Can business process management make compliance bearable?

In today's financial services marketplace, banks continue to face a rising number of regulatory requirements and risk management concerns. It's no easy task for banks to effectively navigate all of this volume while trying to meet customers' changing needs and growing their businesses. But without timely and accurate customer and transactional data, making sound compliance, risk management, and business decisions can become nearly impossible.

Manual processes and traditional technology platforms are not designed to implement many of the required workflows and reports that provide banks with such critically needed information. Manual processes used to gather reporting data also translate into decisions being made using outdated information that no longer reflects an accurate business picture. And disparate systems and procedures make relatively simple data inquiries time-consuming and complex for bank employees.

More importantly, volatility within an institution can significantly impact the people that matter most--customers. Dealing with slow or inconsistent customer service across sales channels or from branch to branch resulting from a lack of clear, consistent data can drive customers away and often toward competitors.

All of these pressures are forcing banks to reevaluate their business processes to pinpoint the areas of opportunity that will keep them operating competitively in a continuously evolving marketplace. As a result, more institutions are looking to implement a business process management strategy that will help align systems and processes with their core business objectives.

Benefits of business process management

Since the financial crisis and the passage of the Dodd-Frank Act, many banks have been "drinking from a fire hose"--focused on simply meeting regulatory requirements, managing business risks, and embracing opportunities as they arise. Institutions often have not taken the time to establish compliance, business, and risk management processes to help address all three areas consistently.

Operating within this "reactive" environment has left many banks with complicated internal systems and highly complex and undocumented processes that are often very difficult to automate.

This is where business process management, or BPM, comes into play. Gartner defines BPM as "a management discipline that treats processes as assets that directly contribute to enterprise performance by driving operational excellence and business process agility. BPM employs methods, policies, metrics, management practices and software tools to continuously optimize the organization's processes to improve business performance against goals and objectives."

BPM offers banks a holistic view of their operations and provides insight into areas where the organization might cut costs, optimize workflows, and enhance customer service.

As part of the BPM process, selected workflows are automated to not only reduce the amount of time needed to complete a business process, such as loan origination, but also to eliminate any errors and inefficiencies along the way.

More importantly, as financial institutions brace themselves for the onslaught of new regulations expected within the next couple years, implementing a BPM program can help improve organizational agility and responsiveness to ongoing regulatory change.

One step at a time

While there has been a significant increase in the number of banks investing in BPM solutions over the past few years, some organizations are hesitant to consider BPM because they view it as an "all or nothing" proposition.

In fact, the reverse is true.

It usually makes sense for most banks to start small. Rather than implementing a major end-to-end process that is extremely complex and overwhelming, it is better to focus on one key workflow. Again, let's consider the loan origination process as an example. Once BPM has been successfully applied to this key workflow, and management sees the benefits, they are more likely to apply BPM to other key workflows like the deposit and account opening processes.

For a successful BPM implementation, perception can be everything. By viewing each step as a series of small changes that are leading the organization toward the larger goal of full implementation, it can make the entire BPM process less overwhelming and more manageable. This way, if any issues do arise, the financial institution can position the failure of one phase as a small setback instead of it threatening the success of the entire plan.

Best practices for implementing a BPM strategy

Before getting started, it's important for banks to take a close look at their existing business operations. Start by asking questions that will help identify what the organization's needs might be:

• What are your specific business processes?

• Who is responsible or has ownership of those processes?

• Are there any gaps or inefficiencies in those processes?

• How do these processes help the financial institution achieve its business goals?

The time has come...

If a bank hasn't yet taken the time to understand its processes, now is the time to start. With the Consumer Financial Protection Bureau's ongoing regulatory oversight as well as the Truth-in-Lending and Real Estate Settlement Procedures Act revised requirements being released in 2014, streamlining operations and establishing organizational transparency has never been more critical.

In today's ever-changing banking industry, banks must be able to do more with less effort. BPM can help financial institutions achieve that by providing visibility into all aspects of their businesses to not only help them make better decisions, but actually change the way organizations operate.

But, as with any implementation process, while it is common to have "big" expectations, it is important to start small to achieve maximum success with your BPM implementation.

By Jamie van der Hagen, director of consumer lending, Wolters Kluwer Financial Services