Real-Time Enterprise for the Real World
By Nanci Rainey
For bankers, making appropriate information technology choices is like trying to hit a moving target – you need to aim where you think the target is going to be in three to five years.
Technology decisions must be aligned with business decisions, and bankers rely on their IT partners to help them choose appropriately.
No matter who is running your IT shop, one important issue any forward-thinking IT partner should be preparing for today is the real-time enterprise (RTE). In this article I’ll discuss why, in today’s climate, you need to ensure that your IT partner can enable the realtime enterprise, and what benefits this will bring to your bank today.
Are You Ready For This?
RTE is defined by prominent tech research and advisory firm Gartner Inc. as "an enterprise that competes by using up-to-date information to progressively remove delays to the management and execution of its critical business processes.”
The objective is to remove time from processes, increasing efficiency and productivity and improving customer service. This is not exactly a new idea – bankers have heard for years that getting better information to decision makers and customer-facing employees, faster, helps the bottom line. The new term RTE involves mostly known processes and existing technologies, although new technologies, such as automated decisioning, are further enabling RTE and making it more affordable.
Community banks want to enable RTE for the same reasons that manufacturers want realtime order and fulfillment systems: better risk management, business agility, efficiency and customer service, facilitating competitive advantage and sustainable growth.
The Right Time for Real time
Sometimes it’s easier to define what something is not, rather than what it is. RTE is not a specific technology, not a set of things you can go out and buy. It’s not a strategy, but a competency; not an event, but a process. Furthermore, RTE doesn’t mean instantaneous response to all events: surprisingly, in the real-time enterprise, not everything happens in real time. It’s more imperative that things happen at the right, or appropriate, time.
Bank ATMs must have real-time information for fraud prevention and customer satisfaction. But for other bank processes, such as those involving the integration of complex information from multiple third parties, RTE might shorten a four-week process to two weeks or less. Batch processes won’t go away immediately, although their replacement with realtime “transaction-at-a-time” processing is a long-term goal. RTE is implemented piece by piece over time, starting with the most important business processes – ones where the removal of time results in a tangible benefit.
According to Gartner, one of the guiding principles of RTE is straight-through processing (STP), a term used in the securities industry to mean fully automated trades. For bankers, STP focuses more on eliminating redundancies such as manual re-keying of data and unnecessary batching of transactions. The goal is for transactional data to be entered only once and then proceed automatically downstream through the system. Replacing manual or multi-step processes with unified, automated sequences should result in condensed business process cycle times, reduced input errors and improved customer service.
Real time Before it Was Cool?
You may ask, "Why should I care about RTE?" The answer is that banks no longer have to choose a transaction processing method based on whether the institution is commercial (where batch processing provides more efficiency and shorter teller lines) or thrift (where online realtime processing immediately captures and posts on-us activity).
The addition of memo posting to batch systems, and the advent of hybrid systems combining elements of both batch and realtime processing, have made realtime transactional environments possible for all banks. But, RTE involves more than just realtime transactional systems.
Although many bank processes take place (or appear to take place) in a real-time manner, there are still numerous procedures that are highly manual, batch and paper-intensive. The streamlining and automating of these processes is the goal of RTE.
Let’s Get Real – One Example
Taking the slowest, most inefficient processes and making them better; removing manual involvement wherever possible; empowering people to make decisions at a lower level (is supervisor approval really necessary at that stage in the process?); contacting decision makers no matter where they are via mobile technologies – these are things banks are striving to do today.
Let’s look at one extremely labor-intensive, multi-phased bank process to see how automation by STP procedures can improve productivity, minimize risk and ultimately provide superior service to customers.
The loan origination process, in its simplest form, is comprised of three major components: customer request and information gathering, loan review and underwriting approval, and funding and booking of the loan. Each component is comprised of multiple detailed steps, many of which are handled by separate systems and independent personnel. This process, teeming with data duplication and disparate information stovepipes, is inefficient and increases bank exposure.
Now imagine a process that captures a customer’s request at any point of contact (Internet, branch, broker/dealer, etc.) and “guides” the loan through the various stages via automated systems. Bank rules for customer screening, underwriting and documentation are all pre-defined and “staged” by workflow and system integration processes to operate at the appropriate times.
Customer communication is automated, keeping the applicant apprised of the loan status. Bank personnel are prompted to perform tasks within appropriate time frames, and loan origination managers are alerted if this does not occur. All supporting documents and approvals are captured electronically and stored in the customer’s loan folder. Lastly, the approved loan is automatically funded and booked to the servicing system. STP can transform these types of labor-intensive, multi-phased bank processes to improve productivity, minimize risk and ultimately provide superior service to customers.
Putting it all Together
Many technologies can enable RTE – the challenge is making them work together. RTE, in its purest form, “marries” IT solutions to the bank’s business processes. Therefore, it’s key that your IT partner provides an underlying infrastructure that allows your bank to achieve an automated environment. Your IT partner should understand bank workflow requirements and customer service essentials so that the technology solutions are joined together in a meaningful manner to support your business objectives while helping you to realize your bank’s vision.
Finally, it’s unlikely any one IT provider can supply everything your bank needs – or wants. The dynamic nature of the banking business and rapid pace of technological change make it virtually impossible for one company to master every facet of banking technology. For this reason, your IT partner should also be focused on integration, and provide you with a technology infrastructure that allows you to use additional banking products from specialty developers.
As senior vice president – product strategy, Nanci Rainey is responsible for product strategy of BISYS Banking Solutions and BISYS Corporate Financial Solutions. During her more than 20 years with BISYS, she has held management positions in product management, product planning, product development, client relations, data center management and strategic marketing services. Before joining BISYS, she held various management positions in commercial and retail banking. Overall, she has 27 years of experience in the banking and information services industry. Rainey holds a BA in English literature and secondary education from the University of Houston and is a graduate of the Bank Marketing School and the Advanced Financial Database Marketing School, Northwestern University. Rainey can be reached at firstname.lastname@example.org or (800) 366-6006, ext. 8309.