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Time to Get Smart When It Comes to Processing

Increases in consumer expectations has led to a demand for smarter processing.


The burgeoning industry term “smart processing” is often applied to systems firms can use to achieve their business objectives in the smartest way possible. Boiled down to its essentials, it’s about creating client value, improving user experiences and at the same time adding scale.

I recently visited a brokerage site to open a custodial account for my daughter’s birthday and was shocked by how manual and time intensive the process still is. To open the account, I first had to print out a 30-page form, complete a laundry list of questions by hand and then drop it off in the mail.

There was nothing on the bottom of the pages that would delineate what kind of form it was, nor any code that might be used for scanning, or for applying any other automated process to speed the entry of the data. By all appearances, it was going to be processed manually before it could be entered into the brokerage’s system.

I can illustrate why this kind of manual processing is a problem using my application for my daughter’s custodial account as an example. When the application arrives, a licensed employee has to approve it by validating that I meet the standards to open the account. They do this based on data I self-reported. Typically, 95 of 100 applications like mine will be approved.

In an ideal, efficient world, this form would be processed without human interaction.

That’s because smart processing can tackle this work faster than humans while also reducing the risk of input errors or other mistakes. The faster loading of customer documents into a company’s systems improves the client experience by giving them quicker access to their accounts, allowing them to use them sooner. They are spared the uncertainty of wondering whether their money has been deposited or the dread of missing an opportunity before they can put it to work. At the same time, the expense of processing the data goes down, creating savings that can lead to greater profitability or lower costs to customers.

Given the high approval rate and the relatively rote procedure, this is a good opportunity to introduce smart processing. These forms could be examined and processed by a rules engine, which is a term for a pluggable software system that executes functions based on parameters that can be modified without reprogramming the underlying software. Customer applications that meet the standards – the vast majority – can be quickly approved. Applications flagged by the rules engine for additional review can be separated for a person to look at. This eliminates having a person green-light batches of cookie-cutter approvals, instead devoting effort to addressing problems with the exceptions. It creates scale from a processing perspective and improves the client experience. Firms can now have accounts opening in real-time, with the ability to handle more clients and activity with the same resources. The variable expense per activity will fall.

Smart processing can improve operations in any area where a company has to take in and process large quantities of information, or any area where there is a reconciliation or approval process. We see its value when we think of where it doesn’t exist. One area is health care. Look at insurance claim forms that you have to fill out for out-of-network treatment. It’s a radically difficult process.

It’s not just about taking in information, though. Smart processing can also refer to changing a customer-facing rule about failed login attempts. For one large discount broker, simply increasing the number of failed attempts before requiring a new password to five from three, we were able to improve customer experience while also saving the company money.

The expectation of customers these days is that things should be instantaneous and understandable. One reason for that is Amazon. Whether it has a process formally known as smart processing or not, Amazon’s management of the customer experience is a benchmark for what smart processing can achieve. Amazon looks at the client experience as crucial to its success. I wanted to buy water filters, so I went to Amazon, put them in my cart, clicked to purchase and they arrived in two days. After I made the purchase I didn’t give it another thought, because Amazon is that reliable.

To make that happen requires mapping several technical processes, from payment validation to sending the order where it can be shipped fastest, to delivery. It’s so easy for the customer that one rarely appreciates how much the simplicity of the process removes barriers to using it again and again.

Generally speaking, the issue of risk is with the compliance of rules engines with government rules and regulations. That means you need to be able to adjust the rules engines so that they reflect an adherence to any change in regulations and compliance standards.

The answer to these problems comes from the thoughtful harnessing of related technologies to make the rules engines perform better. With compliance, artificial intelligence and machine learning can help keep the engines on pace with the law.

Risk management has scale effects, as well, because risk is being assessed based on the quality of the rules you write, rather than the rightness and rigor of each individual decision-making coming from a person performing these tasks.

Governance and compliance are crucial to making these rules work. And the rules, if written right, will likely have fewer errors. And auditors will likely be looking at the applications that are rejected as exceptions rather than the bulk of those approved, making for a speedier process.

Smart processing is the application of machines to handle simple tasks in order to free people to handle more complex problems. Our clients are continually driving us to help them do their work more efficiently, and this technology can lead to precisely the kind of experience they demand.

Firms should continually identify and prioritize opportunities for smart processing, in a way that places the customer journey at the center and aligns with the firm’s core strategic objectives. Employees at every level of the organization should be empowered to look for ways to apply smart processing techniques, but particularly those who are closest to a given process and understand it best.

Implementing smart processing can be complex. In the early stages, working with external providers with expertise in smart processing technologies and techniques can help firms become familiar with core concepts and gain a blueprint for scaling smart processing throughout their organization as it becomes part of their DNA. Firms should also ask their technology providers whether they are building smart processing into the solutions, platforms and outsourced services they provide.

In an era where consumers and clients increasingly expect a seamless user experience, ignoring smart processing can result in high costs, unnecessary friction in the user journey and the firm becoming irrelevant as clients switch to more nimble competitors.

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