The purpose of this paper is to give an insight into the ways in which business process management (BPM) can be used to generate efficiency and service enhancements in UK financial services companies. The paper is based on HML’s own experience of using BPM over the course of the past 4 years and includes details of a credit management project (CREWS), in association with IBM. The successful implementation of CREWS has resulted in HML being shortlisted for a global award for BPM excellence, alongside organisationssuch as Toyota, Audi and the US Navy.

1. An HML White Paper: Business
Process Management
Generating efficiency and service
improvements in financial services

2. CONTENTS ABOUT THIS PAPER
Page 2: About this
The purpose of this paper is to give an insight into the ways in which
paper
business process management (BPM) can be used to generate efficiency
and service enhancements in UK financial services companies.
Page 3: Introduction
The paper is based on HML’s own experience of using BPM over the
Page 4: The challenge course of the past 4 years and includes details of a credit management
facing financial services project (CREWS), in association with IBM.
Page 5: The solution: The successful implementation of CREWS has resulted in HML being
Business Process shortlisted for a global award for BPM excellence, alongside
organisations such as Toyota, Audi and the US Navy.
Management
Page 6-8: BPM in
action: CREWS
“Introducing BPM has allowed HML to improve processes that have a
Page 8: What next for
direct impact on our clients. Applying BPM to the CREWS process for
BPM? example has significantly reduced the volume of manual tasks at a crucial
stage of the pre-litigation process. In turn, it has quickened the process,
Page 9: Contact details reduced operational risk by limiting the scope for manual error and
allowed HML’s consultants to spend more time communicating with
clients’ customers to deliver the kind of experience our clients desire.
“Furthermore, when applying BPM, we have designed it with the flexibility
to comfortably absorb change, so clients have control over how their work
is administered, now and in the future.”
Ian Cornelius, Commercial Director, HML
© HML 2012. All rights reserved. 2

3. INTRODUCTION
The objective
behind BPM is to •Business Process Management (BPM) is not a new technique. It’s
maximise the history stretches back to the early 20th century when American engineer
efficiency and cost Frederick Winslow Taylor’s management theories were first published.
effectiveness of
processes within an •BPM is simply a way of analysing and then optimising processes which
organisation, are present in any organisation. These can be either production or
administrative processes.
resulting in faster
processing,
•The objective behind BPM is to maximise the efficiency and cost
reduced wastage
effectiveness of processes within an organisation, resulting in faster
and re-work, higher processing, reduced wastage and re-work, higher and more consistent
and more quality output and lower production costs.
consistent quality
output and lower •Most BPM projects involve the following key steps:
production costs.
- Analysis
- Re-design and modeling
- Implementation
- Monitoring
- Management
- Automation
•BPM is not a one-off exercise. It involves the continuous analysis and
evaluation of a process, so that it can be enhanced and improved on an
ongoing basis.
•BPM started to establish itself in the financial services industry in the
1980s, when computer and image scanning technology was first
deployed to improve business processes.
•The precursor to BPM was ‘workflow’ (the person-to-person routing of
scanned documents through a pre-determined process).
•Although BPM is well understood and its benefits have been realised for
many years in manufacturing, the UK financial services market has not
yet fully embraced this methodology.
© HML 2012. All rights reserved. 3

4. THE CHALLENGE FACING FINANCIAL
SERVICES
A number of
existing •The UK financial services industry has undergone a period of radical
administrative change following the onset of the credit-crunch. Banks and building
processes are societies are facing a number of challenges including the need to:
labour intensive
and depend on -restructure their balance sheets
manual -rebuild their capital positions
intervention. Not -reduce their cost bases and restructure their businesses so that
only is this slow they are ‘right-sized’ for slower markets
and expensive, but - improve operational efficiency and ensure the delivery of a high
quality service
it also makes it
- be able to respond to new market opportunities as they arise
difficult to deliver a
consistently high
•The sector also has to accommodate the constantly changing
quality service. requirements of the regulatory regime in which it operates. For example,
the UK mortgage market is already heavily regulated but will nonetheless
have to implement the requirements of the Mortgage Market Review.
•Many banks and building societies use legacy computer systems and
operational infrastructures that have been developed piecemeal over the
course of several decades. This makes harmonising existing procedures
very difficult and introducing new processes both expensive and slow.
•A number of existing administrative processes are labour intensive and
depend on manual intervention. Not only is this slow and expensive, but it
also makes it difficult to deliver a consistently high quality service.
•Financial organisations need to improve staff productivity and flexibility
by removing non-value adding processes. By releasing staff from
mundane and repetitive tasks, they can apply their skills to enhancing the
customer experience and also responding to changing business
requirements.
•Banks and building societies are constantly looking for ways to prevent
problems such as arrears from developing, rather than having to respond
to such problems when they do manifest themselves. Faster and more
accurate business processing means management information can be
provided in a timely fashion, which enables preventative measures to be
put in place.
© HML 2012. All rights reserved. 4

5. THE SOLUTION: BUSINESS
PROCESS MANAGEMENT
By streamlining
end-to-end client •BPM enables financial organisations to automate processes such as
management account opening, payment processing, credit management and arrears
processes, financial and possessions management. This not only reduces costs and wasted
institutions are time, but also ensures consistency of delivery.
often able to
reduce human •By streamlining end-to-end client management processes, financial
institutions are often able to reduce human intervention by as much as
intervention by as 80% and be better able to target and serve their customers.
much as 80% and
be better able to •Analysing, mapping, re-engineering and implementing new processes
target and serve means that firms have a clearer understanding of their existing
their customers. procedures and are better able to make future enhancements without
needing to make wholesale changes to existing processes.
•BPM also enables organisations to take a more holistic view of their
client relationships and better understand where issues are likely to arise
and how they can best be resolved.
•BPM systems, once implemented, mean that a financial institution can
react to situations and new business requirements in real time and make
any changes immediately.
•BPM does not, however, provide an overnight solution. To analyse, map
and develop replacement processes takes time (many months) and the
implementation programme may involve a similar period. However, the
benefits, both in terms of improved efficiency and cost savings, can be
great (see results of project CREWS).
•Staff need to be taken on the BPM journey and engage with the process.
Their co-operation is essential and it’s important they understand the
benefits that will accrue from the changes being made.
© HML 2012. All rights reserved. 5

6. "BPM software and
services help
empower BPM IN ACTION: CREWS
organizations to
exceed their
customers' •HML is the UK’s largest specialist mortgage servicer, providing
outsourced mortgage administration services to 50 leading financial
expectations, react institutions. HML operates out of three UK locations: Skipton,
to and anticipate Londonderry and Glasgow. The company was established in 1988 and
shifts in their manages approximately £43bn of mortgage assets and 400,000
marketplace and customer accounts.
keep costs under
control. •In late 2007 HML embarked on its business process management (BPM)
journey to improve, streamline and increase overall control of its credit
management processes, in response to rapidly changing market
“It takes a process conditions and regulatory requirements.
aware organization
to achieve this level •HML’s first BPM initiative resulted in the development of a credit
of agility and HML management workflow system (CREWS), which automated processes in
has raised the bar the firm’s pre-litigation department.
for companies
seeking to •The objective of the CREWS programme was to implement repeatable,
streamline and efficient, consistent credit management processes across HML’s client
accelerate their base. HML worked closely with IBM, providers of the BPM software used
throughout this project.
business
processes. In
•An analysis of existing credit management processes confirmed that
collaboration with HML’s credit management function was heavily focused on manual tasks,
IBM, the CREWS which meant that the costs associated with debt recovery were
project has enabled significant.
HML to deliver an
agile application •HML is a multi-client environment and its BPM toolset includes
that can be approximately 400 business rules and is used by 350 credit management
customized rapidly specialists within the business.
to meet changing
regulations and •By automating non-value adding manual processes such as the
identification and distribution of work items, employees have more time to
requirements." spend with customers resolving issues. This has improved staff morale
and overall engagement within teams. People also have a greater
Phil Gilbert, Vice understanding of how the speed and accuracy of their work impacts on
President, the credit management and arrears process.
Business Process
and Decision •Training for new and existing employees is much easier because
Management, IBM processes are clearly defined, and ‘coaches’ are used to guide
employees through the specific task they are working on.
Software Group.
© HML 2012. All rights reserved. 6

7. BPM IN ACTION: CREWS
The successful
implementation of •Team managers have access to real-time dashboard reporting which
the CREWS project gives an instant view of key data, enabling them to make informed
has resulted in a resource allocation decisions.
cost saving of
£440,000 a year. •With CREWS being the first implementation of BPM within HML, it was
decided to develop a ‘centre of excellence’. This comprised modelers,
developers and testers who followed documented best practice and
upheld strict standards. With this team in place, the subsequent rollout of
the project was easier to deliver on time and within budget.
•HML has fully embraced BPM and sees it as an enabler for further
process change throughout the organisation.
•The successful implementation of the CREWS project has resulted in a
cost saving of £440,000 a year.
•The next phase of CREWS is the implementation of a possessions
project. Based on the experience gained from CREWS, the possessions
project is expected to reduce the processing time for new possessions by
60 per cent. In addition saving a further £200,000 a year by reducing
manual effort.
•The elimination of manual intervention also means improved compliance
reporting and the ability to demonstrate that processes are effective and
in accordance with Financial Services Authority regulations.
•The BPM centre of excellence has improved business support by
answering 90 per cent of queries within 1 hour, comfortably within service
levels.
•The key elements of CREWS includes:
- IBM Business Process Manager (Standard) software.
- HML’s core operating system
- Peripheral HML applications, which handle actions such as
sending-out letters and automatically dialing customers.
•These elements have been fully integrated using Web Services, allowing
each system to focus on what it does best. The systems exchange
information in real time.
© HML 2012. All rights reserved. 7

8. BPM IN ACTION: CREWS
The financial
services industry is •Credit management processes and associated business rules are held
lagging behind on the IBM BPM system in the form of business process definitions,
other industries in allowing users to create and make changes using a graphical interface.
adopting BPM
methodology. As •As a result of the successful implementation of project CREWS, HML
financial institutions has been shortlisted as one of only six European finalists in the
prestigious Global Awards for Excellence in Business Process
look for ways to Management and Workflow.
reduce costs,
increase •The awards, which are in their 18th year, recognise organisations
productivity and around the world which have excelled in implementing innovative
ensure consistency business process solutions.
of service delivery,
BPM will inevitably •Other finalists include Toyota in Spain, Audi in Japan and the US Navy.
become more
common
throughout financial
organisations, both
large and small. WHAT NEXT FOR BPM?
•BPM is a constantly evolving management science and is a journey that
has no defined end-point.
•More sophisticated and integrated technology developments play to
BPM’s strengths and will enable further productivity and cost saving gains
to be made.
•The financial services industry is lagging behind other industries in
adopting BPM methodology. As financial institutions look for ways to
reduce costs, increase productivity and ensure consistency of service
delivery, BPM will inevitably become more common throughout financial
organisations, both large and small.
•BPM is not a ‘passing fad’. It’s based on sound management principles
and proven techniques which deliver tangible benefits.
© HML 2012. All rights reserved. 8

9. For further information
If you would like further information about BPM
and the way in which HML has implemented
project CREWS, contact Paul Swinson,
Programme Manager at HML on (0044)7967
110063.
Further information about HML can be found at
www.hml.co.uk or by phoning 0844 892 2596.
For more information about IBM’s BPM solution,
please call (0044)1475 898688.
© HML 2012. All rights reserved. 9