BPM and Banks: The Four Major Benefits of Process Automation

Banks and credit unions of all sizes are embracing BPM technology, and there are four big reasons why: codifying processes, increasing efficiency, compliance, and loss mitigation.

I recently spoke to a particular bank VP who told me a horror story about generating commercial loan documentation. The bank had a largely unstructured process for loan approval, which was perhaps its biggest problem. But once a loan was approved, individual loan officers would launch into their own individual dark processes to get loan documentation generated. For this particular bank, codifying the process—simply getting everyone to do things in the same structured way—was a critical objective.

For many banks, the process of generating transactional documentation is inefficient and, thus, overly expensive. Much of this inefficiency can be attributed to un-codified processes—meaning dark processes—which frequently involve a duct tape/bailing wire approach to document production (i.e. Word templates, merge fields, and maybe a little VBA sprinkled in).

Automating the generation of transactional documentation is arguably the most cost-effective type of business-process modeling for banks because it dramatically increases efficiency. Many banks report reducing the time necessary for generating loan documentation from “days to hours,” or in some cases, minutes.

With many types of organizations, process modeling is primarily about efficiency. With banks, however, dark processes—un-modeled, un-monitored processes—can lead to non-compliance, both with existing laws and with internal policies put in place to ensure safe lending practices. Either type of non-compliance can lead to legal exposure, dangerous loans, and lost profits.

Automating the loan-generation process can reduce—and probably eliminate—non-compliance. Relationship managers, loan officers, and clerical workers are all channeled into the same codified, automated process, the outcome being not only greater efficiency, but also greater safety.

Relying on human interaction in complex, difficult processes is risky, to say the least. A commercial lending agreement could be a hundred pages long, could have a thousand variables, could require really complex business logic to include/exclude language blocks, could involve multiple levels of repeating text, etc. With this level of complexity, no amount of proofreading is going to eliminate the possibility that something could get missed, and that something could leave the bank exposed to the tune of millions of dollars.

For a lending institution, transforming its transactional documents into a process application with accurate and complete business logic and a highly interactive, structured data-gathering sequence can virtually eliminate human error and, with it, a significant amount of legal exposure.

While banks may have need for many types of process automation, the solution to the document-generation piece is an enterprise-wide deployment of HotDocs, either on-premise with HotDocs Server, or in the cloud with HotDocs Core Services. Automating the loan-generation process will dramatically improve efficiency while simultaneously improving compliance and reducing risk.