Banking
iBPM solutions: A strategic opportunity to sharpen competitive edge and drive operational efficiency – Banking blog
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In turbulent economic times with inflation more persistent greater than expected and pressure to review staffing levels/efficiency in various industries, corporations across the globe are looking into new ways to sharpen their competitive edge. Often, declining profitability and inefficiency in internal operations are among the most common hurdles. Intelligent Business Process Management (iBPM) solutions have emerged that enable corporations to get back on track toward efficiency and growth. Discover below why leveraging the full potential of iBPM tools can drive the strategic value for an organisation.
In our previous publication on Enhanced process optimisation with Business Process Management (BPM) solutions for Financial Services, we introduced the historical roots of BPM and the types of tools and their capabilities, as well as we outlined relevant banking use cases for their application.
In this second blog, we are answering the question: Why do Intelligent Business Process Management (iBPM) solutions enable organisations to drive their business strategy and sharpen competitive edge? We look at:
- The strategic value delivered by iBPM solutions*,
- selected real-life iBPM success stories in banking and
- the challenges and risks to consider.
Note*: In this blog, we focus on iBPM, the most innovative and advanced type of BPM solution, using the latest technology available on the market.
Strategic value delivered by iBPM solutions
iBPM tools are key technological enablers for corporations aiming to achieve enhanced operations transformation. They can be scaled throughout the organisation and tailored to the needs of the business. The benefits from exploiting the full potential of these solutions are summarised in the figure below.
- Process Optimisation: iBPM solutions enable corporations to improve how they run operations by simplifying complex processes and automating inefficient, long workflows. They produce tangible results, with faster case processing time, more automation and higher usability to free up time and enable employees to focus more on tasks with greater added value for the business. The technological capabilities of iBPM solutions such as Robotic Process Automation (RPA), Artificial Intelligence (AI), Intelligent Document Processing (IDP) and Process Mining empower corporations to fully utilise the potential of these tools, enabling streamlined operations across the firm regardless of the size of the business. See Example 1 in figure below.
- Profitability: iBPM applications enable corporations to drive profitability by generating increased revenues and also reducing operating costs. Higher turnover is supported by more efficient processes and greater speed to deliver products and services to clients. Reduction of costs is enabled by streamlining processes, standardising operations across the organisation, allowing staff to focus their time on value adding tasks. Additionally, iBPM can help to reduce errors and repetitive tasks, leading to reduced costs. See Example 2 in figure below.
- Business Agility: Utilising iBPM tools enables corporations to improve operations in a flexible and agile way. The tools are modular. Features can be added to each other to achieve the target degree of improvement. For instance, a low-code workflow solution can be delivered in a matter of weeks, then enhanced with further automation components, such as APIs. This ultimately enables corporations to respond quickly to ever-evolving markets. See Example 3 in figure below.
- Real-Time Insights: iBPM solutions not only process data in a structured and automated way; they also enable data visualisation. Organisations can obtain a holistic view of a business process within one application, combining for example a case management tool with a KPI dashboard. This enables rapid decision-making. The ease of access to data and storage helps cater for any reporting or audit requirements from regulators, easing a burden in the financial sector. See Example 4 in figure below.
- Customer Experience: iBPM solutions go beyond delivering advantages only for the internal part of an organisation. They also provide tangible benefits to enhance the customer experience. Firms can leverage the advanced capabilities of iBPM to improve the user-friendliness of interfaces, and/or level of customer information provided. This results in more engaged, loyal customers, and improved brand reputation. See Example 5 in figure below.
Overall, unlocking the powerful potential of iBPM solutions enables corporations to significantly improve their competitive edge thanks to higher productivity, reduced complexity (i.e., across business & IT functions) and enhanced efficiency. As a result, iBPM represents a key enabler for corporations to increase their market share and drive growth for their business.
Selected real-life iBPM success stories
Numerous operational improvements can be realised through using iBPM solutions. The figure below provides an overview of several successful achievements in the banking space.
While the strategic value of utilising iBPM solutions is clear, they also come with several challenges and risks that need to be considered.
Challenges & risks and how to overcome them
To choose the right iBPM solution it is crucial to assess the challenges, risks and implications that may affect the business to ensure that objectives are met. The operational hurdles that can be faced are summarised in the figure below.
- Compliance & Legal Risks: In the regulated banking industry, financial institutions must comply with evolving regulations (e.g., AML and KYC). iBPM can help by automating compliance checks and meeting documentation and audit requirements. However, there is a risk that an iBPM solution may not be adequately configured or updated to reflect changes in regulations, which could lead to compliance issues. To mitigate (or avoid) this potential risk, there should be careful monitoring of regulatory updates and impact assessment exercises.
- Resistance to Change: Implementing an iBPM tool often involves substantial changes to processes and workflows. This can meet resistance from employees accustomed to the existing way of operating. Achieving buy-in and adoption from all stakeholder groups can be a challenge. In addition, employees may consider these changes a threat to their job or autonomy. A clear change management process and internal communication on the relevance of iBPM is key to addressing concerns and doubts.
- Process Complexity: Processes in banks are often complex, spread and span across different functions, divisions, teams, and tools. Planning the implementation of an iBPM solution demands a thorough review of the existing set of business processes and the IT infrastructure supporting them. Process mapping and dependency identification are crucial to navigating these complexities.
- Integration with Legacy Systems: Many well-established financial institutions are still reliant on legacy systems. Outdated and non-strategic tools still in place and not yet replaced can lead to additional costs, delays as well as increase the complexity of an iBPM integration. Businesses should cautiously assess the impact of integrating iBPM tools and mobilise resources (financial, IT, and business) to create a consensus on delivery.
- Data Quality: iBPM solutions generate vast amounts of data. However, it can be challenging to extract meaningful insights or derive the right interpretations. The root problem is often poor data quality that originates from numerous and siloed processes tools and systems. Businesses must have the right tools and expertise to analyse data effectively and identify areas for improvement in order to realise the full potential of iBPM.
- Technology Dependence: iBPM relies on a range of different state-of-the-art technology components which also have their own set of challenges. While iBPM offers a great deal of functionality out of the box, it requires ongoing maintenance and updates to ensure that it continues to deliver strategic value over time. Over-customising an iBPM system can create a risk of high maintenance costs, more software errors and bugs, and a loss of efficiency. Therefore, corporations should strike a balance between tailoring an application and its long-term sustainability with other existing systems.
Conclusion
Market interest in iBPM solutions is growing rapidly. Financial institutions aiming to improve their business operations should consider the potential of these innovative technologies. Whilst several challenges and risks must be evaluated carefully, organisations willing to invest in iBPM solutions should begin with an assessment of the best provider to support their defined business objectives. Depending on the level of iBPM maturity, organisations should start with small pilots, then further scale the solutions across divisions and functions to unlock the full benefits of iBPM.
In our next edition of this blog series on Business Process Management (BPM), we will dive further into the operational aspects by addressing the “How?” and “When?” of implementing these solutions.
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Lena Woodward
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