Operational Excellence in Banking

Excerpt

1. Why process mining now?
   Banks are under significant financial and competitive pressure. Their customers’ expectations are being shaped by the digital giants and Fintech startups. They are facing increased regulatory scrutiny and oversight. Their staff are demanding new ways of working. The response to date has seen banks grappling with transformation on multiple fronts...
    
2. The building blocks
   All organizations strive to create value. Processes are the building blocks for creating value. It is not surprising that improving processes lies at the heart of any operational excellence agenda. Irrespective of how the program is structured, the first two steps are always the same...
   The traditional approach is to do this within a workshop environment. This is where the issues start. Processes in large, mature banks are fragmented and connected through a spaghettilike network of teams, interfaces and applications. Very, very few people in the bank will understand how the process works end-to-end. For example, consider an everyday process like originating a residential mortgage. Even scheduling the workshop can be a challenge...
    
3. Operational excellence pathway
   In a low interest rate world, bank revenue is under pressure. At the same time, the need to reinvest in digital transformation and cost headwinds in areas like financial crime and compliance are adding to the earnings pressure. It’s no surprise that one of the most common operational excellence goals is cost reduction. Armed with fact-based, data-driven process maps and models, all the typical techniques in a process improvement specialist’s toolkit can be executed with greater precision and at pace...
    
4. Process mining in business-as-usual
   While the focus of this paper so far has been on the role process mining can play in the improvement aspect of operational excellence, it can also play a critical role in supporting day-to-day control. Many banks have implemented Business Activity Monitoring (BAM) in an operational command center to provide visibility over the process as transactions and applications are processed. While this is a significant step forward, BAM is not process-aware. It can tell you that queues are backing up and whether current volumes are in line with expectations, but it cannot provide much in the way of insight of how the process...
    
5. Process mining underpinning process maturity
   One final aspect worthy of note is the role that process mining can play in helping a team climb the process maturity ladder. Many banks still have a long way to go to achieve process maturity. One of the blockers is a lack of transparency and process data to help teams develop the detailed understanding of how their current processes operate. The visibility and insight that process mining provides is far more realistic and stimulates far greater learning. Add to that the ability to...
    
6. Conclusion
   Banks are being buffeted by headwinds on multiple fronts. An operational excellence program is pivotal to how they respond and execute their transformation. It also buys time and plays a critical role in delivering better outcomes for customers and shareholders while the transformation teams are designing and implementing their solutions. Process mining enhances traditional approaches to operational excellence by automating the critical step of process discovery. The maps and models that are generated reflect business reality and are supported with operational data that is so often lacking. With the discovered models as a foundation, the pathway to improvement then becomes far easier, more accurate, carries less risk, and is significantly faster.
   Moreover, process mining does not just support the improvement aspect of an operational excellence. It can play a critical role in...