• Nigel Adams, Director at Hetton Advisory and Senior Advisor at Apromore


• 08.05.2024 01:00 pm
#banking #regulation

Against the backdrop of ongoing global uncertainty, it’s more important than ever to make the most intelligent decisions, based on the most intelligent insights. The challenge for decision-makers is to bring order from the chaos. Leveraging tools such as process mining becomes pivotal, offering a structured approach to uncovering patterns and inefficiencies within organizational processes. 

Understanding the banking agenda

From regulatory pressures to technological disruptions, the banking industry faces a complex array of obstacles. At the top of the agenda are the usual suspects: containing costs; facing increased regulatory scrutiny; and responding to non-traditional competition. 

Ongoing digital transformation meanwhile demands organizational talent and project budgets. Alongside this, banks must adapt to customer hardship; flexible work practices; and heightened community scrutiny of every move - from record profits amidst a cost-of-living crisis to navigating AML/CTF obligations and the politics of account closure.

Taking control with creative opportunism

At a  Royal Commission on banking misconduct five years ago in Australia, one CEO illustrated how seemingly simple tasks like mortgage origination involve over 400 steps. But it’s not the number of steps that make it complex, it’s the 35,000+ pathways through the steps. 

Process mining technologies, however, offer a solution. By providing insights into process bottlenecks, rework, and customer engagement, process mining allows bankers to grasp the reality of their operations. 

This granular understanding empowers stakeholders to articulate root causes, estimate costs, and allocate resources with precision. Moreover, it uncovers hidden opportunities for revenue generation and retention. For instance, a payments command center may be focused on maintaining operational control, but the proactive, client-centric insight it generates can make retention a far easier task. 

This transformative approach has propelled significant growth for forward-thinking organizations, as demonstrated by real-world success stories.

The path to decision-making confidence

Informed decision-making in the face of economic and geopolitical uncertainty is difficult to say the least. Uncertainty poses more questions than answers and shows the need for thorough analysis of multiple scenarios grounded in the realities of banking processes.

For example, simulating scenarios, like a 25% drop in lending demand, not only highlights the need to reduce resources in the loan origination process, but also hints at the need to uplift resourcing in hardship or recovery processes.

Understanding the dynamics of process interconnections is crucial, yet often overlooked in siloed scenario analyses. This calls for a deeper level of insight. By delving into millions of events, process mining offers robust foundations for decision-making, ensuring it's grounded in facts rather than political maneuvering. 

This profound understanding enables organizations to navigate uncertainty with clarity and confidence, setting a solid course for success in turbulent times.

 Tips for winning decisions during turbulent times: 

·      Implement regular scenario planning sessions grounded in process reality to anticipate potential challenges and opportunities, enabling proactive responses.

·      Adopt process mining technology to gain granular insights into banking operations, enabling informed decision making based on facts rather than political maneuvering.

·      Take control of your day-to-day operations by getting to the root cause of the variation that drives the complexity.

·      Manage operational risk more effectively by monitoring compliance at a granular level, across the whole population of transactions on a near real-time basis.

·      Leverage advanced analytics tools, such as predictive modeling and machine learning algorithms, to analyze vast amounts of data to mitigate potentially significant risk events, as well as evaluate possible recovery options . 

·      Foster adaptive leadership to respond quickly and effectively to changing conditions.