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Business and IT executives in many industries already know that streamlining and automating business processes can cut costs and boosting productivity. But for financial services organizations, BPM offers another critical benefit: dramatically improving regulatory-compliance efforts—and doing so efficiently and cost-effectively.

The biggest challenge in achieving this benefit is convincing such organizations to embrace BPM software in the first place. Despite the benefits of BPM software to support financial services processes, Connie Moore, analyst, Forrester, says the companies she speaks to aren’t familiar with BPM software. “I think a lot of companies that are concerned about compliance don’t know about BPM platforms, so the big issue is getting them aware of the potential for BPM to help them,” she says.

But that’s only part of the problem. “Sales numbers are going up, but I’m struck more and more by how many companies are not ready to move to BPM software. They’re still getting their heads around how does this process work, how do we want it to work, do we want to continue to improve it, what do we want to do to improve it,” says Moore.

Given BPM software’s ability to change the way business is done and serve as a competitive differentiator, “IT professionals, line of business executives, process excellence practitioners should all be looking more and more at BPM software as a way of delivering business results,” says Moore. “But I think they’re not ready or they’re trying to look at the big picture, which can be more along the lines of ‘we don’t even want to operate this way.’”

Add to that the fact that optimizing processes with BPM software isn’t plug-and-play. “You have to be ready to do the work. You have to work with each department. You don’t always just want to take a paper form and make it electronic,” says Laura Briscoe, senior vice president and director of information services at Stillwater National Bank in Oklahoma City, Okla. “Before you start building [a process], you have to think it through first, otherwise you’re going to rebuild it and rebuild it and rebuild it.”

The organization also needs to be prepared for the new way of operating. Nicholas Kitson, head of business process management in the global financial services unit, for Capgemini, often sees a lack of change readiness in large IT organizations. “You have to introduce fundamental changes to the way people work and you therefore have to have a change management initiative, and the data up and running and working alongside IT,” he says.

How BPM is used for regulatory compliance
Those financial services organizations that get past BPM implementation hurdles find that standardizing and streamlining processes does more than improve operational efficiencies and reduce operational costs. It can support regulatory compliance efforts to make them more efficient and less costly as well.

According to Capgemini’s Global Business Process Management Report, “more than 77 percent of survey respondents who introduced BPM with a view to improving compliance reported that the initiative had a positive impact on their business in this regard.”

That’s no surprise to Moore. “More and more companies I talk to are trying to standardize their processes, especially as they globalize,” she says. She explains that an insurance company may do claims processing numerous different ways as a result of acquisitions and expanding into different countries.

Standardizing processes and making them configurable by country makes the company more efficient—with the added benefit of making it easier to be comply with a wide variety of regulations. Now that process may be different from one country to another, but it’s automated in the same manner.

“I think [financial services organizations] seek out BPM platforms for creating processes that are compliant. Through BPM, they can make sure that people follow the correct steps, and they have an audit trail,” Moore says. “And through BPM, they can create compliant processes that run in a shared service, but are configured for each different country’s regulations. For example, “a bank may have a process that is Basel II-compliant, and also needs specific compliance for a country’s regulations too,” she says, referring to a set of recommended international standards for banking laws.

One major challenge of maintaining regulatory compliance is simply keeping up with frequent changes in requirements. According to the Capgemini report, “62 percent of decision makers in the financial services sector that participated in the survey anticipated that responding to changes in legislation would become a more important driver for their business over the next 12 months.”

BPM software can help with that, too. “When organizations are approaching regulations, what they are finding is that with some of the older systems, it’s harder to change the business rules and processes because they are locked down, hard- coded,” Kitson says. “Now they can transfer the business rules and processes into a more agile platform that allows business users to make those changes. They’ve unlocked those processes.” Rather than waiting on the IT department to make changes to code, business owners can make the appropriate changes to the business rules.

The ability to automate and automate processes also comes into play here. It’s common for little steps – such as handing off transactions to another department – to be added to processes to address changing regulatory requirements. Briscoe says that when her group charts processes and every hand that touches them, the response is commonly, “Whoa, are you kidding me? How has this gotten so complicated and convoluted?”

BPM software provides visibility into processes and also ensures that the right data is available at the right time and right place to ensure more consistent decision making, says Kitson. “In addition, BPM allows you to route tasks to the appropriate person so that if legislation requires that any loans need to be viewed by a senior loan officer, BPM can ensure this happens and the audit log can demonstrate you were compliant 100% of the time,” he says.

According to the Capgemini report, “Organizations can build compliance to these new regulations into a repeatable, measurable framework. This eliminates the need to impose compliance controls manually in an ad-hoc fashion, reducing error and minimizing time and resources that need to be dedicated to regulatory demands.”

Briscoe agrees. “If you start having processes that have to be modified and updated a lot – if this happens, you do this; if that happens we need to do that – then you’re ready for a workflow process,” she says.

READER FEEDBACK: Has your company used BPM to improve its regulatory-compliance efforts? If so, ebizQ editors would like to hear about your experience. Contact Site Editor Anne Stuart at editor@ebizq.net.



About the Author

Crystal Bedell is an award-winning freelance writer who specializes in covering technology. Contact her at cbedell[at]bedellcommunications.com.

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