Enabling optimization of business processes in banking ws tech conf logan_2011

© 2009 IBM Corporation IBM Software Group | Education www.ibm.com/training/in

Track Name: WebSphere in Industry

Topic : Enabling Optimization of Business Processes in Banking

Presenter Name : Logan Vadivelu,

BPM Technical Leader – WebSphere Software SalesGrowth Markets Unit, Asia Pacific

www.ibm.com/training/in© 2011 IBM Corporation IBM Software Group | Education www.ibm.com/training/in

Agenda

Key Business Drivers for Process Optimization and BPM Solutions

Banks face Challenges with Business Processes and underlying IT Systems

How BPM helps simplify and optimize Business Processes

Process optimization by

– using process modelling tool and process simulation to identify, eliminate bottlenecks

– using SOA to service enable core banking systems and related applications

– An example, Account Opening, to show how process optimization can be

realized with BPM and service enabling systems

Key Process Scenario examples using BPM approach

IBM BPM and Content Pack for Banking accelerates solution

time-to-value and provides process agility

Questions


Agenda






– using services provided by SOA from the underlying core banking systems and related applications

– An example, Account Opening, to show how process optimization can be realized using BPM enabled by SOA


IBM BPM Content Pack for Banking accelerates solution time-to-value and provides process agility

Questions


Business Context of a Bank

Core Banking System

Key Processes


Banking IT infrastructure challenges 1: Cost and Complexity 2: Business and IT Alignment

BusinessPressures:

Launch new and innovative

products

Shorter change cycles

Customized products for

niche markets

BusinessPressures:

Launch new and innovative

products

Shorter change cycles

Customized products for

niche markets

EmployeesEmployees

SuppliersSuppliers

3rd Party Providers3rd Party Providers

CustomersCustomers

ChannelsChannels

PartnersPartners

TechnologyConstraints:

Complex

processes

and systems

Complex

applications

and interfaces

IT budget priorities on

maintenance, not new

investments

TechnologyConstraints:

Complex

processes

and systems

Complex

applications

and interfaces

IT budget priorities on

maintenance, not new

investments


Lending

Account

OpeningDeposits

Product

Development

Customers Regulators

3rd Party Service

ProvidersPartners

Core

Processes

Inflexible system and siloed data cause major hurdles

Core banking processes are supported by internally developed or highly customized legacy applications

Processes are hard-wired in applications and difficult to change

Applications are becoming increasingly complex

Some systems do not support a “product” or “arrangement” concept across different LOBs

Business logic is factored into user interface components and backend applications rather than a middle-tier

Many are built as siloed applications with master data embedded within each application70% + of bank IT costs are spent in maintenance of legacy environments and

less than 30% is spent on true differentiation, innovation and new product offering support

Point-to-Point Interactions

Processes, Business logic, Master Data are buried and hard-

wired within a complex applications landscape


Banks want to gain early ROI with BPM Solutions

Time-to-Value

Solution assets that can

accelerate delivery of BPM

Banking solutions

Reduced Risk

Ensure consistency by using

Banking standards and

best practices

Reuse

Enable reuse of assets

across LOBs, geographies

and projects

Extensibility

Capabilities to extend the

assets as per Bank’s unique

business needs


Key Business Drivers for Banking BPM Solutions

Business Drivers How BPM can help Banks?

Jump-start delivery of new products & services by

connecting back office operations to customer

service. Leverage insights for smarter decisions.

New Offerings

Analyze, document and deploy business processes

with minimal IT involvement. Streamline workflows

and automate escalations & exception handling.

Straight-Through

Processing

Role-based collaboration on processes, perform

and manage human tasks, manage key

performance indicators, & adjust business policies.

Business Process

Collaboration

Centralize, standardize and automate compliance

and regulatory processes to reduce costly

exceptions and lowering risks.

Regulatory

Compliance


Agenda







– An example, Account Opening, to show how process optimization can be realized using BPM

enabled by SOA


IBM BPM Content Pack for Banking accelerates solution time-to-value

and provides process agility

Questions


Adopt BPM approach to most critical process needs

Account opening: Eliminate manual processes. Reduce processing time and increase throughput.

Dynamic Product Bundling: Create customer centric product bundles to enable cross selling.

Dynamically configure bundles at arrangement negotiation time based on customer information, portfolio, and their requirements, and price using Rules.

Payments: Adapt the payment process to modify supporting applications without extensive programming.

Monitor to identify payment process breakdowns, react quickly and reduce manual intervention.

Loan origination: Streamline the processes for all media types, channels, products and regulations.

Quickly locate bottlenecks, regain efficiency and change processes based on insight.

Sales and marketing: Gain business intelligence and analytics to drive smart business decisions.

Fraud detection (regulatory and compliance): Gain timely insight into potentially fraudulent activities before they become problematic.


Optimization by eliminating redundancies, bottlenecks identified by simulating a process execution in a modelling tool

Process optimization includes

– retrieving process performance information from modeling or monitoring phase;

– identifying the potential or actual bottlenecks and the potential opportunities for cost

savings or other improvements; and then,

– applying those enhancements in the design of the process.

– Overall, this creates greater business value. (Source: Wikipedia)

Process modeling tool provides capability to simulate the execution of a process

model.

– "what if" scenarios using modeled and actual data to simulate the dynamic behavior of a

process to analyze workloads and bottlenecks. Helps to identify redundancies,

bottlenecks that can be fixed / improved leading to an optimized business process.

– Simulation helps make smart decisions on the process model prior to deployment as an

application.


Process Payments Model: As-Is


Process Payments Model: To-Be


Solution:• Scalable and robust Account Opening solution that addresses all functional and

business requirements

• A process that is shared and reused across various products and geographies that

need to be supported.

• Solution built on standardized technology stack providing extensive BPM capabilities.

An Example Process Optimization: Account Opening

Business Problem:

Need to provide new account opening solutions for all bank products...By introducing a state-of-art business process management components

By providing flexibility and agility in Account Opening solutions

• Address changing business needs in account opening process

• Monitor and change processes based on test and learn techniques

• Variability considerations that allow reusability of AO processes across regions

IT Reality:Heavily customized and home grown business processing engine that

makes it hard for IT to support the business vision

Lack of business level monitoring of processes and performance


Account Opening: Source of Customer Dissatisfaction

Process is very time intensive

Inconsistent presentation of information across delivery channels leads to duplication of data entry

Resupply of client information for each new account opened.

Process seems extremely long, complex and administratively intense. Involves mail and fax versus online or via phone (preferred channels)

All accounts and services are not available using a single user interface

Automate and optimize account opening processes across multiple channels into a single integrated interface

Extend & reuse of best practices across applications, systems, and delivery channels

Maximize customer satisfaction by providing an efficient and unified customer experience while minimizing duplication of effort & costs

Optimized, Streamlines Account Opening

Process based solution

SOA

BPM

Strategy

Account Opening


Standardizing and Simplifying Account Opening ProcessAs-Is Account Opening Process

General representation of the current account opening process.

CustomerInitial

Request

Send forms to clients

Retail/internet

Legal

Compliance

Fulfillment

Systems

Receive and complete

Send to branch with

signature

Receive and review

Account processing approvals*

Receive and approve*

Receive and review

Account open

Receive and approve*

Account is

opened

Send checks,

Cards, etc.

Receive and review

Retail CRM system

Retail CRM system

Retail CRM system

Compliance systems

Compliance systems

Retail account system


Time

Repeat until complete



* May cause another round of customer interactions, if data is not valid/compliant


Standardizing and Simplifying Account Opening ProcessTo-Be Account Opening Process

Time

Account open

General representation of a revised account opening process using an SOA-enabled application.

CustomerInitial

Request

Collect dataAutomated Validations

Finalreview

Retail/internet

Account openLegal

Compliance

Fulfillment

Compliance approval

Systems

Receive and review

Send checks,

Cards, etc.

Account is open

Compliance systems


Retail CRM system

New account application system

Exceptions


New Account Application - BPM enabled by SOA approachReuse of existing IT assets as services that underpin the new application

Validation Services•Check for duplicate accountsAccount Services•Find account•Create account •Update account•Delete account

Retail

Post

Internet

Phone Mortgage and lending applications

Core banking applications

Credit card applications

Wealth managementapplicationsS

OA

Se

rvic

es

New Account

ApplicationSystem

Create account

Channels Core business applications

Building or integrating a new account application using SOA applications

Brokerage applications

Core banking applications

Credit card applications

Wealth managementapplications

Post

Internet

Phone

ChannelApplications

Core businessApplication

Teller

ATM

Kiosk

BranchPlatform


Agenda










Questions


Collaborative Business Process for Dynamic Product Bundling & Cross Selling

Define Candidate Model

Create Bundle

Run Candidate Model

Approve Campaign

Activate Campaign

Get

Customer

Info

Get Product

Info

Create

Building

Block

Update

Campaign

Deactivate Campaign

Activate

Campaign

Deactivate

Campaign

Analyze

Customer

Product

Master

Create

Campaign

Campaign

Master

Campaign

Mgmt

Customer

Master

Draft

Pendin

g

Appro

ved

ActiveInactiv

e

Customer

s

Analyzed

Reject

ed


Payments and Securities Processes

Commoditization of payments services resulting in shrinking returns

Need to specialize and innovate to drive revenue growth

Market harmonization across the global payments infrastructure drives need for integration with third parties

Increased merger, acquisition and disposal activity has resulted in redundant operations

Sophisticated fraud and anti-money laundering activity drives need for transparency and security

Payments Process Flows

Human Workflow

• Payment Entry

• Payment Repair

• Investigation

• Disputes

•Etc…

Sophisticated Payments Processing Flows

• Liquidity management

• Risk & Fraud

• Exception Handling

• Accounting

• Fee calculations

• DDA Interface

• Etc…

Typical Payments Process

SWIFT

WiresOFAC

AML

ACH

Int’l ACHTreasuryCash

Mgmt

Customer

Info

Trade

Services

Trust


Start simplifying and realizing benefits with a framework project

Integrated Risk Management

Financial Risk

Core Banking Transformation

Governance and

ComplianceFinancial Crimes

Operational and IT

Risk

Customer Care and Insight

Customer Information

Optimization

Payments and Securities

Service Process

Optimization

Compliance Process

OptimizationCustomer Insight

Optimization

Sales Process

Optimization

Marketing Process

Optimization Multi-Channel

Transformation

…select from

20 project

areas across 4

framework

domains

Core Banking Application

Modernization

IT Foundation

Transformation

Core Banking

Process Agility

Corporate

Services

SEPA

Compliance

SWIFTNet

Modernization

Retail

Payments

Payments Process

Efficiency

Digital Payments

Conversion

Core Banking

Transformation

Customer

Care and

Insight

Integrated Risk

Management

Payments

and

Securities


Agenda










Questions


WebSphere Banking Content PackBanking Solution Assets for WebSphere BPMConfigurable & extensible BPM solution assets for core banking, payments & securities, integrated

risk management & customer care; Based on ISO 20022, IFW, SEPA, NACHA standards

BPM Solution Scenarios

Process ModelsCapability Models Service Models

Common Components Business Vocabulary Business Object Models

Based on APQC &

IBM’s Best Practices

Based on APQC &


Based on IFW &


Based on ISO 20022,

SEPA and NACHA

Based on ISO 20022, IFW

& IBM’s best practices

Based on ISO 20022 &


Capability Maps & Process Maps

align business strategy with

process execution

Process Flows & Business

Measures simulate human

workflows & automate processes

Service Interface & Schemas

facilitate creation & assembly of

process implementations

Common Services & Utilities

enable interoperability with the

application ecosystem

Repository of Business

Concepts, Terms & Relationships

to ensure consistency

Conceptual Data Models to

provide a foundation for

information management

Mortgage Refinancing, Corporate Payments – Includes UI Forms, Dashboards, Process Implementation


IBM Banking Solutions based on its Industry FrameworkScenarios & Solution Templates

Loan

Savings

CD

ArrangementProducts

Bundle

Creates Bundles Cross Selling

Account

Account

Creates Accounts

Account

Account

Transactions

Product Development

Marketing Team

RelationshipManager

Sales Customer

Product Factory

Solution Template Product Bundling

Solution Template Account Opening

Solution Template

Creates Products



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