Financial services organizations operate in a business environment analogous, in almost every respect, to manufacturers of finished goods. They transform the raw material of investor-supplied capital into the added-value financial products we know as residential mortgages or small business loans or credit card accounts. In the process, financial services organizations work with a diverse array of specialty suppliers (credit ratings agencies, title and appraisal companies), loan servicers, investors, secondary marketers and brokers. Together, these relationships constitute a supply chain as complex and sophisticated as anything found in manufacturing.



As originators of most financial transactions and primary owners of the customer relationship, financial institutions such as banks, mortgage originators and brokerage houses are the fundamental engines that drive financial services supply chains. With competition intensifying, these institutions have come under increasing pressure to offer more desirable products at the lowest possible price. Like manufacturers, their success in bringing better and more economical products to market depends in large measure on their ability to procure materials and services from business partners in the supply chain faster and at a lower cost.

In today’s technological environment, business interactions with supply chain partners are conducted increasingly through efficient, low-cost e-business systems. As the efficiency and speed of these online systems increase, the individual firms’ business activity becomes an increasingly collaborative process.

To respond optimally, supply chain partners need greater visibility into one another’s operations and greater connectivity with one another’s information and transaction processing systems. The entire supply chain must become one extended electronic enterprise in which each participant has an increasing stake in the success of its trading partners. And every link in the supply chain has a major stake in the success of the originator. If financial institutions cannot correctly perceive and satisfy the needs of the customer, then the whole supply chain withers.

Enterprise application integration (EAI) and supply chain management (SCM) are two of the terms people use to describe the work of linking e-business systems together across the supply chain. Whether they realize it or not, financial services enterprises have been in the EAI business for a long time. The banking industry’s longstanding attempts to automate payments for checks though automated clearinghouses and credit cards are familiar examples. The securities industry’s quests for STP (straight-through processing) and T+1 (trade date + one day) settlement are others.

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