Generating efficiency and service improvements in financial services


Published on

The purpose of this paper is to give an insight into the ways in which business process management (BPM) can be used to generate efficiency and service enhancements in UK financial services companies.
The paper is based on HML’s own experience of using BPM over the course of the past 4 years and includes details of a credit management project (CREWS), in association with IBM.
The successful implementation of CREWS has resulted in HML being shortlisted for a global award for BPM excellence, alongside organisationssuch as Toyota, Audi and the US Navy.

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Generating efficiency and service improvements in financial services

  1. 1. An HML White Paper: BusinessProcess ManagementGenerating efficiency and serviceimprovements in financial services
  2. 2. CONTENTS ABOUT THIS PAPERPage 2: About this The purpose of this paper is to give an insight into the ways in whichpaper business process management (BPM) can be used to generate efficiency and service enhancements in UK financial services companies.Page 3: Introduction The paper is based on HML’s own experience of using BPM over thePage 4: The challenge course of the past 4 years and includes details of a credit managementfacing financial services project (CREWS), in association with IBM.Page 5: The solution: The successful implementation of CREWS has resulted in HML beingBusiness Process shortlisted for a global award for BPM excellence, alongside organisations such as Toyota, Audi and the US Navy.ManagementPage 6-8: BPM inaction: CREWS “Introducing BPM has allowed HML to improve processes that have aPage 8: What next for direct impact on our clients. Applying BPM to the CREWS process forBPM? example has significantly reduced the volume of manual tasks at a crucial stage of the pre-litigation process. In turn, it has quickened the process,Page 9: Contact details reduced operational risk by limiting the scope for manual error and allowed HML’s consultants to spend more time communicating with clients’ customers to deliver the kind of experience our clients desire. “Furthermore, when applying BPM, we have designed it with the flexibility to comfortably absorb change, so clients have control over how their work is administered, now and in the future.” Ian Cornelius, Commercial Director, HML © HML 2012. All rights reserved. 2
  3. 3. INTRODUCTIONThe objectivebehind BPM is to •Business Process Management (BPM) is not a new technique. It’smaximise the history stretches back to the early 20th century when American engineerefficiency and cost Frederick Winslow Taylor’s management theories were first published.effectiveness ofprocesses within an •BPM is simply a way of analysing and then optimising processes whichorganisation, are present in any organisation. These can be either production or administrative processes.resulting in fasterprocessing, •The objective behind BPM is to maximise the efficiency and costreduced wastage effectiveness of processes within an organisation, resulting in fasterand re-work, higher processing, reduced wastage and re-work, higher and more consistentand more quality output and lower production costs.consistent qualityoutput and lower •Most BPM projects involve the following key steps:production costs. - Analysis - Re-design and modeling - Implementation - Monitoring - Management - Automation •BPM is not a one-off exercise. It involves the continuous analysis and evaluation of a process, so that it can be enhanced and improved on an ongoing basis. •BPM started to establish itself in the financial services industry in the 1980s, when computer and image scanning technology was first deployed to improve business processes. •The precursor to BPM was ‘workflow’ (the person-to-person routing of scanned documents through a pre-determined process). •Although BPM is well understood and its benefits have been realised for many years in manufacturing, the UK financial services market has not yet fully embraced this methodology.© HML 2012. All rights reserved. 3
  4. 4. THE CHALLENGE FACING FINANCIAL SERVICESA number ofexisting •The UK financial services industry has undergone a period of radicaladministrative change following the onset of the credit-crunch. Banks and buildingprocesses are societies are facing a number of challenges including the need to:labour intensiveand depend on -restructure their balance sheetsmanual -rebuild their capital positionsintervention. Not -reduce their cost bases and restructure their businesses so thatonly is this slow they are ‘right-sized’ for slower marketsand expensive, but - improve operational efficiency and ensure the delivery of a high quality serviceit also makes it - be able to respond to new market opportunities as they arisedifficult to deliver aconsistently high •The sector also has to accommodate the constantly changingquality service. requirements of the regulatory regime in which it operates. For example, the UK mortgage market is already heavily regulated but will nonetheless have to implement the requirements of the Mortgage Market Review. •Many banks and building societies use legacy computer systems and operational infrastructures that have been developed piecemeal over the course of several decades. This makes harmonising existing procedures very difficult and introducing new processes both expensive and slow. •A number of existing administrative processes are labour intensive and depend on manual intervention. Not only is this slow and expensive, but it also makes it difficult to deliver a consistently high quality service. •Financial organisations need to improve staff productivity and flexibility by removing non-value adding processes. By releasing staff from mundane and repetitive tasks, they can apply their skills to enhancing the customer experience and also responding to changing business requirements. •Banks and building societies are constantly looking for ways to prevent problems such as arrears from developing, rather than having to respond to such problems when they do manifest themselves. Faster and more accurate business processing means management information can be provided in a timely fashion, which enables preventative measures to be put in place.© HML 2012. All rights reserved. 4
  5. 5. THE SOLUTION: BUSINESS PROCESS MANAGEMENTBy streamliningend-to-end client •BPM enables financial organisations to automate processes such asmanagement account opening, payment processing, credit management and arrearsprocesses, financial and possessions management. This not only reduces costs and wastedinstitutions are time, but also ensures consistency of delivery.often able toreduce human •By streamlining end-to-end client management processes, financial institutions are often able to reduce human intervention by as much asintervention by as 80% and be better able to target and serve their customers.much as 80% andbe better able to •Analysing, mapping, re-engineering and implementing new processestarget and serve means that firms have a clearer understanding of their existingtheir customers. procedures and are better able to make future enhancements without needing to make wholesale changes to existing processes. •BPM also enables organisations to take a more holistic view of their client relationships and better understand where issues are likely to arise and how they can best be resolved. •BPM systems, once implemented, mean that a financial institution can react to situations and new business requirements in real time and make any changes immediately. •BPM does not, however, provide an overnight solution. To analyse, map and develop replacement processes takes time (many months) and the implementation programme may involve a similar period. However, the benefits, both in terms of improved efficiency and cost savings, can be great (see results of project CREWS). •Staff need to be taken on the BPM journey and engage with the process. Their co-operation is essential and it’s important they understand the benefits that will accrue from the changes being made.© HML 2012. All rights reserved. 5
  6. 6. "BPM software andservices helpempower BPM IN ACTION: CREWSorganizations toexceed theircustomers •HML is the UK’s largest specialist mortgage servicer, providing outsourced mortgage administration services to 50 leading financialexpectations, react institutions. HML operates out of three UK locations: Skipton,to and anticipate Londonderry and Glasgow. The company was established in 1988 andshifts in their manages approximately £43bn of mortgage assets and 400,000marketplace and customer accounts.keep costs undercontrol. •In late 2007 HML embarked on its business process management (BPM) journey to improve, streamline and increase overall control of its credit management processes, in response to rapidly changing market“It takes a process conditions and regulatory requirements.aware organizationto achieve this level •HML’s first BPM initiative resulted in the development of a creditof agility and HML management workflow system (CREWS), which automated processes inhas raised the bar the firm’s pre-litigation department.for companiesseeking to •The objective of the CREWS programme was to implement repeatable,streamline and efficient, consistent credit management processes across HML’s clientaccelerate their base. HML worked closely with IBM, providers of the BPM software used throughout this project.businessprocesses. In •An analysis of existing credit management processes confirmed thatcollaboration with HML’s credit management function was heavily focused on manual tasks,IBM, the CREWS which meant that the costs associated with debt recovery wereproject has enabled significant.HML to deliver anagile application •HML is a multi-client environment and its BPM toolset includesthat can be approximately 400 business rules and is used by 350 credit managementcustomized rapidly specialists within the meet changingregulations and •By automating non-value adding manual processes such as the identification and distribution of work items, employees have more time torequirements." spend with customers resolving issues. This has improved staff morale and overall engagement within teams. People also have a greaterPhil Gilbert, Vice understanding of how the speed and accuracy of their work impacts onPresident, the credit management and arrears process.Business Processand Decision •Training for new and existing employees is much easier becauseManagement, IBM processes are clearly defined, and ‘coaches’ are used to guide employees through the specific task they are working on.Software Group.© HML 2012. All rights reserved. 6
  7. 7. BPM IN ACTION: CREWSThe successfulimplementation of •Team managers have access to real-time dashboard reporting whichthe CREWS project gives an instant view of key data, enabling them to make informedhas resulted in a resource allocation decisions.cost saving of£440,000 a year. •With CREWS being the first implementation of BPM within HML, it was decided to develop a ‘centre of excellence’. This comprised modelers, developers and testers who followed documented best practice and upheld strict standards. With this team in place, the subsequent rollout of the project was easier to deliver on time and within budget. •HML has fully embraced BPM and sees it as an enabler for further process change throughout the organisation. •The successful implementation of the CREWS project has resulted in a cost saving of £440,000 a year. •The next phase of CREWS is the implementation of a possessions project. Based on the experience gained from CREWS, the possessions project is expected to reduce the processing time for new possessions by 60 per cent. In addition saving a further £200,000 a year by reducing manual effort. •The elimination of manual intervention also means improved compliance reporting and the ability to demonstrate that processes are effective and in accordance with Financial Services Authority regulations. •The BPM centre of excellence has improved business support by answering 90 per cent of queries within 1 hour, comfortably within service levels. •The key elements of CREWS includes: - IBM Business Process Manager (Standard) software. - HML’s core operating system - Peripheral HML applications, which handle actions such as sending-out letters and automatically dialing customers. •These elements have been fully integrated using Web Services, allowing each system to focus on what it does best. The systems exchange information in real time.© HML 2012. All rights reserved. 7
  8. 8. BPM IN ACTION: CREWSThe financialservices industry is •Credit management processes and associated business rules are heldlagging behind on the IBM BPM system in the form of business process definitions,other industries in allowing users to create and make changes using a graphical interface.adopting BPMmethodology. As •As a result of the successful implementation of project CREWS, HMLfinancial institutions has been shortlisted as one of only six European finalists in the prestigious Global Awards for Excellence in Business Processlook for ways to Management and Workflow.reduce costs,increase •The awards, which are in their 18th year, recognise organisationsproductivity and around the world which have excelled in implementing innovativeensure consistency business process solutions.of service delivery,BPM will inevitably •Other finalists include Toyota in Spain, Audi in Japan and the US Navy.become morecommonthroughout financialorganisations, bothlarge and small. WHAT NEXT FOR BPM? •BPM is a constantly evolving management science and is a journey that has no defined end-point. •More sophisticated and integrated technology developments play to BPM’s strengths and will enable further productivity and cost saving gains to be made. •The financial services industry is lagging behind other industries in adopting BPM methodology. As financial institutions look for ways to reduce costs, increase productivity and ensure consistency of service delivery, BPM will inevitably become more common throughout financial organisations, both large and small. •BPM is not a ‘passing fad’. It’s based on sound management principles and proven techniques which deliver tangible benefits.© HML 2012. All rights reserved. 8
  9. 9. For further information If you would like further information about BPM and the way in which HML has implemented project CREWS, contact Paul Swinson, Programme Manager at HML on (0044)7967 110063. Further information about HML can be found at or by phoning 0844 892 2596. For more information about IBM’s BPM solution, please call (0044)1475 898688.© HML 2012. All rights reserved. 9