Real-World Applications of BPM in Financial Services

Customer Onboarding

“As one of the biggest investment banks in the world, our reputation for the effectiveness and high quality of our customer relationships is critical – and yet, just a couple of years ago, we found that our most recently-acquired customers were amongst our most critical; our onboarding process for new clients could take months, which was deeply concerning. Now we bring new clients on board in one-fifth the time it used to take us. We modelled the process we used, and discovered latency, wasted time and inefficiency all over it. We quickly cured a lot of that by paralleling tasks that used to be serial, by automating the chase-up and escalation process, and by pushing tasks to people, systems and services, rather than waiting for them to get around to them as-and-when. If you want a really clear benefit of BPM, that’s it.”

The case our investment banker client refers to is a great example of a successful application of BPM – “client onboarding” is a hot topic today, with all investment bankers, prime brokers, asset managers and broker/dealers across the industry at some stage of planning or implementation of significant improvements.

Customer onboarding used to be fairly simple – check references with banks, exchanges and authorities, open accounts and set up new profiles on the in-house systems - but it has been extended immeasurably in the last 10 years. Creeping regulatory change, increasingly electronic channels of client communication, tougher risk management regimes, know-your-client (KYC) and anti-money-laundering (AML) legislation and other compliance-led restrictions, checks and balances have conspired to make the set-up of new client accounts complex, cumbersome and a drain on resources. This translates all-too-easily into a negative perception by the new clients themselves, of course – and for this reason alone, many institutions are now initiating Customer onboarding projects using BPM technology.

Trade Management

“As a middle/back office in a traditional investment management firm, 10 years ago we were expert in processing equities, and we were OK at fixed income. Now we’re expected to be brilliant – highly automated - across the range of asset classes, including over-the-counter derivatives. Not only that – but we’re expected to know at a glance the status of every single transaction, and how the settlement position and mark-to-market status of complex transactions affects the valuation of specific funds in real time. When you have a single STP pipe for each different asset class, which is still unavoidable today, how do you get that integrated view? We needed something we could control, that would integrate with the STP channels and our core trade accounting systems, so that we could define how we wanted our dashboard to look, and how we wanted exceptions identified and pushed to the right people. To get that, we could have ripped out and redeveloped our entire back office infrastructure – far better, without putting the business at unacceptable risk, we bought a Trade Management solution.”

As our client knows well, all investment managers worldwide are being pushed to diversify. Even traditional retail funds are now allowed – encouraged, even – to use derivatives and other instruments of leverage. The entire investment world is chasing new ways of generating higher returns, which invariably translates (inter alia) to more creative use of increasingly complex investment strategies. An additional challenge is that “new” transactions inevitably come under more scrutiny than long-established strategies, hence the need for real-time state management, and the ability to view (and value) all legs of a transaction as a single entity.

A new generation of trade management solutions, built on BPM foundations, uniquely meets these new requirements by providing three critical capabilities. First, the ability to model transactions and to connect those state models with the database, action or message triggers that enable the system to track each transaction as it matures. Second, the ability to identify and escalate exceptions, and to ensure that there is an optimisation “loop” in place to enable operations staff to fine-tune the system to be able to resolve exceptions automatically, and safely. Finally, a real-time and historic dashboard by which stakeholders in the trade process, inside and outside the firm, can see the information they are entitled to, as soon as it becomes available and/or important to them. BPM-based trade management systems provide these capabilities so that today’s middle & back office professionals can effectively support the business.

Client Reporting

“In Customer Services, we are putting high priority right now on improving our client reporting. We’re moving out of the old-fashioned idea that regular performance reporting is a one-size-fits-all deal – quite often, pension and mutual fund trustees use several money managers per account, and would like reporting in a form that enables easy assembly and aggregation at their end. At the very least, they’re entitled to reporting which is sensitive to their needs, produced and dispatched on time every time and with accurate and informative content. We already have a great system for rendering client reports to documents and to the web – but we’re now putting in a system based on BPM which will manage the production and acquisition of content, and apply workflow discipline to the report production and dispatch/publication cycle.”

Our Client Services customer highlights that the focus of client reporting is clearly shifting – the traditional requirement for well presented reports is now augmented by requirements for increasingly fast and cost-efficient report collation. BPM enables this reporting work to be done quickly and effectively, pushing tasks and pulling data so that, in even the most globally distributed organizations, client performance data can be assembled, approved and relayed efficiently.

BPM in Financial Services – Focus on Results
The significant common factor to all these cases is that for each project, business performance improvement, as defined by the project sponsors, is always the focal point of conversations, rather than the enabling technology. Therein lies the real benefit of BPM – it is, in essence, a mature and powerful tool that, in the right hands, empowers business performance improvement. The result? Measureable impact on the success of Financial Services companies.