Rabobank Automating Investigations

There are approximately 37 ways for a foreign bank payment to go afoul. Naturally, customers expect their bank to spot these payment problems before they occur and to manage exceptions when they happen. But finding and correcting these errors can be a time consuming and labor intensive process.

Rabobank, a cooperative of roughly 400 independent Dutch banks, has turned to technology for help. The institution recently began using software from Pegasystems, Cambridge, Mass., to automate the payments investigation process.

When the euro was introduced in January 1999, many European banks discovered flaws in their operating procedures for sending and receiving foreign payments. "Before the implementation of the euro, you just had one system dealing with nostro or loro accounts," said Patrick Straten, project manager at Rabobank. But two new payment systems were required to support foreign payments using the new regional currency. Editor's Note: Nostro accounts are correspondent accounts held at a foreign bank. Loro accounts are those held on behalf of a foreign bank.

"That gave us a lot of investigations," said Straten. "The only thing we could do at that moment was to hire more personnel." Rabobank has 200 people in its department responsible for investigating foreign payments on behalf of its member banks.

With the euro problem well under control, Rabobank aims to reduce its reliance on manual intervention by using the Pegasystems software. "It'll definitely have an effect on the number of people that are dealing with this process," said Straten.

Rabobank uses Pegasystems' rules-based workflow management system to handle the customer service problems associated with money transfers. Essentially, the software tracks each stage of a payment transaction to identify discrepancies and to perform routine tasks involved with both normal payments and problem cases. When a problem occurs, investigators will rely on the system to generate inter-bank SWIFT messages, rather than generating them manually.

The improved process has already shown a substantial impact. "Before implementation, we had to handle about 700 SWIFT messages per day by hand," said Jaap van Caspel, vice president of international payment services for Rabobank. "Currently, 75% of those SWIFT messages are handled and fully automated by the system."

Customers will soon be able to access payment and investigation information via the Web, to the relief of Rabobank investigators, who typically spend about half their time calling cooperative member banks, correspondent banks and foreign banks.

"When we implement the Web site, we think we can decrease that to about 10%-15% of their time," said van Caspel. "Our customers can track and trace their own investigations via the Web, so they don't need to call our investigators anymore."