The role of process mining in driving digital transformation in banking

There isn’t a bank on the market that hasn't invested in digital transformation. Yet despite the clear prioritization of these initiatives, research from McKinsey reveals more than half of digital banking transformations exceed their initial timeline and budget, or fail altogether.

Banks and financial services organizations are facing considerable economic instability, and need to insulate themselves against factors ranging from shifting tariffs to evolving regulations and geopolitical risk. Alongside this, they must also adapt to growing customer service expectations around convenience, quality and speed; for example a recent survey shows 48% of American bank customers already prefer banking on mobile apps.

Digital transformation is integral to future-proofing efforts — so why, when so much time and money is being spent, do these initiatives continue to underperform?

Solving the disconnect

The key culprit is the disconnect that makes full visibility of process performance impossible. In the standard business model of a financial institution, different departments and systems inevitably operate independently, and in a vacuum. Without effective two-way communication, their data is siloed, preventing the holistic overview that’s necessary for successful digital transformation.

That’s where process mining comes in. Process mining connects departments, processes, programs and people — enabling unparalleled data visibility that reveals how financial institutions actually run, and subsequently, how they can run more efficiently.

Keep reading as we explore the maturing definition of digital transformation, and what makes process mining the lynchpin for its success in the banking sector.

The changing face of… change

New technologies — ones that are transformative in the truest sense of the word — used to come around once or twice in a generation. But today the cadence of change has, well, changed. Banks that spent the last few decades launching and refining their online capabilities are now expected to have effectively implemented AI, process automation, machine learning, and countless other emerging technologies.

What’s more, these technologies are evolving in real time, and can be leveraged in unprecedented ways. Their potential increases by the day, as does their versatility.

In banking days past, digital transformation was finite and completable; it entailed the digitization of tools, data, and processes. Today, digital transformation is an ongoing organizational effort, whereby banks equip themselves to adapt with ease, at pace, and at scale.

The uniquely challenging nature of digital transformation in banking

The barriers to effective digital transformation in most industries are many and varied, but what makes this especially difficult in financial services?

Legacy systems

A surprising number of banks still heavily rely on systems designed before the millennium, but these systems aren’t designed to incorporate recent digital technology. This makes them inefficient and increasingly expensive to maintain, as the pool of experts with the understanding to manage them shrinks.

Fragmented tech stacks

Often because of these legacy systems, banks use a combination of poorly integrated tools and technologies across their business operations. This means customer data is scattered, rather than cohesive — and all the harder to obtain meaning from.

Rapidly changing regulatory frameworks

Financial service businesses must ensure digital transformation initiatives are compliant with AML directives, data protection regs, and a number of other legal frameworks at all times. This can cause bottlenecks in change management, or prevent it altogether.

Tightening cybersecurity measures

When done right, digital transformation should strengthen cybersecurity defenses, but complex processes like cloud-adoption and AI integration also create new vulnerabilities for cybercriminals to exploit.

Process mining: the key to effective digital transformation in financial services

Process mining is the key to making this type of continuous adaptation possible for financial service businesses. But how does it work?

This technique extracts data across all systems and applications (both custom and third-party), and integrates it to deliver an omniscient view of how processes actually work.

As Joaquim Nogueira, our Banking Industry Principal points out, “by uncovering how their processes are actually running beneath the surface, across functions, banks can finally weed out the inefficiencies and root causes behind the issues.” These insights can now be taken even further, with object-centric process mining (OCPM) which doesn’t just examine a process in isolation, but captures the relationships between multiple processes, to shed light on how they interact and influence one another.

Celonis’ Process Intelligence Platform layers the data derived from process mining together with a bank’s unique business context, wider process knowledge and AI, to create a Process Intelligence Graph. This digital process twin is a goldmine for organizations in the banking sector. It’s a fully contextualized data foundation that enables the granular visualization of processes from end-to-end, allowing banks to peel away the wrappings which obscure the opportunities to optimize.

With this three-dimensional visibility, banks can see process performance in real-time, and use this data to inform their ongoing digital transformation efforts, at every step.

Want to take a closer look at how process mining can ensure the success of your digital transformation initiative? Download Process Intelligence for Banking: The Ultimate Guide.