Banking on BPM: The Virtues of Process Automation

BPM technology is finding ever increasing deployment at banks both large and small and there are five big reasons why: for standardizing processes, ensuring compliance, boosting efficiency, raising capacity and minimizing loss. I spoke with one senior bank executive to see if the hype surrounding the virtues of BPM holds true.

Codifying Processes

Any bank employee who has ever dealt with commercial loan documentation knows it can be a nightmare if there is no structured process for loan approval. In such cases, following approval loan officers will often delve into their own dark processes in order to generate loan documentation. For such banks, codifying the process and getting everyone to do things in the same structured way is a crucial objective, which has an enormous kickback effect.

Ensuring Compliancebanking-bpmleader
With many types of organizations, process modeling is primarily about gaining and maintaining efficiency. With banks, however, dark processes can result in non-compliance, both with existing laws and with internal policies put in place to ensure safe lending practices. Either type of negligence can lead to legal exposure, risky loans, and profit loss.

Automating the loan-generation process can reduce and probably even eliminate non-compliance. Relationship managers, loan officers, and clerks are all funneled into the same codified, automated process, the outcome being not only greater efficiency, but also greater safety.

Boosting Efficiency
Prior to BPM deployment, the process of generating transactional documentation had been inefficient at many banks, and hence, overly costly. Much of this inefficiency was be attributed to the dark processes, which frequently involved an ad hoc approach to document production.

Automating the generation of transactional documentation is arguably the most cost-effective type of business-process modeling for banks because it drastically increases efficiency. Many banks report reducing the time necessary for generating loan documentation from days to hours, or in some cases, minutes. Yılmaz Çeliker, Product Development and Marketing Supervisor at Near East Bank in Cyprus, says that using BPM has “phenomenally reduced the processing time required for handling loan applications”.

Raising Capacity
Efficiency obviously exerts a direct influence on an organization’s workload capacity. The more efficiently tasks are carried out, the more manpower is left over for handling new tasks. This reported rise in efficiency has, therefore, led to an increase in the banks’ ability to process more loan applications. Banks have even reported a staggering 400% rise in the volume of applications handled by the bank thanks to the deployment of BPM.

Loss Mitigation
Relying on human input in complex, challenging processes can be, to put it quite mildly, a risky venture. In the case of a a commercial lending agreement there could be a hundred pages or more and virtually countless variables. It might also require really complex business logic to include/exclude language blocks, could involve multiple levels of repeating text, and so forth. With this level of complexity, no amount of proofreading is going to eliminate the possibility that something could get missed, and that particular something could leave the bank exposed to millions of dollars.

For a lending institution, transforming its transactional documents into a process application with accurate and complete business logic and an interactive, structured data-gathering sequence can virtually eliminate human error and a hefty amount of legal exposure. According to Mr. Çeliker, BPM has had a “tremendous effect on error management” at Near East Bank. If an error is nevertheless detected, either by the application or a user, the appropriate signals are given by the application to lead to the speediest resolution of the problem leading to a lower loss than would otherwise have been the case. The status of the rectification process is then accessible every step of the way.

The Solution
Since banks have the need for many types of process automation, particularly with regards to document-generation, automating the loan-generation process with an enterprise-wide deployment of a BPM solution will dramatically improve efficiency while simultaneously boosting capacity, improving compliance and reducing risk.

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By Mike Lawrence @ 6Kare | September 8, 2014

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