According to Gartner, approximately 13 billion USD will be spent in the next 36 months on business process automation (BPM). With all the market interest in translating real-world business processes into automated workflows, many small banks and credit unions are posing a question: Does business process automation make sense for us? My answer to these small banks is a qualified yes. But then I’d give the same qualified yes to large banks.

Potential Business Process Automation Pitfalls                                       

The tricky part for any organization—financial or otherwise—deploying business process automation technology is to pick projects wisely. Some real world processes lack clear structure. Some have structure but are so complex that getting stakeholders to agree on process flow, business rules, etc. is difficult, if not impossible. Still other real-world processes evolve so quickly that by the time an automated version is launched, the process has already changed, giving way to endless patches in the code. (Such workflows, by the way, are likely to collapse under their own weight, given enough time, and will need to be reengineered.)

Predictable Business Process Automation Success

Some real-world processes within virtually all banks and financial institutions are excellent candidates for process automation, perhaps the most common being loan origination. Most large banks in the world have already automated their lending businesses, which tend to be both relatively static and highly structured.  But there's no reason small banks shouldn't follow suit, since the technologies are relatively inexpensive and the returns on investment over the course of years will be enormous, not only in effiency improvements, but also in terms of mitigated risk via process governance.

     Stage One—Automated Document Generation

A loan origination process should begin with the automation of the loan contracts themselves, a project that takes place within a document generation platform, such as HotDocs. Changeable parts of the document are replaced with variables, and optional blocks of text are enclosed in business rules that define the conditions under which language is included or excluded. Finally, custom interviews (sequences of interactive data forms) are designed that walk bank relationship managers through the process of entering the data correctly.

     Stage Two—Integrating with a BPM Workflow

While a loan generation process app can run standalone in any environment (desktop/on premise/cloud), banks will often integrate them into a broader workflow. The workflow might be triggered when a customer logs onto a bank’s website and clicks on a loan application button. The customer would then be presented with the interview, which the customer could complete in a browser. After the completed interview is submitted, the workflow might check enterprise databases for information about the client and call a credit service for validation of the customer’s financial record. In the event that the customer has borderline credit, the workflow might route the application to a credit committee, and so on.

Expected Results

Automating the production of loan documents could dramatically reduce the time and labor required. More importantly, the system, if designed correctly, could significantly improve the quality of loan documents, virtually eliminating typographical errors and human mistakes. 

The overarching workflow will, likewise, yield significant benefits. Governance can be imposed on bank staff, enforcing best practices. Risk (including fraud and collusion) can be minimized, and the bank can insure that its staff complies with internal policies and external laws in the bank’s lending practice.