DCM in financial services: Bank on the benefits

Editor's Note: This three-part package explores the growth of dynamic case management (DCM) in the financial-services industry. Part I provides a DCM overview. Here, Part II looks at DCM’s benefits for financial-services firms. Part III focuses on DCM adoption in financial services, outlining the most important DCM best practices and pitfalls.

More than 90 percent of banks and investment services firms surveyed by the analyst firm Gartner Inc. for its 2010 Banking and Investment Services Architecture Survey currently use BPM technologies, with dynamic case management (DCM) tools being especially popular. It's easy to understand why financial institutions have chosen DCM as the catalyst for their BPM efforts when you consider the potential benefits.

Financial-services companies, like those in many other industries, often keep customer information in a variety of departmental silos. That set-up means that, in many cases, employees make business decisions based solely on information collected in one particular department. Such information might be out of date, incomplete or just plain wrong, in which case the department's decisions can expose the financial institution to unnecessary costs, missed revenue opportunities and increased risk, including the possibility of fraud.

Using DCM helps eliminate those silos and provides other benefits, including:

Improved customer satisfaction and organic business growth. DCM helps integrate information from departments throughout the organization to give knowledge workers a comprehensive view of each customer or issue at hand. If one department updates a customer's data, every other department has access to that same updated information. With a holistic view of the customer, workers can make better-informed decisions that benefit both the organization and the customer.

DCM also lets financial-services employees treat customers as individuals, delivering a more personalized experience to each one. For example, if a customer calls a bank to follow up on an accounting error, that customer won't need to recount previous conversations with the company. The service representative has access to the customer's history and should be able to resolve the problem more efficiently.

Greater customer satisfaction and access to each customer's information can also lead to organic business growth, an especially valuable benefit in today's economy. Knowledge workers can use the intelligence at their fingertips to determine whether particular customers are qualified for other financial products and possibly even whether they might respond to sales pitches related to the issue that led them to call in the first place.

More efficient and consistent processes that support regulatory compliance. As part of business process management, DCM also helps improve actual business processes and, in doing so, can help support regulatory compliance efforts. DCM can "improve efficiency by automating handoffs or enabling various parts to be done simultaneously," says Mary Knox, research director in Gartner's Banking and Investment Services Industry Advisory Service. A business process—for instance, a new account opening—may involve a number of steps and hand-offs. Automated and human-based workflows can be integrated so that exceptions in an automated workflow are handed off to the appropriate knowledge workers at the right times.

The automated handoff also "provides for a level of consistency so that you can help ensure that things are processed in a way that you want them to be processed," says Knox. This helps financial-services organizations' compliance efforts by forcing knowledge workers to follow the correct processes that have been established to meet regulatory requirements. An established process and documentation also creates an audit trail.

Increased protection against fraud. Similarly, "by ensuring that processes are followed, and providing audit mechanisms, opportunities for fraud may be reduced with dynamic case management tools, while fraud investigations are made more efficient," Knox says.

Having customer information scattered across an organization makes it difficult to identify patterns that may indicate fraud. Employees may also inadvertently enable criminal activity by making decisions based on limited or outdated information. With access to consolidated, up-to-date customer information, employees can properly assess a customer's risk level or potential value before, for instance, extending a line of credit.

DCM can offer further fraud-management benefits by being blended with technologies that enable the real-time detection of unusual transactions or patterns, such as complex event processing, Knox says. Such combinations "can then trigger rules-based workflow while linking in relevant contextual information, once again in real time, moving firms beyond reactive to proactive fraud management."

Greater modernization of bank systems. DCM also enables financial services organizations to redesign their processes, a step that Knox calls critical for the updating of many bank systems. A one-size workflow doesn't have to fit all instances of a specific process.

In other words, organizations can build in exceptions to allow for flexibility. For example, a new line of credit for a business customer based in Libya, currently the scene of widespread upheaval and unrest, may call for a more rigorous risk management routine than what's normally part of the process. DCM allows you to build in that exception.

"You can also start to deploy different kinds of processes through the same basic workflow," says Knox. For example, many banks want to process multiple payment types through a single platform. DCM enables that capability. "You can make changes to the workflow based on items relating to that transaction, or on the fly as situations change," she says.

Bottom line: By moving data out of silos and integrating it across the entire financial services organization, DCM offers numerous benefits. Most important, DCM enables the organization to act as a single organism. When all employees operate from the same body of information, customers have the sense that the organization "knows" them. Customers are no longer strangers when they call customer service or apply for a loan. Meanwhile, employees have the business intelligence they need to help the organization meet its goals. Ultimately, their focus can shift from simply gathering information to helping make strategic business decisions.

Part I of this package provides a DCM overview. Part III focuses on DCM adoption in financial services, outlining the most important DCM best practices and pitfalls.

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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