Banks and financial institutions have hundreds of critical business processes. These are sets of actions essential to the workings of their businesses. Straight through processing (STP) allows the entire trade process for capital markets and payment transactions to be conducted electronically, without the need for re-keying or manual intervention, subject to legal and regulatory restrictions.
Historically, STP solutions were necessary to help financial institutions attain the goal of one-day trade settlement of equities transactions, as well as to meet the global demand that had resulted from the explosive growth of online trading.
Now the concepts of STP are applied to reduce operational and systemic risk, to minimise operational cost and to improve certainty of settlement. Yet few banks have realised STP`s full potential and understand how BPM can help them to reap its benefits.
Business process management technology addresses the need to streamline these actions and gain efficiencies from routine processes. But before unravelling where the pieces fit, the first step is to clarify process-based technology. Although it is not new - business software has long supported major business processes - what has changed is the realisation that managers need to better understand and improve these processes in order for their organisations to be competitive, adaptable and responsive.
So what does process technology comprise? David McCoy of Gartner encapsulated the essence of BPM: "...a blending of process management/ workflow with application integration technology...to support rich human interaction and deep application connectivity". This can be taken a stage further: "Specialist rapid application development software for:
* The automation of rules based processes.
* The routing of documents, information and tasks within and between organisations, in a timely manner.
* Fully integrated with complementary technologies and legacy systems for significant, measurable benefits."
So BPM allows us to create a process layer and removes the business processes from the control of applications. In order to do this well, BPM needs to support all the attributes of a business process. For example, it must be able to manage applications in parallel as well as series, manage people-intensive applications inside and outside the organisation, as well as being continuous and discrete, allowing processes to change over time.
Within banks and financial institutions, the entire trade lifecycle, from start to finish, is a complex web of manual processes taking several days. STP streamlines back office activities, leading to reduced failures, lower risks and significantly lower costs per transaction.
This is where BPM comes into its own. Typically BPM solutions can co-ordinate and automate routine functions involving interaction between many individuals and systems, therefore allowing employees to be more productive and focus on other tasks. Additionally, it helps to address fully automated system to system interactions.
For typical applications, such as electronic payment transactions or credit checks, straight through processing capabilities streamline the exchange of data between systems while eliminating delays and errors caused by manual re-entry of information. BPM technology also provides a certain degree of business intelligence or business activity management (BAM) capabilities that enable organisations to establish and monitor business and financial metrics for measuring the health of the business in real-time.
Banks should be looking to implement rules-based BPM as a way of driving STP. To do this, banks need to ensure they have an effective BPM platform in place. Investment in BPM and increasingly powerful technology means that the systems are in place to facilitate ubiquitous STP.
Business process management can improve processes between different staff and different departments to provide on-time and correct information across the whole bank. The innovative use of smart rules-based systems will allow banks to manage the rules of business and separate them from operations to simplify matters. By introducing process improvements internally, the banks can gain significant value by enhancing the business processes of their customers. This will involve increasing efficiencies and compressing cycle times by augmenting existing, commoditised product and services with new more efficient ones. For example, commercial banks that help their customers fulfil their goals of minimising manual and paper intensive processes by offering services such as imaging and payment electronification will foster stronger customer relationships and capture additional revenue streams.
Jon Pyke, Senior Vice-President at Global 360 and Chairman of the Workflow Management Coalition (WfMC), will present the BPM concept and technology in more detail during the BPM Congress, to be held at the Sandton Convention Centre in Johannesburg from 29 to 31 August.
You will find more information on business process management at www.global360.com and www.wfmc.org.
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