'EKG' for Document Processes Helps Financial Institutions Get Lean

By Stephen Olson, Océ Business Services

Just like everywhere else, it's belt-tightening time in the financial services industry. Between mergers and acquisitions and general cost-cutting, financial institutions are consolidating services and trying to do more with less. How do executives know when the belt is tight enough? Or too tight?Financial institutions can now answer these hard questions with more than just intuition. Some have begun applying lessons from the manufacturing sector and implementing business performance management (BPM) tools across all their operations. These tools give the institutions quantitative, near-real-time insight into the operations that matter, from the 60,000-foot level to the atomic level, across functions, sites, regions and businesses. As an EKG monitors your heart in real time, BPM monitors your business. It spotlights risks before they turn into crises, giving you time to change your habits.

With hard data expressed in charts, graphs and numbers, decision makers can allocate resources more intelligently, shutting down underperforming operations and elevating high-performing operations as best practice models. One BPM focus area in financial institutions is document processes, such as mail, print/copy, imaging, records and eDiscovery. Through a combination of software tools and Six Sigma-based methodologies, institutions are systematically measuring, managing, benchmarking and proactively improving these processes in near real time. Just a few of the important document workflows that can be tracked, monitored, managed and improved include loan applications, lock-box operations, loan payments, statement posting and general mail.

How BPM for document processes works There are surprising benefits in tracking these processes. Although documents are easy to dismiss as a fixed cost of doing business, they are actually fertile ground for cost savings, productivity gains and general performance improvement. Just consider how much electronic statements and online bill payment have saved the industry.

Every financial institution has revealing document performance metrics that can be derived from pressing business needs. These metrics include loan processing cycle time, on-time package delivery, mail volume, document scanning accuracy-anything that truly reflects service quality. Helpfully, printer/scanner/copier fleets, mail systems and couriers' barcode scanners increasingly provide data for BPM systems to measure.

Once these key performance indicators (KPIs) are established, the institution can use BPM software to measure and monitor them 24 x 7 x 365. Managers can drill up to the macro level to oversee rolled-up aggregate document performance; drill down to the device, staffer or mail package level; and drill horizontally back and forth through time. Managers can compare site vs. site, isolate substandard service levels, and fix problems before they show up in red ink or customer dissatisfaction.

BPM systems make it easy for senior directors to standardize successful document processes across sites. If performance in a particular site and function shows up in the BPM dashboard as "excellent," the company can replicate this best practice across all locations. If, on the other hand, one site or process is struggling in the red zone, the company can pinpoint the problem and launch a quality initiative-anything from a short staff meeting or form revision to a full-fledged Six Sigma project. Managers can even monitor a single dial on their PC and see an overall score for the entire document process management function on a daily, monthly, quarterly or yearly basis.

BPM in action One major financial institution implemented BPM for document process management and made an alarming discovery: two of its 28 mail centers were grossly underperforming. The institution shut them down, saving the company $72,000 in the next six months alone without reducing service.

BPM systems are also effective for providing insight into compliance operations. One multi-site organization used its system to automate audit trails and eliminate 180 hours of compliance reporting work per year at each facility.

One manager saved money by noticing that performance was too good, a case of over service. Too many non-urgent packages were going out overnight. Detecting this on his BPM dashboard, the manager put a systemwide halt to excess shipping and saved $500,000 in the first year.

Many financial institutions are making the hard decision of lowering service levels to save money. BPM allows organizations to stay informed as they tweak service levels to ensure they avoid "killing the goose."

Outsourcing implications BPM capability is especially effective in outsourcing arrangements. The decision to outsource operations like mail distribution, copy, print, imaging and records handling is traditionally a leap of faith. But if the financial institution, through BPM, has immediate access to detailed, reliable and current data on KPIs, this transparency and accountability make the decision more attractive.

Such transparency also makes it easy for companies to tie their outsourcing contracts to service level agreements (SLAs). Vendors who fail to meet them pay a penalty. A vendor who meets or exceeds targets could get a share of the savings. This is equivalent to a performance guarantee.

Although careful management is always important, it's especially true in down economies. The best-managed institutions, the ones that can tighten belts with precision, will survive and put themselves in a position to acquire their poorly run competitors. BPM not only helps these institutions survive but helps them whip new acquisitions into form and stay in good shape to thrive in the future.

Stephen Olson is national director, best practices, with New York-based digital document management technology and services provider Océ Business Services.