline.

Our Digital Coworkers are trained on the completion of these low complexity insurance activities. Our ML models are trained to recognize the activities that lead to leakage and the Digital Coworkers either surface these to the appropriate people with the relevant context, or they action the items themselves. An example: Some claims correspondence contain language from attorneys or doctors that if not acted on within a short window, leaves the carrier on the hook for unwarranted claim costs.

Please tell us about your recent funding and how you intend to grow your market base in the coming months?

Our recent Series A funding round was led by MissionOG and included Liberty Mutual Strategic Ventures, Vestigo Venures, and CRV.

The investment allows us to increase our impact on insurance claims handling where Roxanne, our Claims Assistant Digital Coworker, only processes a tiny fraction of US-based claims activity. The funding will significantly broaden our reach across insurance companies, where we strive to liberate claims adjusting personnel to engage and focus on their end-customer when that customer needs them most.

We aim to further expand Roxanne’s ability to read, understand, and process unstructured insurance documents and use insurance software without prior training or scripting. If she works at Berkshire Hathaway today, she should be able to work at Chubb tomorrow without skipping a beat.

We also intend to expand our go-to-market and sales teams to ensure we get our message out to a broader audience including expanding to advisory houses and systems integrators.

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Departmental costs are rising for the banking and financial services companies. Could you please highlight some of the key capabilities of your product that can help CIOs/CFOs minimize these costs?

The Digital Coworker was designed with insurance in mind, by insurance leaders. Digital Coworkers are pre-trained to understand and interact with data, documents, systems and processes commonly found in insurance – such as claims management, underwriting, subrogation and billing & collection.

Our AI-first approach allows Digital Coworkers to analyze, understand, make decisions, execute work and learn like a person doing the same task. Further, they federate this learning across our entire customer network – when one Digital Coworker learns something, they all do.

Because our Digital Coworkers are turn-key to the customer, their CIOs aren’t required to pivot tech teams to implementing Digital Coworkers. The IT related footprint is typically limited to security reviews since we are a cloud solution. We are SOC 2 Type 2, along with being compliant to CCPA, GDPR, HIPAA,ISO 27001, and 23 NYCRR 500.

From a CFO’s perspective, our DCs have been able to:

• Boost capacity on the claims team for a global conglomerate by 90%
• Reduce a team’s workload by 25% during audit season for a large US-carrier
• Enable a global insurance carrier to increase employee workflow efficiency by 80%

FinTech is heavily influenced by the seasonal demands in the industry, particularly in the Insurance sector. Could you please explain the tangible factors that CIOs/CFOs should consider before investing in an automation platform to manage these seasonal demands without blowing their budget?

Give the nature of scenarios like needing to scale-up your resources to support a catastrophic weather event (e.g., Hurricane Ian in 2022/Q3), CIOs/CFOs should consider whether their automation platform can add ‘Digital Workers’/’bots’ by simply clicking a button – or is a more complex procurement and technology cycle required to enable capacity.

For example, with typical RPA deployments, you need to acquire additional licenses and add and configure additional servers. Given the cycle time to perform these tasks, CIOs/CFOs will have to project volumes and prepare for this weather event well in advance of it potentially occurring. Essentially, it could end up being wasted effort and wasted cost if the weather event doesn’t occur or alternatively the CIOs/CFOs will be scrambling to add capacity if they got the math wrong.

One of the many advantages of our Digital Coworkers over traditional automation is that our Digital Coworkers recognize volume spikes on their own, they do their own math to understand the required capacity relative to the SLA they work towards, and will instantly clone themselves to ensure CIOs/CFOs always meet the SLA to their customer.

What’s better than an infinitely scalable workforce that is worry free!

Do you think that automation businesses are under-prepared to take on cyber threats and data leaks? Please tell us about your preparation in this field.

Cyber security poses a significant challenge for all businesses.

We have spent many years handling sensitive business and personal data for customers in highly complex, highly regulated industries like insurance, banking & financial services and healthcare.

That’s why everything Roots Automation does is fully secured using our Microsoft Azure cloud-based platform.

Digital Coworkers are compliant with industry standard security and data privacy protocols. Roots Automation is SOC 2 Type 2 and ISO 27001, and we are compliant to HIPAA, CCPA, GDPR, and 23 NYCRR 500 standards to protect and use PFI, PHI, and PII. ​

What kind of IT architecture should a customer have to fully-benefit from your automation solutions? What kind of customer services do you offer to customers to bring them to pace and sync with your platform?

As a cloud-native solution, Digital Coworkers sit on-top of customer IT infrastructure and connect via secure API, VPN or site-to-site with customer systems and infrastructure. Meaning, customers do NOT need to invest significant IT time or resources into onboarding a Digital Coworker.

Finally, once a Digital Coworker has been successfully onboarded, Roots Automation takes care of maintenance, monitoring and management of the Digital Coworker as part of the ongoing subscription.

Our customers’ IT teams only need to ensure the connection stays open.

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A unique customer use case scenario that highlights the great benefits of working with machine learning and automation:

Claims Management – Document Indexing

• Our customer chose to adopt a Digital Coworker due to its ability to ingest and make sense of a significant amount of data held within structured and unstructured claims documents.

Situation

• Our customer, part of the Berkshire Hathaway family, receives 3000+ correspondence items per day via email, mail and fax – which hit the imaging team first.
• The imaging team (14 FTE) is responsible for imaging each item and routing to an existing claim file.
• Imaging of an item includes: extracting claim information to search for and identify the existing claim in our customer’s claim system; renaming the item for easy identification by the adjuster; categorizing the type of correspondence into 1 of 15 categories.
• The imaging team adheres to a same-day SLA, meaning all incoming items for the day are imaged and sent to the claim file the same day.

Challenge

• The adjuster’s workflow is dependent on the speed of the imaging team.
• The faster the adjuster receives the necessary correspondence from the imaging team, the faster the adjuster can follow up with the claimant. This is crucial for our customer to maintain high quality customer service.
• Our customer was challenged to improve response times (from 24 hours to 1 hour) around claims correspondence – to offset rising leakage without hiring additional FTEs.
• To reach this goal, our customer estimated they would need to hire an additional 7 FTE.

Solution

• Our customer chose to adopt a Roots Automation Digital Claims Assistant due to its ability to ingest and make sense of a significant amount of data held within structured & unstructured claims documents
• For each piece of correspondence, the Digital Claims Assistant reads and extracts the relevant claim detail. It then searches for and identifies the existing claim in our customer’s claims system and then categorizes the item and routes it to the relevant adjuster.
• The imaging team is now solely responsible for reviewing items the Digital Claims Assistant asks for assistance on. They also spend time QA’ing the Digital Claims Assistant’s work – with all interactions improving the knowledge base and accuracy of the Digital Claims Assistant.

Results

• 90% of items handled straight-through by the Digital Coworker
• < 30 seconds average time to review document and index to correct place
• < 12 weeks to train and deploy the Digital Coworker
• Our customer avoided any headcount increase.

Your take on the future of AI and Automation solutions for the financial services;

The space is evolving fast, and the ecosystem to serve it is still being built. Tomorrow’s solutions need to assume the office environment is 50% humans and 50% Digital Coworkers and that interactions between the two are the norm. Absent that AI/automation cannot take things the last mile. If a human always has to step in, then you haven’t accomplished the goal of automation – allowing people to focus on other higher-value activity.

An advice to every data science/AI professional looking to start in this space:

Reach out, we are growing the team.

An event/ conference or podcast that you have subscribed to consume information about B2B technology industry: If invited, would you like to be part of a podcast episode on IT/Cloud/AI/NLP tech research?

• Event – ITC
• Podcast invitation, yes (and any other interview, speaking opportunities)

Thank you, Chaz! That was fun and we hope to see you back on globalfintechseries.com soon.