IBM SoftwareWhite Paper

Enterprise Content Management

Managing complex decision-making processes in the financial services industry

2 Managing complex decision-making processes in the financial services industry

It’s no news flash that the financial services industry is undergoing significant transformation, driven by a global and rapidly changing business climate and new regulatory requirements. Add to that the challenges associated with managing information access, the need for greater customer insight and new imperatives to leverage social networking data, and the pressure mounts on IT and business leaders.

In this environment, the status quo is not good enough. Financial institutions must augment or replace their current line-of-business (LOB) systems with advanced capabilities in order to deliver real-time, actionable intelligence that facilitates higher-quality and well-informed business decisions, many of which are growing in complexity.

Not long ago, the process of opening a new bank account or executing most other banking transactions was a simple matter of visiting a branch location, speaking with friendly personnel

and filling out a form or two. Today, however, these primary financial business processes have transformed into complex interactions. There are global name-recognition databases and terrorist watch lists to check. All kinds of credit profiling and assessments are required, resulting in more documents to collect and information to validate. Organizations must fit more complex processes into less execution time in order to remain competitive.

Many once-simple LOB processes now have multiple components. They might interact with multiple channels, integrate with core banking systems and portals, or accommodate voice, video or biometrics validation and capture tools. As a result, processes such as account opening and loan origination have become so complex that they are outstripping the capabilities of traditional LOB systems.

How did the industry get into this position? The financial services industry was an early adopter of software designed to automate basic customer-facing business processes such as account opening, lending and credit card issuance. Automation made these processes progressively easier to execute and more operationally efficient. However, financial institutions must now do more than simply retrofit and patch existing LOB systems to attain new levels of efficiency and competitive differentiation.

Is your institution taking the necessary steps to take the lead in executing smarter banking practices?

Enterprise Content Management 3

Many believe that the industry has reached a tipping point with respect to the responsiveness and capacity of legacy LOB systems. The sheer volume and diversity of information that they must ingest and utilize presents serious concerns. To address these challenges, financial

services organizations are leveraging new technologies designed to capture, activate, socialize, analyze and govern their information assets—and IBM has taken a leadership position in this area (see Figure 1).

• Collaborative and mobile content experience delivers user-initiated intelligence and personalized control to LOB, extending the reach of content

• Extensible platform based on open standards supports broad content management scenarios

• Seamless access to content sources, including structured and unstructured data

• Single, user-friendly approach for other IBM offerings that support capture, activate, socialize, analyze and govern activities

• Combine social content with the control and reliability of ECM for significant business value

• Organize, access, find and share content in context for the community to enhance team effectiveness

• Optimize information management and compliance efficiency for the volume, variety and velocity of social and collaboration content

• Archive information with value and defensibly dispose of unnecessary information to lower run-rate IT costs

• Help reduce legal risk and costs with eDiscovery process management and evidence and cost analysis

• Define and execute retention schedules for all information to maximize the business value of information, meet regulatory compliance obligations and eliminate unnecessary cost and risk

• Integrated search, classification and analytics for better-quality information to support enhanced user and IT efficiency

• Embedded analytics across the IBM content solutions portfolio

• Integration with IBM® InfoSphere® BigInsights™ enables customers to perform and scale big data analytics and search functionality across the enterprise

Capture/Activate Socialize Analyze Govern

Figure 1: IBM solutions provide capabilities to help financial services organizations utilize the full value of unstructured information.

4 Managing complex decision-making processes in the financial services industry

Making complex decisions requires real-time access to complete, accurate and relevant information Much of the information today’s financial institutions have about their customers is in repositories, fileshares, data marts, email stores, help-desk logs or social media. A majority of this information exists as underutilized unstructured content such as scanned paper documents, audio recordings, faxes or chat logs.

To gain the full benefits of actionable intelligence, the tasks associated with information capture, analysis and assimilation must be accomplished within a limited time frame—normally when the customer is engaged. Borrowers, for example, most often reward the lender that is first to fund the loan, so lending decisions based on a wide array of information must be made quickly. Institutions that understand where the most complex, time-critical decisions are made and act aggressively to improve the processes associated with them will reap competitive advantages, reduced risk, improved credit quality and greater profits.

Assessing the value of case management strategiesFinancial institutions must also recognize which business processes have become complex enough to be managed as cases. Candidates for case management include processes that involve direct customer interactions, have many moving components and benefit from ad hoc knowledge worker intervention.

Some processes, such as opening a new credit card account, can be automated using a straight-through processing approach requiring minimal human intervention. By contrast, commercial lending—the approval of multimillion dollar business loans while conforming to an overarching

credit-granting process—will involve more complex and ad hoc decisions by senior lending officers and committees. These critical lending decisions impact customer satisfaction, profits and risk levels, and require expert knowledge- worker involvement.

The steps involved in a commercial lending decision are shown in Figure 2. The marketing and application submission steps represent relatively low-risk processes. The closing and post-closing steps are extremely important and require efficient, timely and compliant execution, but are still far less complex than the credit-granting steps (shown in blue). These steps are where the lion’s share of the risk is taken and profits are made:

• Information capture• Assessment and clarification• Grant or decline contract terms and rates

A number of considerations go into these three steps:

• Has all of the mandatory customer information been captured, classified and analyzed?

• Have content analytics been used to capture previously inaccessible customer information?

• Are predictive analytics being used to anticipate default potential?

• Has all information upon which the grant decision will be based undergone comprehensive assessment and analysis?

• Has the necessary collaboration with internal and external personnel been achieved?

• Is the loan compliant with corporate policy and regulations?• Have all legal requirements been met and sign-offs obtained?• Are legal and regulatory retention schedules in place and

being followed?• Is the information disposal process defensible?

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Enhancing the decision-making processes shown in Figure 2 by deploying an advanced case management approach does not require institutions to replace their existing LOB systems. Instead, institutions can augment existing lending automation to become more competitive and make better-quality business decisions.

Specific financial services tasks that benefit from deploying an advanced case management solution include:

• Wealth management account opening• Mortgage lending—post-close securitization• Investigation and resolution of compliance issues

Deploying advanced case management helps improve complex decision making by augmenting the existing business process to address industry challenges.

Critical steps in the commercial credit-granting processWhere the risk is taken and revenues earned

Challenges• Rapidly growing volume of information to capture• Many data types to manage and channels to access• Need a complete view of the customer• Need to access information trapped in content• More complex credit-granting tasks to perform in less time• Need for flexibility and intelligent ad hoc processes• New regulations to address• More stringent legal and contractual issues to address

Marketing ApplicationInformation capture

Assessment, clarification, verification and validation

Grant/declineterms

Pre-close Close

• Case systems consolidation to an enterprise standard • Claims investigations• Secured lending default • Equity loan management • Pensions membership enrollment• IPO investigation support• Fraud investigation • Anti–money laundering (AML) investigations

By approaching complex business processes as cases, IBM helps institutions keep the administrative processes that are working well and supplement LOB systems where necessary with a powerful decision-making subsystem.

Figure 2:

6 Managing complex decision-making processes in the financial services industry

Introducing IBM Case Manager for complex decision making

IBM Case Manager offers a solution for tackling complex business decision processes on a standard case management platform. This platform unifies information, processes and people to provide a 360-degree view of each case. In addition to content and process management, Case Manager supports advanced analytics, business rules, collaboration and social software to help drive more successful, optimized case outcomes (see Figure 3). Case Manager is an innovative platform that can act as the foundation to support multiple LOB case management requirements, thereby promoting an enterprise-wide standard for reuse, consolidation and optimization. Moreover, advanced case management solutions from IBM incorporate frameworks and templates to empower users and help accelerate return on investment.

Figure 3: IBM Case Manager can be deployed as an enterprise platform to provide a complete solution that addresses complex decision-making challenges wherever they exist.

Rules

AMLinvestigations

Case systemsconsolidation

Accountopening

Fraudinvestigation

Wealthmanagement

Commerciallending

IBM Case Manager

Case design

Models | Templates | Solutions

Case runtime

Content | 360-degree view | History

Case analytics

Structured UnstructuredReal time Persisted

Case infrastructureCase analyticsdata store

People Process Information

Content EventsCollaborationand social software

Monitoringand analytics

IntegrationWorkflow

Case objectmodels Case APIs Solution

constructsTask objectmodel

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Taking the next steps to improve decision makingDo you believe that greater customer insight is required to address complex decision making? How do you know if your institution will benefit from improving its complex decision-making processes? Here are some questions to help you assess your situation:

• Has the institution identified its greatest exposure from making uninformed complex decisions?

• Has the institution transitioned from paper-based manual processes for account opening and loan origination to an automated digital system?

• Is the institution capturing, classifying and indexing all of the customer information trapped within unstructured digitized documents, emails, photos, videos and voice records?

• Is the institution capturing and assimilating customer information stored in applications and databases across the enterprise?

• Can the institution assimilate and use all of this information to make better decisions in real time while a customer is online, on the phone or in a branch?

• Can the institution deliver actionable content to customer-facing personnel so they can use it when they’re engaged with a customer?

• Is the institution offering competitive credit-granting services at reduced risk and at a high level of compliance?

• Are the institution’s customer interactions delivered from a product perspective (LOB) or a customer-relationship perspective (trusted advisor)?

The IBM approach to complex decision making extends a financial institution’s existing system by integrating capabilities designed to help close cases efficiently with better

results—in essence, by working smarter. To help meet these objectives, IBM has developed a powerful arsenal of content, predictive and historic analysis tools to help organizations achieve better outcomes. Bolstered by the ability to integrate with data capture, market management and business-to-business integration capabilities, the IBM enterprise content management (ECM) portfolio provides a comprehensive range of capabilities designed to help financial services companies optimize customer information assets and manage complex decision making.

Delivering real-time, actionable intelligence to financial industry decision makersIBM can help you determine whether your organization will benefit from a case management approach to complex decision making. Working with IBM, your organization can identify ways to organize the onslaught of customer data, make accurate information available to employees across the enterprise, and augment legacy systems with real-time analytics technologies. An IBM workshop is available that includes a site visit, interviews, use case discussions and an initial report detailing current-state and future-state gap analysis. Many of the leading financial services institutions have already taken this first step. Is your organization ready?

For more informationTo learn more about advanced case management and IBM Case Manager for the financial services industry, please contact your IBM representative or visit: ibm.com/software/advanced-case-management/case-manager

To learn more about the IBM ECM platform, visit: ibm.com/software/ecm

© Copyright IBM Corporation 2013

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Produced in the United States of America January 2013

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