Novagalicia Bank

Spanish savings banks (caja, or caixa in Galicia) are financial institutions that arose in the 19th century to encourage the habit of thrift among the poor by accepting low-volume deposits and granting small loans. Over time, these banks have grown to rival commercial banks. In the Autonomy of Galicia, Novagalicia Bank is the largest financial institution and the sixth largest Spanish savings bank. It has 1,368 branches, 7,224 employees, 2.9 million customers and 124 billion EUR in annual business volume. The bank also has 17 branches in 10 other countries, including U.S., Switzerland, Brazil, England, Mexico and Portugal.

Novagalicia Bank has been quick to adopt electronic banking technologies such as mobile banking and electronic invoices, and is a banking technology leader among savings banks in Spain. In 2005, the bank embarked upon service oriented architecture (SOA) initiative, internally called “Metrópolis,” to increase its flexibility with repeatable business services. The bank also undertook a business process management project to improve agility and operational performance by organizing more efficient workflows and business processes. Within this effort, Novagalicia Bank created business rules to help employees channel products such as loans through the approval processes.

There are many departments and committees within the bank that must act on a loan depending upon a variety of factors such as: The channel through which the request originates, (i.e., the Web or a branch), and the type of collateral the customer is offering. The process is complex and full of rules and regulations internal to the bank and imposed by government, regional and central banks.

While responding to customers’ needs promptly was of the essence, it was also critical that proper controls be in place in order to manage risk. The business rules ensured that loan applications would go to the right individuals in the right departments, who were authorized to deal with the risk level involved.

Anxiety, errors in making routing decisions

A customer entering the bank to apply for a loan initiated a chain of approvals that was outlined in a 45-page book containing 173 business rules. When followed manually, the decision-making process was error-prone, and routing product requests took too much time.

“There are numerous departments that deal with loans, depending upon the level of risk and type of loan involved,” says Jose Antonio Fernandez, Director of Architecture and Transactional Bank. “The branch had this book to guide them in what to do when a customer requested a certain product. And what made it especially difficult was that the rules change quickly.”

In order to deal effectively with its loan business and other products, Novagalicia Bank changed its risk consignment practices. On one day a department might deal with loans up to a certain limit, and on the next day that limit may be lowered because of tightening money or rising risks, including regulation changes by central bank institutions and other governmental policy agencies.

30-millisecond decision-making

The bank needed to automate its business rules to solve these challenges and enable loan and other product requests to be sent quickly for processing. Seeking a business rule management system (BRMS) that could be implemented as part of the SOA initiative, the bank also looked for a technology that would enable business users to change rules quickly.

By using the traditional development systems (PLI/IBM® CICS®/IBM DB2®), only a limited percentage of the business rules could be automated due to their high complexity, their difficult maintenance and the difficulty of achieving an effective response to changes.

For the solution to its problem, Novagalicia Bank turned to IBM and the WebSphere® ILOG® JRules BRMS. With the JRules BRMS, the bank was able to implement its 173 business rules as repeatable business services, saving programming time by reusing these services. JRules works seamlessly within the SOA, executing within 30 milliseconds to direct a request to the right individual with the proper authorization to make a decision.

“Implementing ILOG JRules has allowed us to automate all of these business rules, considerably reducing the effort required for their development and maintenance, by using efficient validation methods and involving the people responsible for business in the different stages of the project,” says Fernandez. “This solution helps the colleagues, since it indicates which business rules have been used to make a decision, avoids mistakes that were previously checked by the Risks Department and improves the workflow that the Process Department has optimized.

“Not only does the automated BRMS eliminate guesswork and improve accuracy, time-to-market on loan processing has improved with JRules, saving days of work.,” We have a better quality product and more satisfied customers with JRules. In addition, business users are able to change and manage business rules in conjunction with the architecture team in a matter of hours using WebSphere ILOG Rule Team Server, as opposed to days previously.”

Connecting the dots

Another area of the bank using WebSphere ILOG JRules BRMS is non-payments. Novagalicia Bank processes approximately 200,000 non-payments per day, and each one has to go to the manager responsible for that account. Non-payments could be for credit cards and different types of loans, and six business rules govern the assignment to the proper manager. With JRules, the 200,000 non-payments are assigned nightly in a batch process that takes 14 minutes. Before JRules this used to be a manual process involving hours or in some cases days.

“JRules is part of our SOA tools portfolio, that allow us to provide solutions to complex problems with the response time and the consequential cost-saving required by our business,” concludes Fernandez.

For more information

Contact your IBM sales representative or IBM Business Partner, or visit us at: ibm.com/brms