The Evolution of Business Process Modelling in the AI Era
Introduction
In today’s rapidly evolving financial landscape, Business Process Management (BPM) has emerged as a critical driver of operational excellence and competitive advantage. Financial services firms are grappling with increasing regulatory complexities, heightened customer expectations, and the relentless pace of technological change. In this context, BPM offers a systematic approach to streamline processes, enhance efficiency, and foster innovation. By effectively managing and optimising business processes, financial institutions can not only improve their operational performance but also adapt swiftly to market dynamics, ensuring sustained growth and profitability.
Process Diagrams are NOT Process Models
Many firms make a limited effort to draw process diagrams in PowerPoint and Visio; PowerPoint, at least, is available for everyone to use in every firm. But the sheer volume of processes that need modelling overwhelms firms trying to do the right thing. There is often no agreed standard for capturing processes. BPMN (Business Process Model and Notation) is commonly used but can be arcane and too detailed. Flowchart formats are also used. But nothing is ever consistent.
A diagram is just a drawing; boxes, lines, and words on a page. A model takes those boxes, lines, and words and adds meaning, context, and relationships. A named activity in one process can be reused in another process. In a process diagram, this is just a copy with no link between the two. In a process model, the model knows that these two activities are the same thing.
Modelling takes a little more effort as you need to choose a modelling tool and standards and set up governance around your process models. But the small amount of time spent doing this will reap huge short and long-term benefits once you start modelling for real.
The Importance of BPM
According to a report by Gartner, organisations that implement BPM effectively can achieve a 20-30% improvement in process efficiency, highlighting its transformative potential in the financial sector. However, many institutions only scratch the surface by stopping at process modelling, missing out on the broader benefits of a fully optimised process landscape.
The benefits of process modelling include:
1️⃣ Transparency: By visualising processes, stakeholders gain a clear understanding of how various activities interconnect, facilitating better communication and collaboration across departments.
2️⃣ Optimisation: Process models help identify inefficiencies, redundancies, and bottlenecks, enabling organisations to implement targeted improvements that enhance performance and reduce costs.
3️⃣ Standardisation: Process modelling ensures consistency in operations, which is essential for maintaining quality and compliance in financial services.
4️⃣ Compliance: Detailed process documentation ensures that all activities adhere to regulatory standards and internal policies, reducing the risk of non-compliance and associated penalties.
5️⃣ Better Decision-Making: Comprehensive process analysis provides valuable insights that inform strategic planning and operational decisions, supporting data-driven management practices.
6️⃣ Training and Onboarding: Well-defined processes make it easier to train new employees and integrate them into the organisation. Some BPM tools enable you to create detailed procedures and manuals based on your existing processes.
7️⃣ Workflow: Once you have your processes modelled, you can use them to execute your processes in a workflow. A workflow controls how the process is executed by your teams. Workflows track metrics on process performance to provide opportunities for improvement based on actual results.
In our work with several financial institutions on operating models and process definition, we consistently observe a recurring challenge: many organisations miss out on realising the next significant wave of benefits from process optimisation. Their efforts often stall in debates over which vendor to select for process mapping and how to implement future processes. This approach limits their ability to unlock the full potential of process improvements. The integration of emerging technologies such as Artificial Intelligence (AI), low-code platforms, and process mining can be transformative, enabling institutions to break free from this cycle and drive more substantial, long-term value.
The Future of BPM – Unlocking Potential with Emerging Technologies
Artificial Intelligence (AI) is transforming BPM by introducing advanced capabilities for automation, optimisation, and decision-making. AI encompasses a range of technologies, including machine learning (ML), natural language processing (NLP), and robotic process automation (RPA), that enhance BPM systems’ ability to manage and analyse complex, data-intensive tasks.
AI in BPM goes beyond simple automation to include intelligent process automation (IPA), which combines AI with traditional automation to handle more complex tasks. For instance, AI can analyse vast amounts of data to identify inefficiencies and patterns, predict outcomes, and generate actionable insights. This enables financial services firms to streamline operations, reduce manual intervention, and enhance decision-making processes. By integrating AI, organisations can achieve improved process efficiency, enhanced customer experiences, and better compliance.
Process Simulation
Process simulation involves creating virtual models of business processes to predict their performance under various scenarios. AI enhances process simulation by enabling more sophisticated modelling and forecasting. AI algorithms can simulate complex process interactions, predict potential bottlenecks, and evaluate the impact of different changes in real-time.
This proactive approach helps organisations anticipate challenges and make data-driven decisions before implementing changes. By leveraging AI for process simulation, financial services firms can test and refine processes in a controlled environment, leading to more effective and resilient operational strategies.
Process Mining
Process mining utilises data from event logs to visualise and analyse the actual flow of business processes. AI-powered process mining provides deeper insights by analysing large volumes of data to identify inefficiencies, compliance issues, and areas for improvement.
This technology allows organisations to uncover hidden patterns and deviations from standard procedures, leading to more informed and targeted process optimisations. With a projected compound annual growth rate of around 40% from 2022 to 2028, process mining will play a crucial role in enhancing process visibility and performance.
Intelligent Automation
Intelligent automation combines technologies such as robotic process automation (RPA), AI, machine learning (ML), and business process management (BPM) to enhance tasks and decision-making across organisations. By integrating AI with RPA, businesses can automate not only routine, repetitive tasks but also more complex processes such as fraud detection, customer onboarding, and regulatory compliance, all in real time. This reduces manual effort, minimises errors, and improves operational efficiency, enabling employees to focus on more strategic activities. As these technologies continue to evolve, intelligent automation will drive greater value, adaptability, and sustained growth for organisations.
Case Studies
Case Study 1: HSBC Enhances Customer Service with AI and BPM
A leading global bank, HSBC, integrated AI-powered chatbots into its customer service processes through a robust BPM framework. This integration resulted in a 40% reduction in response time and a 25% increase in customer satisfaction scores. HSBC also utilised process modelling to streamline its loan approval process, reducing approval times from weeks to days and improving overall operational efficiency. (Source: HSBC Annual Report 2021, Deloitte Insights on AI in Financial Services)
Case Study 2: Process Mining at Deutsche Bank
Deutsche Bank leveraged process mining technology to optimise its operational processes across various business units. The bank used Celonis, a leading process mining tool, to analyse millions of transaction records and uncover inefficiencies in their processes. By visualising and understanding their process flows in real-time, Deutsche Bank identified bottlenecks and deviations from standard procedures, leading to significant improvements in efficiency and compliance. For instance, they were able to reduce loan processing times by 15% and improve overall process conformance, resulting in enhanced customer satisfaction and reduced operational costs. (Source: Celonis Implementation at Deutsche Bank)
Case Study 3: Insurance Firm Streamlines Claims Processing with Low-Code Platforms
An international insurance company, Zurich Insurance Group, adopted a BPM solution to revamp its claims processing system. The implementation enabled rapid development and deployment of customised workflows, reducing processing times by 50% and decreasing operational costs by 30%. The enhanced process transparency and automation also led to improved compliance and audit readiness. (Source: Forrester Research on Low-Code Platforms, Zurich Insurance Case Study by Appian)
Actionable Steps for Realising the Opportunity with BPM
Financial services firms looking to adopt and enhance BPM should consider the following actionable steps:
1️⃣ Start Small: Don’t try to model everything. Pick one important process that you know is not working. Think about the process at a high-level to begin with. Once you have the basic process modelled, you can drill down into more detail. Then, you can expand to other high priority areas.
2️⃣ Work Top-Down: In the process you have chosen, what are the 5-7 most important activities that happen in the process? Once you have captured those in your model. Pick each one of those 5-7 and go into the next level of detail.
3️⃣ Define Clear Objectives and KPIs: Establish specific goals for BPM initiatives aligned with overall business strategy and identify key performance indicators to measure success.
4️⃣ Conduct a Comprehensive Process Audit: Begin by mapping and analysing existing processes to identify areas for improvement and prioritise initiatives based on impact and feasibility.
5️⃣ Leverage Appropriate Technologies: Select and implement technologies such as AI, low-code platforms, and cloud solutions that align with organisational needs and capabilities.
6️⃣ Seed with a Skilled Team: Invest in training and developing a team skilled in BPM methodologies and technologies with in-house and partners, fostering a culture of continuous improvement and innovation.
7️⃣ Adopt an Iterative Development Approach: Embrace rapid prototyping and iterative development to quickly deliver initial versions of new processes. Get these processes into use early, gathering feedback from real-world application, and then refine them based on this feedback. This approach accelerates time to value and ensures that solutions are continuously improved in response to actual user needs and evolving business conditions.
8️⃣ Monitor and Refine Continuously: Regularly review process performance against KPIs and make necessary adjustments to sustain and enhance improvements over time.
Conclusion
Business Process Management is not merely a tool for operational efficiency; it is a strategic enabler that empowers financial services firms to navigate complexity, embrace innovation, and achieve sustained competitive advantage. By focusing on the next wave of opportunity with BPM, financial institutions can optimise their processes, integrate emerging technologies, and adapt to the ever-changing market dynamics.
For those interested in delving deeper, we offer access to the results of our extensive analysis of 100 BPM solutions. Our evaluation covered key aspects such as capabilities, technical functionality, and product architecture.
To discuss these insights further or to understand how they can be applied to your organisation, please contact Leading Point co-founder and process specialist Thush, who is available to provide expert guidance and tailored recommendations.
References and Further Reading
1️⃣ “Business Process Management: Concepts, Languages, Architectures” by Mathias Weske
2️⃣ Gartner Research Reports on BPM and Emerging Technologies
3️⃣ “The Ultimate Guide to Business Process Management” by BPMInstitute.org
4️⃣ Deloitte’s Insights on “Transforming Financial Services through BPM”
5️⃣ “Process Mining: Data Science in Action” by Wil van der Aalst
Thushan Kumaraswamy
