BPM in financial services: Drilling down to specific applications

No doubt about it: When it comes to modernizing financial services organizations, BPM can play a critical role. As business and IT professionals in many such companies have learned, BPM offers numerous benefits, from reducing the costs and inefficiencies of business processes to improving customer service and increasing revenues.

But it should also come as no surprise that in organizations where BPM resides in silos, returns from such efforts will be sharply limited. That’s why many financial services companies are looking to consolidate BPM functionality.

“BPM is a discipline that looks at continuously improving and transforming cross functional processes,” says Connie Moore, a vice president and senior analyst with Forrester Research. “Financial services companies are using BPM for a wide range of processes that mainly touch the customer.”

Moore divides those processes into two categories: service requests and investigations. The nature of the service requests aligns with the company’s line-of-business offerings. For example, a service request for a bank might be a customer requesting a mortgage. An insurance company might have a service request to file a claim that must be processed against an insurance policy. Obviously, addressing those requests involves extensive customer-service activity, either in a contact center or face-to-face in a branch office.

On the investigative side, institutions concerned about credit-card or insurance fraud may “do a lot of tracking down in these situations to see if something is going wrong that they need to shut down.”

“BPM is a critical component in the modernization of bank systems,” says Mary Knox, a research director in Gartner’s banking and investment services industry advisory service. She’s seeing BPM technology increasingly applied to automated processes, such as payments, core banking, lending, treasury management and customer servicing.

Knox sees BPM platforms being used to more easily change applications to reflect rapid changes in requirements. “Changes can be essentially configured, as opposed to having to go into the code itself,” she says.

That development represents a huge benefit for financial services organizations because it enables business units to control and change workflow without having to contact IT. After all, those business units “know their process better than anyone else,” says Laura Briscoe, senior vice president and director of information services for Stillwater National Bank in Oklahoma City, Okla. “They can control the process themselves, and them being that much more involved with it is really a benefit.”

Many financial service and insurance companies are looking to eliminate processes that overlap or duplicate each other, Moore says: “There are huge inefficiencies and costs associated with redundant processes, and companies are spending money to streamline those.”

Briscoe concurs. “We have too many processes where data gets entered multiple times,” she says. “When you do that, you have more mistakes, you have more data entered. You’re just wasting time and effort.”

But the higher up you move in the organization, the more senior executives—the CEO and COO, for example—are looking for benefits beyond cost savings and efficiencies. They’re looking at the customer side for greater market share, greater lifetime value from the customer and greater revenue per sale, says Moore. “In today’s business environment, the things that get executives excited are more on the customer side,” she says.

BPM platforms are also being used to “deliver more personalized products and services, and to support multiple transaction types in a single platform,” says Knox. BPM CONSOLIDATION: BRINGING IT ALL TOGETHER
Financial services organizations are also looking to consolidate BPM and move away from monolithic, silo-like platforms, Knox says:“You see a desire to reduce the number of BPM tools that may be used.”

Many applications interact with each other or share common functionality within the organization. For example, a payments application may reach out to an anti-money laundering capability used by other areas of the bank beyond payments. The BPM functionality in the payment application may lack visibility into the anti-money laundering application.

Analysts often see silos in processes associated with customer prospecting and on-boarding. The workflow stops at the point where the prospect is converted to a customer. Then the employee has to enter another system. “They’re starting in all over again,” Knox says. “The workflow doesn’t span from prospecting and on-boarding to servicing. They want that ability to span the entire life span of the customer relationship.”

But that doesn’t stop financial services organizations from looking at BPM functionality in point solutions. “Banks are looking at it when they’re looking at applications,” Knox says. In many requests for proposal (RFPs), financial services organizations seek answers to questions such as how workflow is managed, how processes can be automated and what kind of audit trails are included, she says.

“There is tension between the two approaches,” says Knox, referring to the use of a BPM platform versus BPM functionality in point solutions. “What we recommend depends very much on what the use case is, what the problem is that they’re trying to solve.” In other words, there’s no single solution or right answer that applies to all cases.

“In a situation where there are unique and highly demanding performance requirements, we recommend looking at specialist tools and the ability to support integrations with more general tools, but where possible moving BPM functionality into the infrastructure layer to be able to facilitate a broader view of processes within the organization,” Knox says. “But there are always times when specialty tools are required.”

In some cases, the BPM tools that are built as part of an application have particular performance capacities that are not found a more general BPM tool, Knox explains. That’s common in the payment space, where a payment system might process thousands of small payments.

When evaluating BPM platforms, it’s important to remember that you’re enabling business users to change processes or process steps, says Knox. Hard coding isn’t required. Thus, she says, “You need strong user authentication and the ability to assign different roles and responsibilities. You don’t want a situation where the required steps of a process are inadvertently overwritten because of a business user who doesn’t know better or doesn’t understand the downstream implications of what they’re doing.”

It’s also important to make sure that IT and the business units are on the same page when it comes to adopting a BPM platform. “If IT is charging ahead and quite reasonably says, ‘This is a new, more agile, more modern platform for us to be using for all kinds of processes, so let’s put it in,’ but the business people are not there, then they’re out of sync. That’s a real danger. There’s a high risk of failure,” Moore says.

“This is a business thing,” she continues. “It’s not like putting in middleware. It’s a very business-facing piece of software. You need the IT and business organizations to be in the same place.”

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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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