Enhancing banking software with real-time Process Intelligence for proactive decision-making

In days gone by, transformative ideas and technologies hit the banking world once every few years. A gentle cadence. Today, change is the industry’s natural state – with customer expectations, banking operations, regulations, and fraud threats all evolving at an astonishing pace.

If a bank is to keep its footing in this ever-shifting landscape, it can’t simply respond to change. It needs to thrive on, and drive, change. And to do that, it needs a clear view of its operations. A view that empowers the bank to make informed, proactive decisions on everything from AI investments to process optimization.

But many banks still find their visibility obscured by aging core banking software and complex IT infrastructures. This is where enhancing banking software Process Intelligence can make all the difference.

Process Intelligence (PI) helps banks to make smarter decisions, faster, while creating a solid foundation for digital transformation initiatives – and in the case of neobanks, for ongoing digital banking innovation. But we’re getting ahead of ourselves. First, let’s explore the status quo.

Banking software, today

Whether a financial institution offers retail banking and business banking, corporate banking, private banking, or investment banking – or a mixed combo these services –  it’s dependent on a host of banking software solutions.

At the heart of retail and business banks, you’ll find a core banking system (CBS). These systems are intended to act as the central engine or digital brain that connects and enables essential banking operations. While core banking systems can vary in scope, they typically support transaction processing, credit and loan processing, customer account management, as well as security, compliance, and regulatory reporting.

So, for instance, a CBS is what makes sure your account is instantly updated when you ping money to a friend on a mobile banking app, use online banking, or make a withdrawal from an ATM and place the cash in their hand.

(Fun fact: while it’s rarely capitalized, “core” is an acronym for “Centralized Online Real-time Environment”.)

Recent years have also witnessed the rise of the core banking platform. A modern riff on the same functionality, a core banking platform takes advantage of cloud computing and APIs, to be more modular and easier to upgrade than a traditional CBS. Whatever core banking solution a bank depends on, APIs are also key to facilitating the information sharing required by today’s open banking initiatives.

Investment banking has its own roster of essential technologies, from deal management systems and financial modelling tools, to the virtual data rooms that increasingly support secure collaboration during mergers and acquisitions.

And then, of course, a bank needs the same function-specific software as any other business: finance solutions, HR solutions, customer service and support solutions, you get the idea.

The proactive decision problem

Banks have been investing in software for decades. As McKinsey observes, this long history of tech investments has led many banks to develop a complex and siloed IT architecture. Legacy systems have become a major drain on technology budgets, with more than 60% of tech spend now getting swallowed by “run-the-bank” activities.

But the cost of aging, fragmented systems isn’t just monetary. It’s strategic. Such systems prevent a bank from seeing its operations clearly. A fragmented tech stack is also a blocker to proactivity. It makes processes harder to optimize and automate, new technologies harder to harness, and banking services harder to innovate. And that’s a huge weakness when customer expectations, transactions, and regulations are evolving at such an unrelenting pace.

How Process Intelligence enhances banking software

Process Intelligence (PI) uses process mining to consolidate data from a bank’s source systems: CBS, CRM, Rules Management, AML, Homegrown and beyond. It combines this real-time data with an understanding of how a bank’s processes work, applies AI, and creates a digital twin of the entire banking operation.

By consulting this digital twin, a bank can see how its end-to-end processes run (and interact) across systems and departments. PI also helps banks:

• Identify process inefficiencies such as bottlenecks
• Model and evaluate optimized processes
• Orchestrate automation and minimize process deviations

In this way, PI is a pivotal technology for financial institutions striving to embrace change, and continually evolve their operations. It provides the insight a bank needs to make proactive decisions regarding its core processes and the tools to follow through on them.

Proactive decisions to improve customer experience

When a retail bank uses PI to gain an end-to-end view of its customer journey, it typically identifies room for improvement in multiple areas. It might discover that opening an account involves manual steps that could and should be automated. Or that its credit application process is being slowed down – and customer experience compromised – by lengthy document verification times.

PI can help retail banks to quickly evaluate each opportunity and decide where to optimize first. Often, these proactive decisions lead to faster decisions for customers, too; one German bank has used PI to reduce time-to-yes by 50%.

Proactive decisions to create smarter operations

PI also surfaces opportunities to enhance core banking processes, such as payments and trade operations.

Typically, a payment process involves a number of key steps: the payment is initiated, fraud and anti money laundering (AML) checks are completed, and the payment is authorized, released, sent, and acknowledged. PI can spot when payments fail to meet a bank’s SLAs, and unearth and address the root causes, driving standardization.

PI also helps banks minimize trade amendments and monitor for duplicate financial transactions. Powered by Process Intelligence, a global investment bank reduced effort across its payment teams by the equivalent of ~37 FTEs.

Proactive decisions to reduce fraud and regulatory risk

The end-to-end view of core banking operations provided by PI is invaluable for today’s financial institutions, as they negotiate a complex landscape of evolving fraud threats and industry regulations.

A couple of great examples? Take the global investment bank that previously generated more than 60 regulatory reports using around 15 different systems – and regularly received fines in relation to their accuracy, completeness, and timeliness. This bank used PI to gain cross-system visibility and identify opportunities for automation, reducing SLA breaches for regulatory reporting by 80%. One of the top commercial banks in the US, meanwhile, used PI to reduce its fraudulent claim approval rate by 21%.

PI can also transform a bank’s KYC (Know Your Customer) processes. Just as with any other multi-step workflow, a bank can use PI to apply automation, optimize resource allocation, and unlock new efficiencies. Even better, PI can identify and rectify process deviations, helping the bank to enhance regulatory compliance and reporting.

Proactive decisions, powered by AI

AI is set to transform almost every aspect of banking and financial services, from customer service and personal financial planning, to custom software development. In the case of risk and compliance testing, Generative AI is expected to reduce banks costs’ by up to 60% in the next two to three years.

But for AI to deliver on its potential, the technology needs to understand how a bank works. It needs to know which processes depend on which systems, how a bank’s people and documents relate to each other, and what business rules to apply. In short, it needs the context that PI can so readily provide.

When combined with PI, AI comes alive. It enables banks to make all those strategic, proactive decisions about where and how to optimize their operations. The better the data, the better the decisions. Banks can also deploy AI with confidence, developing innovative, modern banking services that delight customers, and empowering everyone from customer service representatives to fraud investigators with highly capable co-pilots.

The adaptiveness banks need to thrive on change

As the pace of change in the industry quickens, every bank must be able to respond to new technologies, regulations, and threats, rapidly and with confidence.

In all the ways described above, PI is helping banks to achieve this new level of adaptiveness. It’s connecting their core banking systems, core banking platforms, and other key systems to create a clear, comprehensive view of their current operations and opportunities. It’s also empowering them to implement new technology faster, by providing the data and business context that AI needs to succeed.

Find out more about enhancing banking software with PI

If you’re interested in enhancing your bank’s core systems and software with PI, here’s some recommending reading:

• Get your copy of Process Intelligence for Banking: The Ultimate Guide
• Discover banking solutions from Celonis