BPM and Financial Services – How to Look Through the Process Prism

When your organization’s products are intangible, like an investment CD or a retirement plan, it’s sometimes difficult to identify waste or inefficiencies in your business.  Today I want to discuss some of the unique attributes of financial services organizations and how to look at these businesses through the prism of process to find problems that are often overlooked.

Financial services often tend to think of themselves as very different from other types of organizations.  For example, many firms have organically grown along the lines of “functional silos” based on different types of product, reinforced by separate IT applications supporting these product categories. Yet, every organization shares similar horizontal functions such as human resources, finance or accounting.  These functions alone offer more than enough opportunity for delivering business value through a BPM initiative.  But, I promise there’s more!

Financial services companies are generally very IT-intensive, and open to new technology and approaches to problem solving.  However, it can be difficult for these organizations to determine which solutions fit their needs the best - or even which problems to address - since their products are not tangible like a car or any product that you can hold in your hand.  If you can’t see your product, it can be difficult to see your problems like “defects” and “waste”.

Furthermore, regulatory monitoring & reporting requirements such as Sarbanes Oxley and Basel 2 have weighed heavily on this industry. Combined with global economic factors such as the credit crunch, there’s huge pressure on financial services companies to increase visibility, transparency and controls whilst reducing costs and simultaneously improving customer service.

In steps BPM…

There’s no doubt that BPM is extraordinarily useful in helping organizations meet their SOX and other compliance obligations, by providing the necessary controls and visible evidence of these controls. However in meeting these requirements, there is also a fantastic opportunity to look at the business through a process lens and seek opportunities to reduce waste (cost) and improve the speed and consistency of process delivery (customer service).

There are many useful practices from process improvement methodologies such as Lean Six Sigma which can be used to identify opportunities for improvement, which can then be implemented using BPM. In my opinion, Lean Six Sigma is a great match for BPM.  The problem is that many financial services companies think that these techniques are just tools for industries such as manufacturing which do have a physical product. They therefore tend to look only at the technology side of automation rather than from the “outside in” customer perspective that such process improvement approaches can offer.  But simply automating a bad process can deliver poor results.

For instance, if a car is moving down the assembly line and the doors don’t fit properly, the problem will be obvious, and quickly rectified.  In financial services, a security breach or act of internal fraud is difficult to immediately notice.  If an email from a customer has been sitting in someone’s inbox for three weeks, there’s no way for someone else to notice. This is what BPM helps to manage in this industry - it provides visibility into the status and performance of processes that might help identify and address problems - or better yet, to prevent problems before they occur.

If you can’t plainly see problems, you may not even be aware of them, and you will probably have difficulty solving them. Or you may be trying to solve the “wrong problem” with unexpected consequences!  To this point, I have to commend financial services organizations that have implemented a BPM program.  It’s not easy to look at things through the process prism.  This involves challenging the status quo of the organization, and asking a lot of questions which may not have previously been considered. As I mentioned above, these organizations have a lot going on in their IT departments, the business is worried about a lot of external factors, and if your woes aren’t as visible as a botched paint job on a car, then it’s hard to diagnose it as a process problem and the prescription for BPM is not written.

Ultimately, the business has to recognize these problems and work with IT to find ways to fix them.

If you take away just one thing from this, start thinking about your business through the prism of process.  Those unanswered customer emails are a process failure just like on the assembly line, and there’s no better way to improve those processes, and to sustain these improvements, than with BPM.