January 29, 2005

From the customer's view, the financial services industry appears to be embracing digital technology. Each day, more and more people sign up for online banking, pay bills at electronic storefronts and even apply for mortgages and home equity loans online.

In the financial institution back office, data warehousing, data convergence and other enterprise tools are helping institutions gain control of the voluminous data they hold on customers and accounts.

Digital solutions are indeed spreading throughout the financial services industry. Yet, between the customer and the data stores, paper and manual processes continue to rule. From the knee-to-knee encounter with a customer applying for a loan, to changing beneficiaries on an insurance policy, to arranging artifacts in compliance with the know-your-customer provisions of the USA PATRIOT Act, paper documents handled by human beings remain integral to financial processes. Even after the flurry of "e" activity that began in the late '90s, institutions focused on Web strategies on the front end and data access in the back office have continued to "drop paper" in myriad middle-office manual business processes.

As evidence of this, Gartner Dataquest forecasts double-digit licensing growth over the next four years for tools such as content and document management and collaboration software. Financial institutions recognize the need to bring better controls, standardization, consistency and measurement to their business processes.

Yet, enterprises are implementing these solutions in isolation, both from one another and within the organization. The real value of these tools comes from the potential of creating a highly cohesive, yet loosely coupled, structure.

Digitization is such a structure. Digitization formalizes, through technology, the business processes, content and associated metadata required to serve customers and support good business decisions. It leverages a services-oriented architecture to create a more nimble business infrastructure that provides critical linkages, among the customer, the back office and emerging technologies.

The Road to Digitization

Recently, institutions have begun deploying the new tools emerging for business process management (BPM), workflow, collaboration, and document and content management. Too often, however, these point solutions fail to deliver the hoped-for benefits. For example, a document management solution might store documents in an organized way, but if a global deal team requires distribution of a stored document, the solution would not have the "push" capabilities to deliver it.

Similarly, a BPM tool can manage highly structured information that exists within current systems. Unfortunately, businesses operate on unstructured data emerging from person-to-person collaboration, instant messaging, e-mail, and paper and electronic documents. As a result, most business processes are merely human layers atop siloed applications that provide the facade of a seamless end-to-end process.

Few organizations have actually institutionalized business processes through a software infrastructure, instead relying on people to figure it out. Digitization can bring these and other technologies together in a suite - or digitization stack - that captures and manifests the way the institution operates today. At the same time, it supports the ability to dynamically reconfigure systems and information at a moment's notice to implement new business processes in specific contexts, such as a new product or new customer.

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