4 Ways Business Process Management Solutions Can Transform Big Banks

Despite the finance sector's rapid rate of change, the cost of non-compliance is colossal, and there's no question that financial institutions need to change their relationship with compliance

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By Gero Decker


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The banking and financial sector is one of the most heavily-regulated industries in the world, and so it should be - after all, money is the backbone of our economy. In the wake of digitisation, the way financial institutions operate - and the way they are governed - are changing almost as quickly as technology is advancing, alongside constantly-evolving compliance laws and regulations that financial institutions are required to keep up with.

Despite the sector's rapid rate of change, the cost of non-compliance is colossal, as we are seeing with the recent anti-money laundering and counter-terrorism breaches impacting banks.

There's no question that financial institutions need to change their relationship with compliance - investing in infrastructure to comply with extensive policies and regulations such as Anti-Money Laundering, and Know Your Customer rules, is the safest way to ensure business processes are compliant. Specifically, investing in business process management solutions (BPM) and process mining.

BPM is the methodology used to make workflows more efficient and capable of adapting to change, while "process mining' penetrates the right data in specific workflows to reveal the root cause of inefficiencies. In a banking sense - process mining excels in identifying non-compliant behaviour within an organisation's process landscape through comparing the way a process actually runs to the way internal policies and external regulators say that process should run, detecting compliance violations which are then acted upon swiftly.

That's not the only benefit however. Here are four ways BPM can transform banks and financial institutions, for the better:

Keeping Up With Competition

Innovation in the banking and finance sector is largely driven by technological advances. Big banks are struggling to keep pace with the rise of agile fintechs and neobanks - especially with open banking laws set to come into effect early next year, allowing consumers greater control over their banking data and how it's shared with other institutions.

Willingness to transform distinguishes leading companies from their competitors - if banks want to compete with their small but lucrative disruptors, they must be open to change. Barriers preventing innovation in large financial institutions are largely centred around lack of ownership and an outsized emphasis on governance - management can be unwilling to embrace technology they don't understand, while fear of regulatory suppression can paralyse big ideas.

When implemented correctly, process mining automatically identifies non-compliant behaviours meaning issues can be dealt with swiftly. Increased transparency, coupled with continual process optimisation automates how a business adapts to change, making them more resilient and most importantly, complaint.

Process mining is not just a disruptive, one-off event - but an ongoing holistic transformation with the ability to track, and keep up with changes in the vast range of standards and policies an organisation is required to comply with. In short, process-driven compliance takes the risk out of innovation.

Customers Comes First

Banks are recognising that customers need to be their main focus - not products. Despite this recent shift in awareness, complaints and enquiries against financial institutions have risen significantly. The Australian Financial Complaints Authority was established in November of 2018 during the Hayne Royal Commision, and have since received 73, 272 complaints, with the big four reaping the most grievances of any other organisations.

A blindspot for many financial institutions is not knowing how their customers interact with their organisation. If the recent issues are anything to go by, it shows that big banks can be oblivious to how their business processes work, meaning they don't know how their customers use them either.

Process mining helps organisations understand customer behaviour by mapping each individual customer's journey. Identifying and responding to each touchpoint within a process landscape, process mining captures and classifies complaints while addressing the root cause of any issue, allowing for full visibility. This data can then be used to fulfill regulatory and reporting obligations.

By connecting touchpoints, process mining can predict interactions across future journeys, improving customer satisfaction by delivering an "outside-in' perspective. This transparent mapping means business processes can be redesigned in a customer-centric way, responding to changing circumstances quickly by building a positive cycle where data is continuously used to improve the customer experience.

Creating Compliant Aware Staff

Banks and financial institutions need to create a culture where calling-out non-compliant behaviour becomes normal, and where defects are not ignored. This change is not only to ensure history doesn't repeat itself, but also because non-process driven compliance relies on humans, and humans inevitably make mistakes.

Process-mining eliminates errors by identifying non-compliance through continuous monitoring of end-to-end processes - meaning the onus is taken off individuals. Organisations are still held accountable, but their processes become clear and visible to all, meaning there is a greater understanding and awareness of non-compliance, should it arise.

Employees with little knowledge of business process management can set up a solution that understands the role it's intended to undertake, quite simply. Instead of trying to interpret long lists of complex regulations with varying outcomes, staff can simply input data into the appropriate process, and the correct compliant output is generated. Staff can complete their tasks faster and more accurately, allowing IT teams to drive innovation initiatives with confidence.

Increased Compliance and Efficiency

For large institutions, operations are typically spread across multiple countries with varying legal jurisdictions and regulations. Then, there are varying divisions operating in different ways to align with specific goals - this means there are hundreds of different processes occurring, not to mention the number of interactions with the outside world. Organisations can become unstuck when these variances became too difficult to track and manage - making compliance an immeasurable task.

Process mining uncovers detailed information about the way complex processes actually run, how they interact with other processes and how they exist in an organisation's entire process landscape. This allows financial institutions to view their disparate systems as a seamless, single unit, giving management the ability to pinpoint exactly where processes can be altered.

Compliance staff, or risk management departments, are able to visualise and analyse end-to-end processes across an entire business, using existing internal data to identify improvement opportunities such as: enhanced processing power for IT systems, lower costs for data storage, standardising and optimising processes.

Creating a common source of truth through a transparent overview of process builds confidence in communicating compliance coverage to regulators, management and employees. Put simply, reducing complexity reduces mistakes.

Gero Decker

Co-founder and CEO, Signavio

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