How Is Business Process Management Applicable to Financial Services?

  • Written By: Hans Mercx
  • Published: January 3 2006


Business Process Management (BPM) is increasingly being used by organizations to improve internal processes in order to make them more efficient. But which processes are appropriate for BPM? Which industry, if any, has successfully deployed BPM?

BPM in Vertical Markets

BPM is already used in a variety of markets, from financial services and government to healthcare and manufacturing. In fact, vendors have different forms and workflows for each industry that companies can use as the basis for their BPM solution and that they can customize to their specific needs or structure in order to optimize their processes.

This customization is, in fact, fairly simple as BPM solutions are designed in such a way that business analysts are capable of doing most of the process development, thereby limiting the need for programming skills. BPM solutions enable analysts to design work flows, process flows, forms, and maps using the process designer.

Despite this, many organizations have focused on implementing vertical solutions, such as enterprise resource planning (ERP) and customer relationship management (CRM). BPM, in contrast, spans the entire enterprise. Nonetheless, despite BPM's seemingly horizontal applicability across industries and enterprises, many organizations might benefit from industry-specific, or vertical, BPM solutions. This article focuses on such solutions within the financial services (FS) industry.

Core BPM Components

BPM is made up of a wide range of components. Most of these components are industry-independent and can integrate with different legacy systems. The core components include the process designer, the actual process engine, and the interface component.

The process designer component is where the process developers or business analysts design business processes. Every process for which the BPM solution is used, and every form within these processes, will be designed using this component. In addition, the process designer can often facilitate integration with other components and systems that integrate within the scope of the process and workflow, as well as towards any business rules associated with the process.

The process engine component is used to authenticate and authorize users. In order to do so, it either stores the information in its own database or is able to connect to external applications or directories where user information is being stored. If organizations are already using other authentication and authorization tools, the process engine can duplicate and synchronize the authentication and authorization process to make it more efficient and to reduce the risk of failures.

Finally, the interface component enables users to access the BPM solution through a variety of applications and interfaces, such as browsers, portals, e-mail, etc.

Besides these core components, BPM can have components that contain industry-specific information, such as rules builders, form builders, and analyses.

The FS Industry

The FS industry is one of the industries that are focusing on BPM solutions, and BPM vendors have responded by providing industry-specific functionality.

Within FS, we can talk about banking, insurance, credit card companies, securities, etc. These organizations are under intense competitive pressure and, thus, are constantly trying to improve their operations and to respond to dynamic market demands. FS organizations have implemented several enterprise solutions over the last few years and encountered mixed results. These solutions include customer relationship management (CRM), the year 2000 (Y2K) problem, and anti-fraud initiative solutions, as well as business improvement and competitive advantage applications.

One problem that keeps arising is that applications often are not integrated with each other or are not being used on an enterprise-wide basis. This makes it hard for companies to streamline business processes that are specific to the organization's changing needs. FS companies must be able to design the processes so as to increase productivity within the organization. To do this, it must be possible to adjust processes so that they match an organization's needs as they evolve in an ever-changing environment. For FS companies, these needs may include complying with regulations such as the 2002 Sarbanes-Oxley Act (SOX), acquiring new customers faster, improving efficiency, integrating processes with legacy systems, automating manual processes, analyzing processes for risk management, improving exception handling, and decreasing the number of bottlenecks.

BPM vendors play to these industry requirements. Vendors allow companies to design processes within their solution in order to manage their resources in a structured manner. Through the BPM solutions that they offer, vendors also help FS organizations achieve compliance, reduce risks, keep or acquire new customers, and link different vertical applications together to become more efficient.

FS organizations can use BPM solutions to their advantage in the following areas.

  • Claims management
  • Loan management
  • Client intakes
  • Conflict processing
  • Compliance regulations
  • Credit issuances
  • Credit processing

The Influence of SOX on FS

Within the FS industry, compliance regulations are becoming extremely important, if not critical. Many North American organizations must comply with SOX. Under SOX, executives must sign off on all financial statements, which have to comply with strict regulations and be monitored with a process control.

There are several key indicators organizations have to take into consideration when aiming for SOX success. These indicators are collaboration, security, control, iteration, adaptation, and measurability.

Collaboration involves employees across departments or offices, as well as external people, working together to collect data, consolidate data, put together financial reporting, and provide accurate financial statements.

Various levels of security must allow or restrict users' access to data, such that only management has the ability to sign off on tasks within a workflow. The security can be either user- or role-defined.

Controls that are mandatory under SOX are established, in part, through the afore-mentioned security system. A BPM solution, however, can contribute to these controls through its capability of showing a user only the information necessary for that user's authorization level in a particular workflow step.

Because financial statements must be audited, the ability to iterate processes is essential. Electronic, automated processes can bring consistency to processes every time they are used.

As rules and regulations change, an organization's processes must be able to adapt to these changes. A BPM solution should enable the organization to quickly change business processes in order to adapt to new conditions and to the market.

Lastly, in order to meet SOX regulations and financial industry standards, it is important to have a solution that is capable of measuring and tracking all financial data and of illustrating the processes and controls surrounding those numbers. A BPM solution is the perfect solution to these criteria for the financial industry.


Vendors such as TIBCO, Handysoft, Metastorm, and FileNet, which has created a whole department dedicated to SOX, are examples of organizations that provide BPM solutions with legislation and regulatory compliance capabilities for the financial industry.

BPM is an ideal solution that allows companies in the financial industry to manage internal processes and to increase efficiency and accuracy. Organizations, especially those that deal with SOX, should focus on BPM to ensure that they are compliant and less vulnerable to error and risk.

Organizations in other industries should also look closely at their processes, and ask themselves if these processes are influenced by internal or external changes and what the efficiency of the processes is at this time. If the processes are influenced by either the market or internal changes, a BPM solution could be a positive influence on their business. Several BPM vendors have industry-specific solutions, industry-specific forms, pre-defined workflows, and other solutions available. This topic may be discussed in a future article.

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