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Banks are reaping order-of-magnitude productivity gains using workflow automation technology, which allows organizations to map business rules and procedures, and in combination with imaging, to automate the routing of documents.

Workflow-based systems deliver order-of-magnitude productivity improvements

Chase Manhattan Mortgage, a subsidiary of JP Morgan Chase, has been doubling its business volume every two years while averaging only a 20 percent increase in staff. Signature Bank, a New York-based subsidiary of Bank Hapoalim that opened last year, has streamlined the processing of some 300 forms used in the account opening process. McAfee Mortgage, a Texas-based mortgage originator, aims to double its portfolio, from $500 million to $1 billion, without increasing headcount.

They and other institutions are reaping order-of-magnitude productivity gains using workflow automation technology, which allows organizations to map business rules and procedures and, in combination with imaging, to automate the routing of documents.

Signature Bank began using workflow as soon as it opened its doors in April 2001. The bank, which provides private banking services to wealthy individuals, hired Englewood Cliffs, N.J.-based Immediatech to build a document management and tracking system for its account opening process, which involves some 300 forms, each tied to a particular account. For example, opening a business account may require the names of a company's officers, while a personal account may require a Social Security number and other details. Additional forms are used for opening securities accounts, adding insurance products, and the like.

"Depending on the volume of accounts opened and the number of offices processing accounts, a tremendous amount of work could be generated on a daily basis," said Ivor O'Keeffe, chief information officer at Signature Bank. "We sought to reengineer that process."

The workflow-enabled account opening process at Signature Bank begins with a customer printing out and completing an account form, available via the Web in one of the bank's financial centers. The form is then scanned into the system, which reads a barcode to identify the type of form. The data within the form is then automatically extracted and indexed. A scan station operator verifies that the information is correct before it's saved to Signature's client database.

Thus, a manual process that required hours and several human beings has been transformed into an electronic process requiring one person.

"Being able to scan in account information saves us a lot of time when processing new accounts, and cuts down on our staffing requirements," said O'Keeffe. "Plus, we're more certain to avoid keying errors."

Yet despite the successes of Signature Bank and others, many banks have yet to embrace workflow technology, instead preferring to rely on manual systems. "For every 350 call center agents, there are 200 people in the back room performing research, account reconciliation and follow-up," said Darryl Demos, head of Demos Consulting, a Norwell, Mass.-based productivity firm.

That leaves a wealth of hidden productivity waiting to be mined. American workers spend almost 500 hours a year, or 25 percent of their time on the job, searching for files and information, according to a study cited by John O'Connor, commercial lending practice manager at Benchmark Consulting International. A misplaced document costs $120 in expenses and lost productivity. A four-drawer filing cabinet costs $25,000 to fill and $2,000 annually to maintain, with 80 percent attributable to labor.

While imaging has helped fill the gap, the real breakthroughs lie in combining imaging with workflow automation. "An imaging system is not a grown-up version of microfiche, nor is it an expensive filing cabinet," wrote O'Connor in a white paper. "It is a tool that can manage workflow from the contact point through the back-office."

Chase Mortgage is one of the largest mortgage originators and servicers, processing over a million loans a year. It's also one of the largest users of workflow and imaging technology. It developed its first document management system in 1992, based on the C and Visual Basic programming environments, the Informix database application and the Plexus optical storage management system. In 1999, it added ImageFirst Office, an integrated software product providing document image processing (DIP), computer output to laser disk (COLD), and workflow. The systems convert customer financial documents into images, enabling customer service representatives (CSRs) to immediately access customer information.

The workflow component, which Chase built itself, has enabled the company to double its volume every two years with only a 20 percent increase in staff. "The workflow has a tremendous payback," said Rick Duff, manager of software development and imaging at Chase Mortgage, Columbus, Ohio. "It lets us handle increased volumes without an equal increase in personnel."

Duff's unit handles documents used in the servicing side of Chase Mortgage. "I have responsibility for the physical storage of the paper documents and then making those available electronically." Chase has image capture facilities in Monroe, La., Columbus, Cleveland and San Diego. Monroe, the largest, captures 100,000 pages a day.

"We scan a subset of our documents that are part of the loan closing package into an imaging system," said Duff. When a customer calls with an inquiry about escrow, tax, insurance, etc., a CSR will bring up the image and create workflow routes.

The imaging and workflow systems are separate. "We aren't creating workflow routes based on images," Duff said. "We're just imaging everything for our CSRs so they'll have the image if needed.

But for all its success, the system lacked a reliable image capture capability, a glaring weakness that caused error rates to climb to almost 50 percent and required costly manual intervention. "Skewed documents were the biggest issue," said Duff. "We were scanning 100,000 documents per day, so it was obvious that changes had to be made."

Last year, Chase installed Ascent, an image capture system from Kofax, Irvine, Calif. Ascent's fast, accurate document capture, plus its production-oriented architecture and user interface, fit well with Chase's expanding operation. The product enables users to index, validate and release to back-end systems not only scanned paper, but electronic documents, Web forms and other data streams, such as XML.

Using the Kofax system along with high-speed controller devices, Chase has dropped its manual correction rate to less than one percent, enabling it to scan 2.5 million documents per month versus 750,000 previously. Equally important, it has reduced the number of people required to handle documents.

Because the Ascent software is agnostic as to whether a document originates in paper form or is generated electronically, Chase is able to capture mainframe print streams, convert them to image (TIF) files, and then perform the same workflow processes as if they had been scanned in.

Chase has also taken advantage of Ascent's ability to work with dozens of back-end document systems. Kofax-supplied integration modules translate images and data sent in native formats into the appropriate format for Chase's image repository.

The ability to process documents from any source is vital to Chase's loan servicing business. When Chase purchases a loan portfolio, data is received as electronic images embedded within an XML stream.

"We purchase servicing rights from other companies," Duff said. "They transfer images to us electronically, then we auto-import these images into our system, eliminating the need for manual inputting, and reducing the chance for errors."

Chase is also considering use of another Kofax product, Ricochet, which allows documents to be scanned using a copier or other low-speed multifunctional peripheral (MFP) device attached to a workstation. From their desktops, document creators or content experts can quickly review thumbnail images of scanned documents. The documents are then assembled in a predefined package and released into the workflow.

The product is especially suitable for the mortgage industry, where the trend is to capture documents as close to origination as possible. "We have a centralized capture operation," said Duff. "We want to capture the documents at the origination offices, and Ricochet would allow us to do that."

As Chase and other giants reengineer their businesses, other participants in the mortgage supply chain-appraisers, lenders, insurance companies-are feeling the pressure to change as well. "All these big investors like WaMu, Countrywide-we don't send them physical files anymore," said Tom Couture, executive VP at McAfee Mortgage, a Texas-based mortgage originator. "We send them electronic data and that's how they purchase the loans."

But in changing the way they do business, McAfee and other downstream suppliers aren't merely complying with the demands of their large trading partners, as have suppliers in retailing and manufacturing. Instead, they are embracing workflow as a means for realizing efficiency gains and for achieving tighter integration and connectivity. "It's not being deployed industry-wide as well as it could be but I believe it's going to catch on," said Couture.

McAfee is upgrading to a workflow-enabled version of MortgageWare, a mortgage origination system from Interlinq Software, Bellevue, Wash. "The mortgage industry is an industry of exceptions," said Michael Jackman, CEO of Interlinq, which was recently acquired by Harland Financial Solutions. "MortgageWare allows a shift in the processing model of mortgages."

Although the workflow version of MortgageWare isn't due out until next year, McAfee has already begun installing it. "With MortgageWare's workflow technology and the ability to integrate with outside applications, we will be able to automate our lending processes for our customers and trading partners," said Couture.

The system will eliminate manual tasks like printing and faxing a request for an appraisal. "With the new platform, the system will be programmed to know it's time to send a request," Couture said.

By combining document imaging with workflow, MortgageWare will free up employees for more productive activities, said Jackman. "We may find that the process has turned into an auto-decisioning engine talking to a data-collection engine, and people are just out there selling like crazy."

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