To succeed in international competition, financial services providers must make their processes more flexible while gearing them towards evolving market situations. With active process management, ideally in combination with a service-oriented architecture, financial institutions can automate, monitor and optimise their workflows.
Financial services providers are feeling more and more pressure to operate quickly, efficiently, and profitably — all at the same time. Competition from direct banks accessed via the Internet or other distribution channels forces financial institutions to ensure that their business processes are lean and efficient. This allows them to increase their profitability and offer their customers innovative products with attractive terms.
Banks must react to the challenges facing them, for example the fact that consumers can apply for a loan directly from electronics retailers when they want to buy something. Consumers must provide personal details along with the amount of the desired loan, and the bank must decide relatively quickly whether and under what terms it wants to grant the loan.
This means that the financial institution must find a very easy and cost-effective — that is, automated — way to process customer data and to handle these commercial transactions within the bank. So, more and more financial services providers are using process-automation tools (business process management or BPM); both as a solution to redesign their core processes and as a way to continuously optimise their processes. In the above example, greater efficiency is achieved because the information needed to make these decisions is now submitted electronically, loan applications are no longer processed manually, and bank employees can view loan applications electronically (which was previously very unusual).
A new way of thinking
BPM requires more than just the underlying technology; it also demands a new way of thinking and a new view of the business processes needed for close collaboration between professional users, business analysts, and IT departments. When introducing such an approach, it is advisable to begin with a new, innovative, and forward-looking process flow that promises a competitive advantage, like the consumer lending process described here.
Ideally, only those core processes that require re-organisation or optimisation should be automated with BPM, in order to achieve additional advantages. To ascertain this, however, each process must first be made measurable. Performance-management tools can determine the processing time for a credit screening or a loan application. It is imperative to think about this in advance for processes selected for automation, so that the processes can be focused on future needs.
Service-oriented architectures (SOA) can be helpful here, because they allow services to accelerate decision-making, for example information can come from an external rating agency rather than from a lower-cost, but slower, internal rating system. Because services feature re-usable technical application components, they greatly help process automation. These components are merged into workflows via the BPM system in accordance with each department’s needs.
In an ideal world
In an ideal world, a BPM system consists of a set of interdependent solutions that map business processes at a departmental level and allow collaboration between departments, business analysts and the IT department. Thus, processes can be modelled and visualised enabling new individual process steps, specified with the necessary business logic on the basis of set rules.
They are then executed in a data-flow environment. It is advisable to select a solution that supports the simulation of processes before they go live, which makes it possible to test different scenarios and check the amount of time and resources needed for the processes.
But BPM can do much, much more. It follows the entire life cycle of a process, which is beneficial because competitive advantages arise only if the focus is not just on one-time automation of processes, but also on continually updating them.
With the help of business activity monitoring (BAM) tools, business users can monitor and analyse a process’s performance to make any necessary corrections to the process that will add lasting value. For example, resource planning can be improved when BAM helps determine when loan applications tend to pile up.
Service-oriented architectures and BPM complement each other to provide truly flexible corporate IT: the SOA forms the technological basis for BPM, and BPM delivers the technological framework for implementing services.