The processes shown in our retail banking series reflect the scenario of BPM implementations being mission critical, all encompassing, end-to-end, complex GUI driven solutions that cover the entire sales cycle and which are heavily (core and legacy system) integrated.
Figure 1 – Human centric business process, Winkler 2013
Credit card processes also abide to the basic structure that is so typical for human centric process, which has been outlined in our previous post (Retail Banking Process Series (part 1)): it consists of user steps and integrations that describe the Time-to-Yes (TTY) as well as the Time-to-Cash (TTC) activity sequences.
The commercialization of credit cards and consumer loans are usually mission critical processes for many banks that focus on high volume retail products (such as personal loans) for which a clear differentiation between TTY and TTC is critical in achieving “BPM success” (read more on possible metrics). For one thing, there is clear separation of purposes between these 2 – TTY is tailored to attract and retain the customer, and to close the deal. The TTC part however, is designed for the post-sale execution and compliance.
Figure 2 – Retail banking process progress, Winkler 2013
Having automated more than 50 different credit card processes during the last 6 years, we (NSI) found that for retail banking processes in general and for credit card processes in particular the attraction of a new customer, retaining an existing one and to successful complete a sale (while complying with all policies) you can rely almost entirely on the first 2 process steps – the (credit card) quote and the subsequent (credit card) request steps. Hence TTY has to capture the interest of the customer (FAST and attractive quotes, terms and conditions), create the promise of a conditioned approval (“Approved if applicant complies with…”) and allow for individual negotiations within given policy margins. For (credit card) TTYs speed, promise and individualized negotiations are key elements. Credit Card TTYs also have a completely different operational structure when compared to its TTC counterparts – due to their commercial properties, far more and usually lower cost intensive resources are involved during the TTY activities whereas TTC is normally handled by fewer but more senior resources, being the “(credit card) request approval” the process’ tipping point, going from TTY to TTC. In that relation and also considering a growing seniority the more one advances in a retail banking process to its middle, the rigidity of process rules, policy enforcements and ease of use (of the BPM solution) have to be high for the TTY part and can become more dynamic for the later TTC part of the process.
Note: The more automation is achieved in the credit review and approval steps (due to BPM – credit scoring, blacklist and core banking integrations), the more all approval steps are part of the retail banking processes’ TTY portion.
In the market of Central and South America that NSI is catering to, there is a common pattern for credit card sales process types and related BPM implementation:
1. A Bank typically starts out automating its credit card sales process – “Walk-In”. The credit card “walk-in” process describes the commercialization of credit cards for the banks customers and prospects, on request and at their correspondent branches (brick and mortar).
Figure 3 – CC Walk-in, Winkler 2013
The walk-in process is a valid starting point for BPM initiatives (for credit cards) since it contains almost all the activities further adjacent credit card processes entail as well.
From there follows in no particular order:
2. “Pre-approved” credit card processes that integrate into the existing “Walk-in” process, right after its approval steps.
Figure 4 – CC Pre-approved, Winkler 2013
3. “Instantaneous emission” – this process is typically used for micro branches (such as malls), where the approved credit card is being emitted and activated with a minimum credit limit on the spot and “at once”. The credit limit is being increased post emission and behavioral analysis. Due to an initial reduced risk (exposure) only some of the core’s process steps are being invoked.
Figure 5 – CC Instantaneous emission, Winkler 2013
4. “Cross Selling” – “Credit Card Cross Selling” is directly derived from the “Pre-approved” concept whereas here the credit and policy validation is being harnessed from a different retail banking process. In retail banking processes, cross selling normally is being combined from macro to micro:
- a. Mortgages -> Personal Loans + (and/or) Credit Cards
- b. Car Loans -> Personal Loans + (and/or) Credit Cards
- c. Personal Loans -> Credit Cards
Figure 6 – CC X selling, Winkler 2013
Macro activities (core process)
- CC Quote:
- Identify requester as customer and/or prospect
- Basic credit background check and validation
- Emit with minimal possible information an initial quote (card type,
limit and conditions)
- Identify if customer/prospect is apt and/or interested (capture data
even if not apt for future purposes)
- CC Request:
- Refine and complete customer/prospect data
- Refine and complete quote
- If possible: negotiate and approve here
- CC Review:
- Intended for special requests, considerations and exceptions (rest
should be filtered and routed automatically)
- CC Approval:
- If possible, automate through integrations with scoring systems
- Manual approval for exceptions only
- Logistics + Formalities:
- Gather signatures
- Generate and individualized plastics (cards)
- Validate documents and policies
- Deliver Card
- Confirm Delivery
- Deliver Pins
- Confirm Delivery
- Activate Card
- Welcome kit
- QA Step (activated for a definable % of cases at random)
Integrations (core process)
As mentioned above, there are several different integrations from and to the BPM Credit Card Solution to be considered. Among the most common ones we have:
- BPM <–> Core Banking System
- Read CIF
- Create/Update CIF
- Create/Update product
- BPM <–> Blacklists
- Internal and external (like OFAC)
- BPM <–> Credit Card Issuer (if not bank owned, like
- BPM <–> Other BPMS and/or processes (eg.: prospect
exists not as a customer but as a requester in a mortgage process, about to be
- BPM <–> Other Legacy systems (Document processors,
e-mail & ), CRM and ERPs
Credit Card processes are very structured and rigid processes, and therefore well suited for an initial mission critical BPM implementation of a bank. These comparatively simple processes range from some 8 to 12 user steps (low to medium process complexity).
However, for credit card processes as for most of all other BPM implementations the Pareto principle applies; in short – “Don’t automate the exception but the rule”.
Next up – “Personal Loan Processes”