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 Sales
Growth Markets Unit, Asia Pacific

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
Business
Pressures:
Launch new
and innovative
products
Shorter
change
cycles
Customized
products for
niche markets
Business
Pressures:
Launch new
and innovative
products
Shorter
change
cycles
Customized
products for
niche markets
EmployeesEmployees
SuppliersSuppliers
3rd Party
Providers
3rd Party
Providers
CustomersCustomers
ChannelsChannels
PartnersPartners
Technology
Constraints:
Complex
processes
and systems
Complex
applications
and interfaces
IT budget priorities on
maintenance, not new
investments
Technology
Constraints:
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
– 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

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 Process
As-Is Account Opening Process
General representation of the
current account opening process.
Customer
Initial
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
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 Process
To-Be Account Opening Process
Time
Account
open
General representation of a revised
account opening process using an SOA-
enabled application.
Customer
Initial
Request
Collect data
Automated
Validations
Final
review
Retail/
internet
Account
openLegal
Compliance
Fulfillment
Compliance
approval
Systems
Receive and
review
Send
checks,
Cards, etc.
Account
is open
Compliance
systems
Retail
account
system
Retail CRM
system
New account application system
Exceptions

New Account Application - BPM enabled by SOA approach
Reuse of existing IT assets as services that underpin the new application
Validation Services
•Check for duplicate
accounts
Account Services
•Find account
•Create account
•Update account
•Delete account
Retail
Post
Internet
Phone Mortgage and lending
applications
Core banking
applications
Credit card
applications
Wealth management
applications
SOAServices
New
Account
Application
System
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
management
applications
Post
Internet
Phone
Channel
Applications
Core business
Application
Teller
ATM
Kiosk
Branch
Platform

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
Active
Inactiv
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
Wires
OFAC
AML
ACH
Int’l ACHTreasury
Cash
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
Compliance
Financial Crimes
Operational and IT
Risk
Customer Care and Insight
Customer Information
Optimization
Payments and Securities
Service Process
Optimization
Compliance Process
Optimization
Customer 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

WebSphere Banking Content Pack
Banking 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 Framework
Scenarios & Solution Templates
Loan
Savings
CD
Arrangement
Products
Bundle
Creates Bundles Cross Selling
Account
Account
Creates Accounts
Account
Account
Transactions
Product
Development
Marketing
Team
Relationship
Manager
Sales Customer
Product Factory
Solution Template Product Bundling
Solution Template Account Opening
Solution Template
Creates Products

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