Published on 01-Oct-2012
"Thanks to IBM WebSphere ILOG JRules BRMS, auditors can easily see the rationale for our decisions and determine that we have controls in place. The customer experience is also consistent, and we can onboard new customers faster." - IT Architect, Large bank
Enterprise Content Management
A large, diversified financial services organization has approximately $300 billion in assets, 57,000 employees and about 2,900 branches. It has reached this size through a steady stream of mergers and acquisitions.
A large bank had manual loan processing operations which delayed onboarding of new customers, made it difficult to comply with regulations and led to inconsistent customer experiences.
The bank developed an automated loan processing system with straight-through-processing using IBM BPM software and IBM® WebSphere® ILOG® JRules BRMS. The consistent application of policies enabled the bank to standardize loan processing operations across work centers.
● 85 percent straight-through-processing vs. 100 percent manual operations ● Faster loan processing and onboarding of new customers ● Ability to comply with regulations
The prospect of integrating operations with another company tends to bring to light procedures that are not scalable. A large diversified financial services organization had to resolve such a situation within its own operations a few years ago. The bank has approximately $300 billion in assets, 57,000 employees and about 2,900 branches. It has reached this size through a steady stream of mergers and acquisitions.
The bank followed a manual, paper-based system in its loan closing operations, which introduced variables into the decision-making process. “Manual loan processing provided limited opportunities to keep controls over the way people in different lines of business worked,” says an IT architect. “Business rules existed, but individuals deciphered the information differently, leading to inconsistent customer experiences.” The manual loan procedures led to suboptimal results both in terms of speed and quality. Onboarding new customers took several days for the average loan. In addition, it was difficult to adapt to market fluctuations. New promotions for a product led to spikes in volume, but there were no well defined processes for handling the volume and fulfilling the terms of the promotion. The bank needed to make policies consistent.
Of critical importance to the bank was the difficulty in complying with regulations. Seeing inconsistencies in the way loans were processed, auditors might conclude that there was a lack of control over policies and how policy changes were applied.
Business as usual not an option
In 2008, the bank acquired another large bank, which doubled its size. “Our existing loan processing operation became a potential obstacle to unifying operations of the combined organizations and establishing a consistent way of doing business across the whole enterprise,” says the IT architect. “The business spearheaded an effort to drive change. It was clear to them that we could not continue to do business as usual. The lines of business and IT formed close partnerships to identify a roadmap to finding a solution. Without that collaboration, which exists to this day, we could not have achieved success.”
Executive management kick-started a strategic initiative that got teams organized and working on ways to fix the inconsistencies across processing centers. The solution that the teams arrived at was to automate loan processing operations and institute straight-through-processing and exception management. By automating the process, individuals would not be interpreting business policies, and outcomes would be consistent. With manual processing, humans interacted with the loan application at every stage through the processing. Even a good loan packet had to be manually verified. With an automated loan process, human interactions would be reduced to dealing with exceptions, and there would be well-defined, consistent policies and workflow for handling those.
Standardizing procedures across different processing centers
The first phase of the project primarily dealt with process management using business process management (BPM) software which enabled the different processing centers to function the same way. The bank was fortunate that it had already developed platforms for BPM using IBM Lombardi Teamworks™ (now available as IBM WebSphere Business Process Manager) and IBM Blueworks Live™. Content management repositories were IBM Content Manager and IBM FileNet® Content Manager. “The IBM products had already been vetted and evaluated against other vendors’ products, and users had enjoyed excellent experiences and success records with them,” says the IT architect.
“The number of systems we had to integrate and bring together as part of this process automation was quite huge, encompassing over 17 different legacy applications across the organization,” says the architect. “Bringing the data together to do all the policy validations was an enormous effort. It required clear leadership from IT organizations within our teams to spearhead the testing efforts.”
Reducing loan processing complexity with IBM BRMS
Process automation required the use of a business rule management system (BRMS) to simplify the creation and update of the policies for loan approvals. The team developed approximately 1,000 business rules, which were validated by testing them against dozens of scenarios.
The bank had already standardized on IBM WebSphere ILOG JRules BRMS (now available as IBM WebSphere Operational Decision Management). The bank uses the central rule repository and the easy-to-use user interfaces to manage all the business rules. Business users modify rules using plain English commands easily mastered by nontechnical users. This shortens the process of making changes in procedures compared to the previous manual method, and saves the time of IT personnel to focus on more strategic projects. When policy violations occur, they are passed as exceptions onto the queues of processors to be resolved.
The BRMS automated the decision making involved in 85 percent of the loan closing process. “Now all 1,000 policies are applied consistently across all our loan packets,” says the IT architect. “Thanks to IBM WebSphere ILOG JRules BRMS, auditors can easily see the rationale for our decisions and determine that we have controls in place. The customer experience is also consistent, and we can onboard new customers faster. IBM has helped us modernize our loan processing procedures, which will help us continue to grow and add market share.”
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