For many years, financial companies have been digitalizing their business processes. They often fail at the same point: where complex decisions have to be made. We explain the role of decision automation in digital banking and show, how a new standard supports its implementation.
The Complex World of the Financial Industry
Everyone has seen the popular “Apply now” button on retail bank loan websites. Users quickly fill out the web form, submit their data, and wait for the result – only to be disappointed: “You will receive the documents by mail in a few days.” This is not a state-of-the-art, customer-oriented process, and certainly not a digital one. However, the bulk of bank and insurance company business processes are in a similar state. Why is the financial industry still struggling with truly digital end-to-end processes?
The answer is that certain process steps are simply too complex, business-critical, and risky for common methods of digital transformation. One example is the typical consumer-sector lending process, which can include hundreds of decision rules. These rules assess customer data and calculate credit default probabilities and interest rates while ensuring compliance with regulatory requirements. The bank client remains unaware of all these highly complex business decisions, which are made in the background, when he or she clicks a button on the bank’s website.
Why Conventional Approaches Fail
In many institutes, the complex, specialized decision-making logic is “digitized” by means of spreadsheets, in the form of application code or in BPMN models. A quick look at these methods reveals deficits.
Spreadsheet tools like Microsoft Excel are widely used decision-making systems. They help to assess complex risks, calculate prices and conditions or simply serve as a “look-up table” in the process. However, they are not suitable for large transaction volumes and in particular for integration into an automated process.
Decisions can be programmed directly into applications for automation. However, complex decisions usually require the inclusion of departments that are difficult to cope with the often confusing code constructs. Redundant implementations and different programming languages increase overhead and make maintaining logic a cumbersome and error-prone process. Changes are therefore difficult and from a compliance perspective, the method is difficult to understand.
Simple, static decisions can be implemented with the Business Process Model and Notation (BPMN). However, for complex decisions and technical logic, the standard for business processes is not designed (but for process logic). A “misappropriation” usually leads to confusing, overpowering process models. This has also been recognized by the Object Management Group (OMG®). The consortium developing the BPMN standard has therefore launched a new standard: the Decision Model and Notation (DMN).
Digital Transformation Means Automation
With Decision Management and the DMN (Decision Model and Notation) standard, the Object Management Group has defined a new standard to address this gap. The DMN standard unifies and simplifies the modeling, implementation, and automation of decisions, enabling digital end-to-end processes. Instead of optimizing internal workflows, companies optimize and automate their decision-making. This allows them to focus on their customers who expect real-time responses in the digital world.