May 27, 2003

Royal Bank redefines process for delivering historical records, saving money for itself and its customers

Anyone who's had the misfortune of going through a divorce, a tax audit, or even a mortgage application process knows the paperwork nightmare of collecting old financial records. What people don't realize is that it's no cakewalk for banks to provide customers with copies of past statements, either.

Toronto's RBC Royal Bank certainly felt the pain, and has taken steps that are paying off. Not only has the bank deployed a technology-driven process that shrinks the costs and amount of time involved in re-creating bank statements for any of its 12 million customers-a considerable feat in and of itself-but its risk-management and anti-fraud and anti-terrorism units are likely to tap into the system to help them make decisions or gather data in near real-time.

The bank for years charged clients about $30 an hour to re-create statements, and the process would take from one to three weeks. There had to be an easier and less costly way to pull together historic information and present it to customers, and Andy Hanna, Royal Bank's manager of report management and distribution, found it.

Hanna, who spent ten years in IT and ten years on the business side at the bank, chose to deploy an automated Web-based system for accessing archived data that has delivered a 1,200 percent return on investment since it went live in June, he says.

In the past, reconstructing transaction statements went like this: When a client requested back statements for a specific period of time, an agent in Royal Bank's operations service center would dig into various legacy systems for transaction data and cut and paste information into a document. Meanwhile, the everyday data that appeared on statements, such as the customer's address, was being stored by third-party service providers on microfiche, so agents had to find and print out those records. All these documents then went to data-entry clerks, who would input the data into a Microsoft Word template. And, because the bank's customers are both English and French speaking, the document would have to be translated into the appropriate language.

Hanna's biggest challenge was to get that data, about one terabyte, into a centralized location that could be easily accessed by agents. Knowing that many of the divisions collected and stored their own data, Hanna poked around other areas of the bank. He discovered that the marketing department had a data warehouse to monitor, analyze, and record all transactions in order to spot business opportunities. The data warehouse was storing all customer-contact and transaction data-everything that was later duplicated on the mainframe and microfiche systems.

Things fell into place from there, and suddenly the microfiche system was no longer needed. "If we could use all those records of those transactions and create a new Web application to access it, it'd be easy" to re-create statements on the spot, Hanna said.

Hanna and his team called on one of their suppliers, Information Builders, to provide a middleware layer between the marketing department's enterprise data warehouse and the operations agents. WebFocus, Information Builders' business intelligence architecture, provided the integration tools to place a Web interface in front of the user and connect him to the data sources in real time.

Hanna worked with a Royal Bank software developer, Jayem Nolan, for six months to build the Bankbook Reconstruct application, with Hanna creating the business rules and Nolan developing code. Banks use thousands of transaction codes to identify customer activity-such as whether a payment was made with a check or via a funds transfer-so Hanna's team had to work with different bank units to find out which transaction codes would be needed to reconstruct the bankbook.

Also, the marketing department had only two years of data in its enterprise warehouse. Hanna bumped that up to six years, which added a cost of $360,000 for additional storage.

All the data had to be cleansed and tested to assure its integrity before the system could go live. Hanna, who banks at Royal Bank, tested a year's worth of his own transaction data to be on the safe side. Good thing. "There were missing transactions that we had to reinject into the data warehouse, and we had to make modifications in the data collection process to do a better job of data cleansing," Hanna said. For customers who need this data for audits, "it had to be down to the penny."

Now, when customers call in to the operations service center to request a bankbook reconstruction as far back as six years, agents input the dates requested via a Web-based interface, and within as little as 30 seconds they'll have a complete report in an Excel spreadsheet ready to send to the client, who's guaranteed that there are no errors as the process no longer includes manual data transcribing. Translation software automatically handles language difficulties-something that's becoming increasingly important as the bank expands its reach into 66 countries.

Cost savings is estimated at $2 million per year, and it comes from increased efficiency as well as eliminating microfiche costs. Now, RBC customers pay just $5 per reconstructed statement.

"We've passed along our savings to the customer," Hanna said.

The next phase of the effort is to give access to the same data to branch tellers, so clients can simply walk into a bank and receive a spreadsheet on the spot. Hanna hopes to expand the type of data accessible by the interface beyond personal account data, to include credit card statements and more. Plus, he wants to push the service to the Web. He won't do that, however, until he's certain the data can be available 24-by-7 and that it will be secure.

Now other business units are looking at the system to see how they can use the same interface to access data. The risk management department is using the application to make decisions for things like approving credit lines. "They can see from the data whether a customer is hanging out at a casino or is overdrawn for another reason, so they're saving because they're not having to write off loans," Hanna said. "This is huge for them."

The anti-fraud and anti-terrorist division has tapped into the system to comply with government requests that the bank monitor for suspicious activity under anti-money-laundering regulations.

"We get as many as 30,000 information requests and search warrants from different law enforcement agencies that we have to comply with," Hanna said. "Using this application saves time and speeds up the judicial process."

Projects like this are common at banks these days, though institutions throughout the industry are at various stages of completion, said Maggie Scarborough, senior analyst with banking industry research firm Financial Insights. That this project is useful beyond the original statement reconstruction intent is laudable, especially at a time when the banking industry is spending billions on integration projects that will take three to ten years. "This is the ideal-to have information integration and it spawns itself," she said.