Business Process Mgmt The key to more efficiency, effectiveness and flexibility

BPM & Banking

Governance

business processes sustainable

improvement

Flexibility, Effectiveness,

Efficiency

Align with business strategy

Budget controls

Regulatory Compliance & Risk Mgmt

BPM & Banking

Outcome of the G20 Finance summit

Strengthening Transparency and Accountability

• The key global accounting standards bodies should work to enhance guidance for valuation of securities, also taking into account the valuation of complex, illiquid products, especially during times of stress.

• Accounting standard setters should significantly advance their work to address weaknesses in accounting and disclosure standards for off-balance sheet vehicles.

• Regulators and accounting standard setters should enhance the required disclosure of complex financial instruments by firms to market participants.

• With a view toward promoting financial stability, the governance of the international accounting standard setting body should be further enhanced

Business Process Management will become a key to

deliver on future regulations setup by the Banking

Regulators

BPM & Banking

Outcome of the G20 Finance summit

Risk Management

• Regulators should develop enhanced guidance to strengthen banks' risk management practices, and should encourage financial firms to reexamine their internal controls and implement strengthened policies for risk management.

• Supervisors should ensure that financial firms develop processes that provide for timely and comprehensive measurement of risk concentrations and large counterparty risk positions across products and geographies.

• Firms should reassess their risk management models to guard against stress and report to supervisors on their efforts.

• The Basel Committee should study the need for and help develop firms' new stress testing models, as appropriate.

• Banks should exercise effective risk management and due diligence over structured products and securitization.

Business Process Management will become a key to

deliver on future regulations setup by the Banking

Regulators

BPM & Banking

Process without BPM

Executive

Management

Customer

Service

Invoice

Reconciliation

Teams

Account

Teams

Account

Administration 1

2

3

4

5

6

1. Informal Tasks and

Communication (ex Paper or

email)

2. Inefficient Working

Environment Spans

Systems

3. Inconsistent Prioritization

4. Inconsistent application of

business rules

5. Lack of Control Over

System and Business

Events (Exceptions)

6. Poor Visibility Into Process

Performance

BPM & Banking

Layer enabling control & visibility: BPM

Executive

Management

Customer

Service

Invoice

Reconciliation

Teams

Account

Teams

Account

Administration

1. Automatically Prioritizes

and Routes Work

2. Guides users through

decisions

3. Standardizes resolution

across geographies

4. Leverages existing

systems and data

5. Monitors for business

events and initiates action

6. Real-time visibility and

process control

BPM & Banking

Strategic value of BPM

Better processes produce lower costs, higher revenues motivated employees

Productivity improvement > 12% per process (Source Gartner)

CIOs place Business Process improvement TOP business priorities *

BPM Benefits

Efficiency

Effectiveness

Agility

* Source Gartner EXP, CIO Insight

BPM is an approach to effectively automate and manage cross-functional processes by

orchestrating and streamlining people and applications using supporting software tools.

BPM & Banking

Example: Process cost (1/3) - Designed model

1 customer treatment (Data Entry, search, calculation and print) represents on average 66.08 seconds.

Per day (8 hours), this represents a maximum of 435.83 customer treatments.

Labor cost / Hour = $37.5. Each day is $300

Transaction cost is therefore $300 / 435.83 = $0.68

BPM & Banking

Example: Process cost (2/3) - Degraded mode

1 customer treatment, with degraded application delivery, represents now on average 119.18 seconds.

Per day, customer treatments is reduced to only 241.65.

NEW transaction cost is = $1.244

No outage --> No SLA impact !

BPM & Banking

Example: Process cost (3/3) - comparison

Due to process time increase, the number of business transaction per day decrease by 60% without any notice and clear visibility.

Over 220 days (1 year), total additional cost per employee is $53’592 ($1.24 - $0.68) x 435) x 220

Process Risk:

Are you aware this is

happening ?

Is the process overloaded ?

Are the systems

adequate ?

Which cost to fix it ?

What part of it is seen as

business lost ?

Should we outsource this

function ?

What is the root cause ?

BPM & Banking

Process management

Questions

real time flow follow up ?

compliance (regulation, Basel II, SoX,...)

bottle neck ?

Risk, points of control, audit ?

capacity mgmt ?

cost ?

root cause problem ?

KPIs ?

BPM & Banking

3 pillars of BPM benefits

Process Agility

Enterprise Infrastructure Services

(Portal, SOA, IDRS, LDAP, EAI, E-mail, IT Operations)

Customer Relationship

Management Field Worker Automation

Program Ops Planning

Benefits & Fraud Detection SCM & Logistics Finance & HR

SFA Prodict LMS

Inv MGMT

B2B product

ERP.

SCM producti

nfo.

MES

DB ERP CRM

BPM models, simulates, executes, manages, monitors, & optimizes those Business Processes.

eCitizen Services

Case/Field Workers

External Orgs.

IT Operations & Logistics

Finance & HR

SFA Product LMS

Inv MGMT

B2B

Enterprise Infrastructure Services

(Portal, SOA, IDRS, LDAP, EAI, E-mail, IT Operations)

product

ERP

SCM product

MES

DB ERP CRM

Organizational Units - process Efficiency

Real-World Business Processes span organizations, systems, and applications.

Eligibility & Intake

Benefits Management

Compliance Pro

ce

ss

es

-

Efe

cti

ve

ne

ss

BPM & Banking

True integration of IT with the business

Infrastructure

Network

Server /

OS

WEB /

Security Business

Application

Database /

Middleware

Telephony

Mainframe

User Service

View

(User Experience)

Production Service View

(Operational Level)

Qualified End to End Service View

Business Process „n“

PP1 PP3 PP4 PP5 PP6 PP7 PP2

Element

Management

Systems

Management

Service

Management

Business

Management KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI KPI

11.1 % 88.9%

SLA Value 98%

:20

%

Major Major Major

SLA achived

Order Processing

99.9999%

BPM & Banking

IT is best measured from a business perspective

BPM & Banking

BPM & Banking

The need for flexible processes and real-time responses is incredibly high in banking

help banks reduce costs and improve staff productivity by automating routine tasks

processes like retail loan processing: greater automation of processes and effective workflow BPM help in reducing the time to process a loan request and tracking the status of each loan application.

Other processes credit approval, overdraft processing, loan and mortgages origination and administration and compliance

Complying with future international banking regulations (G20 Finance Summit)

A key aspect of BPM is that business

processes should be treated as

reusable components.

Basic business processes occur

throughout a bank across its many lines

of business and product sets.

Documenting processes and storing

them within a central business process

repository, positions the bank for

meeting the three goals of BPM: saving

time, saving money, and adding value to

the bank's customers.

BPM & Banking

Examples of banks having adopted BPM

Barclaycard Germany, was able to

reduce processing time of credit card

applications from three days to just 18

minutes.

Credit Suisse – for its private banking

operations

ICICI Bank - to streamline and accelerate

core processes including: account opening

for retail banking and trade finance for

corporate banking

Rabobank of The Netherlands – for

automation projects in payments

processing

Nordea – for inquiry and exception

management in payments processing

BNP Paribas – to accelerate and

streamline existing processes for the

secure transfer of funds an opening up new

clients accounts

BPM & Banking

Summary

business benefits are visible ONLY if Business processes are under control

BPM discipline brings to business

efficiency

effectiveness

agility

BPM: Active tool for Compliance, Control & Risk Management

Banks need to examine their existing processes, define the requirements for current and anticipated BPM applications, optimize technologies and relationships that prevail, and then identify the solution that best meets the requirements

BPM & Banking

Business Process Management Implementation Objectives

Client Service • Create a client-centric business model with focus on client relationship

and customer service • Provide all customer facing staff with all the required information to

deliver client satisfaction Cost • High levels of productivity and efficiency within core processing • Maximise utilization of resources, mitigating headcount pressures • Faster-time to-production for inexperienced new hires • Effective management of different phases of product cycle Control • Elimination of operating errors • Remove inconsistency in service and procedures • Monitoring and reporting of the operation with proactive controls and

escalation • Fully auditable compliance to industry regulation built into processes Capability • Comprehensive and transparent reporting of performance metrics • Enhance staff capabilities and reduce attrition • Enable more effective targeting of spend, benefits quantification • Incentives for process improvement and operating model evolution

Bank and Finance companies process

millions of transactions every day

Customer queries relating to account

information occupy a considerable

amount of staff time because they don't

have ready access to copies of customer

statements. Staff may need to locate

copies of a statement from microfiche or

have them regenerated at the next

computer run.

All this takes time and extends

customer response times

Business Process Mgmt

Manor Group info@themanorgroup.net www.themanorgroup.net