Introduction

Banks have long trodden the path of Transformation and Digitization, and the pandemic pushed these efforts to the forefront, to enable banks to conduct their business as usual, and work towards creating a differentiating factor to bring in a meaningful impact on their business metrics.

While Digitization efforts have yielded satisfactory results, with Banks deploying basic automation through RPA, Banks still struggle with legacy systems that hinder automation initiatives. Look at any loans process, or a credit card application process or even a customer onboarding process, the level of digitization may not be 100% as manual workflows cause breaks in the process which in turn increase the turn-around-times of these processes. This in turn impacts the customer experience and the growth potential of a Bank.

Hence, Banks must continuously improve operational efficiency, with a focus on growth and transformation and bring in the required resilience in their operations. And with Process Mining, Banks can re-imagine and intelligently automate their customer journeys to accrue exponential benefits.

What is Process Mining and how does it help Banks?

Process Mining is defined by Gartner as “a technique designed to discover, monitor and improve real processes…by extracting readily available knowledge from the event logs of information systems.”

Thus, process mining provides Banks with a far granular visibility of their processes which enables them to benchmark their people, process, technology and (operational) data against industry best practices. Banks can leverage the end-to-end view that Process Mining offers to take decisions on improvements to optimize, transform and re-invent their business models and customer journeys.

So, let us understand this with an example.

A Bank’s Compliance process is in place to monitor/ audit that transactions of high risk are carried out in accordance with the laid-out process (to reduce risk exposure). Many a time, this process is a reactive process, that runs after a transaction was executed and may be invoked several days or months after the transaction, which maybe a gross deviation from the process, resulting in a potential exposure for the Bank which could lead to penalties and fines and thus a financial impact on the balance sheet.

If the Bank deploys process mining, they will get a holistic view of how transactions are processed. Are the transactions being processed as per the process and the policies laid down (the tool will look at policy data and transaction data generated during each activity in the process, across systems), pull up the contextual information from other relevant systems and throw up inefficiencies and deviations. The tool will highlight the deviations between the “AS IS” process and the process that is being followed, how the deviations are handled, flag off activities where an employee is involved in violations of the compliance process, and reflect any areas for improvement, in terms of automation, optimization of the process, lack of controls etc.

Process Mining would provide complete transparency of each business transaction and the activities that are followed for processing the same, end-to-end, across all IT systems. There will be conformance (how procedures are followed with gaps highlighted between what is “to be” and what actually “is”) and compliance analysis (determine if what “is” follows what’s “to be.”) that will be conducted. Thus, process mining will provide all the information about the execution of the transaction to enable the Bank to validate if the transaction is compliant as per the Bank’s policies and procedures and provide data for analysis of possible improvement areas to further optimize or transform the process, by bringing in additional controls or automation.

Some of the benefits of using Process Mining in the Compliance Process will be understanding risk exposure, understand the breaches that occur (through alerts and notifications) and the commonality in them, finding areas where the Bank is cutting it too close to the SLAs, understand the impact of upcoming regulations in advance, receive defined policy violation alerts and use the insights for employee training and education and understand areas that can be automated / transformed for a higher ROI. Banks can also fully control all compliance activities related to processes, and ensure completeness, conformance, and timeliness of checks to manage compliance more proactively.

Additionally, if process mining is used along with BPM (business process management), and Data/Process/Operations observability, the impact of transformation is far higher as the “TO BE” processes can be rolled out by keeping all the relevant departments of the bank in the loop so that a seamless change management initiative is in place, thus ensuring that the change in the process is informed to all the concerned stakeholders.

Apart from the compliance process, process mining can be used to optimize, transform, and re-invent any other process of the bank, like KYC checks, credit card application, Loans processing, Customer Onboarding, AML, and others.

Process Mining as a lever for Transformation and Re-invention

Transforming operations and the very core of the way bank’s function is an essential step for Banks to remain competitive and meet customer expectations. And process mining provides banks with a lever to enable this transformation.

By leveraging data generated from processes in the form of event logs or digital footprints from the Banks business software, process mining highlights points or areas where the process gets stuck, leading to delays or manual touch points. Process Mining throws up the data and insights required by business stakeholders on how the process is working, what are the obstacles or hold ups faced by the process and the breaks in the process that lead to manual interventions. This helps Banks understand areas that need optimization, automation, and transformation. And Banks can use this data along with external data to obtain deeper insights to optimize and transform.

For example, in a Customer Onboarding process, the areas where SLAs are breached, or there is a break in the process, causing delays or non-adherence to SLAs or manual touch points are all highlighted by the process mining tool. And this is a holistic view that is provided, thus enabling Banks with data that can be used to increase end-to-end automation, digitization, or complete re-invention of the process, spanning across units/departments which helps increase the digitization index and provide its customers with far superior experience. Additionally, as Banks adopt new digital processes, process mining can highlight problems as they occur during the transformation.

 A leap into the Bank of the Future 

Banks should use the process mining lever to not just optimize and transform their processes, but also completely re-invent their business models and customer journeys to exceed customer expectations, by providing a fully automated, frictionless, and seamless customer experience. Performing at new, market leading levels will accrue several benefits to banks like:

• Driving continuous Digital Transformation & Innovation
• Accelerate and scale up automation, especially in back-office operations and front-to-back communications and flows
• Reduce cost of operations
• Increase enterprise-wide efficiency, adaptability, and agility
• Enhance Revenue & Profitability
• Increase Customer, Stakeholder and Employee Experience
• Strengthen risk-mitigation and compliance
• Ensure full control of critical processes and adherence to the set policies and standards
• Create a resilient and agile organization which is geared to face business cycles
• Help to monitor and measure the impact of digitization/automation and Innovation programs

Process Mining is thus an invaluable tool for banks to forge ahead into the new era of Banking and explore the potential of myriad opportunities to differentiate its products and services, remain competitive and agile, and explore opportunities for renewed growth.