Process Mining in Financial Services
in Learning | PAFnow

Process Mining in the Financial Services sector

The road to lean and effective processes

Authors: Katharina Laumann, Content Manager and Editor at PAF &
Franz Kreuzer, Project Manager, Emporias Management Consulting GmbH & Co. KG

Digitization and the associated fact that customers can find information more and more quickly are pushing financial service providers to make their processes leaner and more effective in order to continue to survive in the face of increased competition. The speed and efficiency of workflows - from customer order processing to billing and quality assurance to risk management - is now the deciding factor between success and failure.

But which processes hold the key to optimized workflows? Which areas could be automated and how can a high ROI be achieved? The answers to these questions are provided by Process Mining - the key technology for lean processes and a comprehensive digitization strategy.

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What is Process Mining?

Process Mining uses data that is generated from digital business processes and documented in so-called event logs. Process Mining tools visualize this data and map the entire end-to-end process including all deviations. This enables a detailed process analysis and identifies bottlenecks, waste, rework as well as general optimization and automation potential. Companies thus obtain an overview of all internal processes and can identify the greatest potential for improvement.

For banks in particular, it is important to understand how processes work and are interconnected. Even in the long term, financial institutions will continue to have internal processes that require human intervention. Optimizing these manual processes in combination with targeted automation is the biggest challenge for financial service providers.

Process Mining can help them to achieve process transparency and realize a variety of benefits, such as:

  • Process optimization for leaner processes, lower process costs, and higher productivity
  • Compliance analysis and monitoring
  • Change management
  • Effective collaboration across departments

Use Case: Process Mining in the Credit Application Process

An exemplary Process Mining use case is the credit application process. Here, the first step is to create complete process transparency by displaying the actual process flows in all existing variants in the Process Explorer.

process discovery pafnow audit edition
The PAFnow Process Explorer visualizes your business process automatically in a process flow

First important insights are usually already gained here. For example, it becomes immediately apparent at which point in the process flow loops occur (for example, if the credit application has to be returned to the market after submission due to missing or incorrect information). In addition, the newly gained transparency can be used to identify deviations from a best practice or target process model.

It is important that the best practice process for each product category is modeled or defined in advance based on the process data.

conformance check pafnow audit edition
Compare your process variants with the automatically generated conformance model on the PAFnow conformance check page

By subsequently reducing deviations from the best practice process, it is possible both to avoid the extra time associated with the additional steps and to advance process standardization. A suitable lever for this is the standardization and modularization of the product range to avoid high-cost individual solutions, especially in the private customer sector.

In addition, the lead times of the overall process can be broken down to process step level and differentiated into processing and idle times, so that the minimum and maximum processing times become visible alongside average processing times.
This is helpful because high fluctuations in processing times under the same conditions indicate a high degree of individuality in processing by individual employees and provide further indications of potential for standardization. A short processing time until loan approval is a decisive competitive advantage, especially in the area of mortgage financing.

What is important is to proceed using AI-powered Root Cause Analysis to identify various root causes (e.g., analysis of loops, long wait times of individual credit applications, long overall processing times, etc.), which is particularly helpful for product features, clients with higher requirements and complexity, or processing of credit applications.

Why Process Mining in Power BI?

Process Mining provides transparency and uncovers real potential for improvement. Nevertheless, the entry hurdle for many users is often high and the path from the first analysis to the implementation of the acquired findings is long. To get started with Process Mining as quickly as possible and to set improvement measures in motion, it is advisable to use a solution that integrates into existing and known infrastructures (databases, programs, applications).

What exactly does that mean?

There are two types of Process Mining solutions.

First: so-called isolated applications that are deployed as stand-alone solutions.

Second: integrated Process Mining tools, which extend existing infrastructures with Process Mining. Since the digital infrastructure is already in place for integrated tools and users do not have to get used to new user interfaces, the costs for implementation and maintenance as well as administration or training are lower and training times are significantly shorter.

Microsoft’s Office 365 is the world’s most widely used office suite. With Microsoft’s Power Platform, it offers everything that companies need for successful digitization and automation. At the same time, it is extremely easy to use, because Microsoft relies on simple user interfaces that deliver outstanding results even without programming knowledge.

By adding Process Mining with PAFnow to Office 365, organizations gain more advanced analytics, data sources and other tools to drive direct business process improvement actions and collaborative work.

In conclusion

When done correctly, Process Mining not only creates transparency, but also generates real value for financial services providers by exposing process improvement opportunities. The combined expertise of EMPORIAS and PAF provides clients with expert knowledge of industry challenges and the best ways to address them, combined with a Process Mining solution that is easy to use and enables direct action.

Contact us

If you have any questions or are interested in more information, please feel free to contact us via the email address below. Our experts are looking forward to hearing from you.

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PAF: Katharina Laumann katharina.laumann@pafnow.com
Emporias: Franz Kreuzer franz.kreuzer@emporias.de