UNiQUARE Software Development: Optimum banking – Dietmar Schwarzenbacher

As financial operations rapidly grow in complexity, business process optimisation is fast becoming a necessity. Founder of UNiQUARE Software Development Dietmar Schwarzenbacher (right) and Dieter Bourlauf, head of competence centre technology at Degussa Bank, discuss how a business process management model, combined with sophisticated service-orientated architecture, can produce the best results.

Banks across the developed world are fighting battles on a number of fronts with dwindling resources at their disposal. In the wake of the financial crisis, stronger regulatory focus on risk has resulted in the need for greater process transparency. Achieving this can require extensive systemic overhaul at a considerable cost. All the while, customer expectations carry on rising and competition keeps intensifying.

Processes such as opening an account, which once took days, are now expected to take hours, and traditional manual procedures have been exposed as highly inefficient in the modern internet age. Paper-based processes result in slow approval times and a higher likelihood of error. They also make it difficult for managers to track the progress of documents passing through the process chain.

In addition, banks are under pressure to create products that match the individualised needs of their customers. This often involves the analysis of huge amounts of data, which legacy systems struggle to handle.

Service-orientated optimisation

As a result of these pressures, many banks are beginning to realise the value of process optimisation. By pinpointing areas of dysfunction, underutilised resources or excessive expense in the process chain, banks can boost efficiency, reduce costs and improve customer relations. This was a realisation experienced by Germany's Degussa Bank back in 2006. The bank, which has 250 locations throughout Germany, decided to introduce a business process management (BPM) engine to link to its customer service.

"We wanted to increase transparency and get a better knowledge of our processes so that they might be optimised," explains Dieter Bourlauf, head of competence centre technology at Degussa Bank. "When you introduce a business process management system you can trap the knowledge of everyone in your organisation. You can analyse every step of a process with a high degree of transparency."

The approach of Austrian software house UNiQUARE, a specialist in process-orientated front-end and CRM software solutions, is based around service-orientated architecture.

This modular method packages a bank's processes as individual services that can exchange data with each other and be combined in different ways. This results in a high degree of flexibility and interoperability between various banking processes. Service-orientated architecture, enacted through a BPM model, has proven to be a successful approach.

"Dieter was one of the first in Germany to consider the idea of industrialising and optimising the customer service process," says UNiQUARE's founder Dietmar Schwarzenbacher. "The combination of service-orientated architecture and process management systems helps banks to achieve the best possible business practice.

"You can analyse each step of a process: the data that comes out can tell you what is wrong with a product, method or employee and allow you to better allocate your resources," he continues. "You can then act on the results - partly automatically and partly by using the information to carry out a manual operation."

Agile architecture

The data that Degussa Bank has derived from optimisation can be used to set automatic process parameters, which standardise the customer procedures. This makes it easier to manage the process and gives employees the knowledge to take the correct procedural steps. Degussa Bank's BPM system also allows it to tailor its offering to the customer's needs, which is now more of an expectation than a wish.

"You find what is right for the customer by combining process philosophy with customer information and matching it to the most appropriate product," Schwarzenbacher explains. "The software can go through the customer's basic information, risk profile and investment profile and use this data to tailor a product to their individual needs. While this customised offering is being created, the process continues to run automatically because pre-defined processes have been inputted. The end result is win-win: customers are happy with their individualised offering and the bank is happy to be able to sell something that puts it at such a competitive advantage in the market."

Another strength of the service-orientated architecture and BPM combination is the agility it offers. New regulatory requirements, products or pieces of customer information can be incorporated and new software integrated without breaks in process, even if the nature of BPM systems means that this isn't always easy.

"When you build the process with graphical tools, you can rebuild it and implement new regulations much more easily," says Schwarzenbacher. "On the other hand, this method requires some skill in the design process to ensure that you reach the right outcome - you have to address the usage of BPM systems, because they don't always support service-orientated architecture. We always find a compromise - a bit away from clean architecture, but still flexible enough to facilitate quick reactions to change."

Rapid efficiency savings

Degussa's optimised customer-centred process is still relatively new, so solid performance figures have yet to materialise. From an overall customer services perspective, however, Degussa Bank has seen efficiency savings of 30% per annum between 2007 and 2009. Increased process optimisation means this figure has almost certainly been maintained, or exceeded, in the past two years.

"The processes are much faster than they were before," Bourlauf says. "There are fewer mistakes and I'm sure our customers recognise that. The new system also makes it easier for the employees to handle complex business without the company having to make a huge investment in education. The processes are driving them, with the right information being brought forward at the right time. They can go through each and every step in the customer-centred process in the right way."

Although the software provides assistance, Bourlauf and Schwarzenbacher both acknowledge the difficulties of winning employees over to a new system.

Unlike other industries, such as automobile manufacturing, banking is still relatively inexperienced when it comes to BPM. Greater systemic complexity and a renewed emphasis on risk mean, however, that adoption of new technologies will soon become a necessity.

"Many people are afraid to do new things," states Schwarzenbacher, "but business is becoming more and more complex. If a client needs a loan, you need a lot of information. Their current situation, character, financial history... This influences your risk level as well as your business. If the risk on the client side increases then you'll have to change terms and conditions to compensate.

"Nobody can pre-calculate these things. A manual process would never achieve the right results," he concludes.

With the global economic outlook remaining bleak, banks will have to tread a fine line between growth and capital preservation. They will also have to invest in gaining a much deeper and broader understanding of customer risk. Business process optimisation could help them balance these requirements.

"By using a business process management engine, you can trap the knowledge of everyone in your organisation and analyse every step of a process with a high degree of transparency." – Dieter Bourlauf, Degussa Bank.
UNiQUARE founder Dietmar Schwarzenbacher.