Most of the core banking systems were built in an age where new product launches could take a long time and were likely to disrupt business operations. Over the past decade, there is an increased sophistication of front and back-office banking operations. Banks have embraced IT services to improve customer experience and efficiency of banking operations. Customer relationship management (CRM) systems, loan origination systems, and channel systems are examples of the “surround” systems that envelop the core systems, which makes it easy to modify application logic.
Regulatory compliance is another challenge faced by banks today. Banks need to update their policies and operations as per regular changes in compliance mandates. New regulations like FATCA compliance in the USA, RDR compliance in the UK, and chip card mandates in Canada require additional IT investments. Regulatory compliance is driving banks to embrace modern technology for risk and compliance management. Tackling financial crimes like money laundering, financial terrorism, and loan defaulting requires banks to adopt automation technologies.
The millennial culture is seeing a rapid rise in omnichannel banking operations. Banking services and customer information must be accessible from multiple channels/sources like ATMs, Internet banking, Mobile Banking, IVRs, etc. Providing seamless customer experience across these channels can be a key business differentiator for banks. Advanced analytics of data across multiple channels helps banks streamline their services.
Banks and financial institutions require a Business Process Management (BPM) solution that covers multiple aspects of business operations.
BPM in banking needs to cover 3 main dimensions:
- Human and system processes: Human process systems include operations performed by users, customers, and human stakeholders. System processes include system workflows, human-system interactions, and system interconnections
- Business rule engines: Rule engines are the basis for automating banking systems
- Business activity monitoring: This provides visibility into the system processes used currently
Key business requirements like mergers or acquisitions, regulatory compliance, and the need for operational flexibility are the drivers of business process automation in the banking industry.