To succeed in international competition, financial services providers must
make their processes more flexible while gearing them towards evolving
market situations, writes Fred Brady, sales director: Africa at Software AG.
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
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.
The 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
Therefore, 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). 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
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 reorganisation 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 reusable 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, 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 analyze 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.