The Future of Loan Automation: How Camunda is Shaping Banking Innovation

While business process automation in the banking industry is on the rise, financial institutions are struggling to find the most efficient path to the desired goal. Learn helpful tips on impactful automation in banking, and examine the loan origination use case with Camunda to better understand how true end-to-end automation should look.  

Table of Content

What Is Camunda and Why Do Banks Love It?

While there is an abundance of tools designed for automation in financial services, many of them offer nothing else than point solutions aimed at automating separate tasks within more complex workflows. Camunda is a robust process orchestration platform that exercises quite another approach to automation in the banking industry. Instead of adding to haphazard automation efforts, it serves to get those disparate solutions to act together in streamlined business processes, thus ensuring true end-to-end automation with unparalleled visibility into workflows and endpoints.

As a result, leading banks, such as Morgan Stanley, Goldman Sachs, Truist, and NatWest, rely on Camunda process orchestration when executing their digital transformation strategies. They appreciate the Camunda platform for:

• User-friendly way to model banking processes. Users of different backgrounds can build complex workflows in Camunda using easy-to-grasp diagrams based on the universally recognized Business Process Model and Notation (BPMN) standard.
• Better collaboration between business and IT. As business stakeholders can effortlessly read BPMN models, their communication with IT teams becomes simpler and more effective, resulting in better workflow designs and faster development cycles.
• More opportunities for business process improvements. Since graphical workflow models provide a clear view of business processes, they help to reveal redundancies and other inefficiencies for better workflow optimization and smarter automation in banking and finance. 
• Automated decisions built into business processes. The Camunda software allows business analysts to easily model rules for business process execution with the open and widely adopted Decision Model and Notation (DMN) standard.
• High-performance Zeebe engine. The BPMN and DMN models are simple to execute with the powerful Camunda workflow engine, which doesn’t depend on an external central database and can distribute processing across a cluster of machines for extremely high throughput.  
• Scalable infrastructure. By adding new nodes to Camunda clusters, a banking automation system can scale up to handle higher workloads without the need to supply machines with more processing power. 
• Open architecture. Camunda is an open-source platform that enables developers to use their preferred programming languages and tech stack, thus removing the bottlenecks associated with proprietary standards.    
• Seamless integrations. Camunda can work as a centralized platform that seamlessly connects all kinds of banking automation software, microservices, corporate systems, business applications, IoT devices, and even people with the help of out-of-the-box and custom connectors, APIs, and built-in interfaces. 

Besides, the end-to-end Camunda process automation helps to ensure compliance with PSD2, Basel III, SOX, and other regulations and simplifies auditing and reporting.  

How Camunda Orchestrates Loan Automation in Banking

To better understand how Camunda differs from other solutions for business process automation in banking, let’s look into a standard loan workflow and examine the platform’s components that ensure smooth coordination across people, systems, and devices involved in loan origination. 

• Easy to design user task forms. Camunda features an intuitive form editor enabling its users to quickly and easily design and configure forms for human tasks. The forms can be linked to a BPMN diagram within a loan workflow, for example, to initiate loan processing by entering the applicant’s data received with the corresponding request through any channel. You can configure the forms to collect applicants’ data, give work instructions to bank employees, or let them enter some information manually.
• Ready-to-use interface for human tasks. The Camunda platform offers a built-in user-friendly interface for tasks that need human interaction, such as reviewing a loan application. You can configure the Tasklist to send notifications to bank employees involved in loan processing via email, SMS, or other channels. Apart from notifying people about tasks assigned to them, Camunda can trigger messages informing bank workers about certain milestones or task completion.
• Reusable and flexible DMN tables. You can build decision tables specifying minimal credit score, points, down payment, or debt-to-income ratio required for the loan to be approved as well as other business rules applicable to loan processing. Using DMN tables allows you to adapt the whole workflow to changes in business rules without alternating and redeploying the process model.
• Process-boosting parallel gateways. Parallel processing available in the Camunda software allows splitting tasks for faster execution. For example, Camunda can run several checks simultaneously to verify information provided by the applicant and complete the processing faster, thus reducing the turnaround time.  
• Helpful timers. You can set up timers to trigger various events, including sending reminders about uncompleted tasks to bank employees or routing time-sensitive assignments to their supervisors to avoid missing deadlines specified in service-level agreements. Thus, you can gain a competitive edge by minimizing SLAs while providing an excellent customer experience by meeting the set loan processing timeline.       
• Event-triggering messages. This feature comes in handy when your loan processing logic requires receiving a certain message for the process to proceed. For example, a loan application cannot move to the next stage until all documents, such as an ID or an income verification letter, are submitted. But once the papers are received, the corresponding message can initiate further document processing, including with the use of RPA bots. 
• Service tasks. This feature is used when your workflow reaches a certain stage where external services need to be involved to perform a task for loan processing. Specifically, if it is required to check the applicant’s portfolio in your CRM system, you can create the respective service task and receive the information necessary for further processing within your BPMN model.   
• Out-of-the-box connectors. Connectors ensure fast and smooth integrations with external systems used in banking process automation. Camunda offers a wide choice of reusable connectors for popular business tools, AI and ML services, data sources, cloud computing platforms, and protocols. Namely, if you need to perform a credit score check with a credit bureau, you create a service task for the ready-for-use REST Connector, and the score is delivered to your loan processing workflow automatically.   
• Continuous monitoring and optimization. The Camunda Operate tool gives access to real-time dashboards showing how your banking process is running and flagging issues, which can then be resolved on the fly. Camunda Optimize delivers data-driven insights into your loan processing by packing both real-time and historical data into valuable reports and visualizations. Alternatively, you can extract data collected by the Camunda workflow engine to an external data warehouse to use it with the business intelligence tool of your choice.        

This breakdown clearly shows Camunda’s advantages over disconnected solutions, as the platform guides the loan workflow across multiple endpoints from the initial request to loan origination with ultimate visibility and great opportunities for troubleshooting and process optimization.   

Why Use Camunda: Getting Ready for Changes

As regulatory authorities worldwide keep adopting new rules and regulations aimed at adding the banking sector agility, resilience, transparency, and security, these changes require even a higher degree of automation in banking and financial services. Namely, the upcoming settlement cycles and the migration to ISO 20022 require banks to optimize their processes, update their infrastructure, and train employees to handle the increased volume and speed of transactions. Additionally, banks will need to adapt to new compliance and reporting procedures and conduct internal and external testing to implement ISO 20022.

End-to-end financial services automation can be a game-changer since it helps to streamline processes, reduce human errors, improve data validation, maximize operational efficiency, and maintain detailed audit trails. For example, a white paper for the settlement process by industry associations recommends identifying key drivers for settlement fails, re-engineering certain processes to eliminate redundancies and minimize manual efforts, and developing an automated and standardized straight-through settlement processing. Moreover, while helping banks prepare for the changes, automation in banking operations enables financial institutions to reap more benefits from the new rulings. Specifically, when coupled with data-rich ISO 20022 messaging and ML algorithms, automation promises to produce stark improvements in fraud detection and prevention, cash flow routing and management, decision-making, and customer segmentation and personalized service.

Camunda business process management allows financial institutions to easily scale automation and promptly adapt to changes in regulations and market dynamics by:

• aligning fusion teams on business and technical requirements through easily readable BPMN and DMN standards, which results in faster solution delivery;
• coordinating diverse endpoints, including advanced technologies, legacy systems, and humans, which ensures end-to-end automation customized to specific business needs; 
• integrating with AI, ML, and other technologies capable of improving operational efficiency and resilience while reducing errors and exceptions;
• providing scalable infrastructure that can handle high volumes of trades at low latencies and maintain resilience in case of disruption;
• offering an open, language-agnostic platform that can be painlessly connected to an existing technology stack, thus eliminating all the challenges of vendor lock-in.

As a matter of fact, in a survey conducted by Regina Corso Consulting, 64% of the IT decision-makers, business leaders, and software architects admitted that proprietary languages/tooling presented one of the biggest challenges to business process automation by locking process design, with another 58% pointing to a disconnect between IT and business teams — while both of the obstacles can be removed by Camunda orchestration.  

What Is Camunda Used for in Banking

The use of Camunda in banking is not limited to the loan workflow. Actually, one of the main Camunda’s benefits is its fitness for coordination of complex business processes, which is just the case with bank workflows, usually passing through many people and systems. Along with other technologies widely used in banking process automation nowadays, such as AI, RPA, ML, and OCR, Camunda simplifies, accelerates, and makes more efficient the following workflows:

• accounts payable
• customer onboarding and KYC
• account opening and closure
• debt collection
• mortgage processing
• deposit handling
• payment processing
• customer self-service
• customer support
• compliance reporting
• credit card application processing
• fraud detection
• AML
• financial reporting and analysis 

Actually, the user-friendliness and flexibility of Camunda fosters process automation in the banking sector, as all it takes to get the ball rolling is to pick one of the workflows where ROI can be clearly proven, design a minimum viable product automating the process end-to-end, measure the results, appreciate the process manageability and transparency, and see business users and IT teams jumping on the bandwagon. 

Automation in Banking: 6 Tips on How to Do It Right

With the prediction for the global banking process automation market to grow from $3 billion in 2022 to over 19 billion in 2032, there is definitely a trend making banks invest heavily in digital solutions that can replace manual work with software running monotonous and time-consuming tasks. However, despite numerous advantages of automation in the banking sector, such as cost-cutting, error reduction, improved customer experience, and increased revenue, many financial institutions are still struggling with their automation journey. Here are 6 tips that can make automation for banking simpler and more efficient:

• Spot automation opportunities. Often, banks rely on their IT teams hoping they will continuously generate and promote automation initiatives to successfully lead the organizations to digital transformation. However, IT departments may just lack a clear understanding of banking processes and thus miss prospective automation opportunities. Engaging business users along with technical people and mapping a business process with a language both parties can easily understand would be a much more fruitful approach to automation in the banking sector.
• Improve business processes. If asked what automation in banking is, many decision-makers are likely to think about simply replacing manual tasks with digital processing, thus overlooking the chance to add value to their automation efforts by enhancing the whole workflow. Clearly designed workflow models help financial institutions rethink their existing processes and find ways to streamline them, maximizing efficiencies and arriving at higher ROI.  
• Establish a Center of Excellence (CoE). According to Deloitte’s survey, a lack of clear vision and resistance to changes are among the top barriers preventing organizations from unlocking their full automation potential. To overcome these and many other obstacles, banks can establish CoEs involving people from different departments and serving as a hub for sharing knowledge, providing support, fostering collaboration, and driving adoption. 
• Focus on customer experience. Since nowadays banks have to compete with disruptive startups successfully combining agility with customer centricity, FIs need to shift from traditional monolithic apps to microservice-style architectures, which, according to IBM’s research, can bring a 30% increase in customer satisfaction/retention. The composable architecture allows FIs to roll out new products and services faster with no disruption to the customer experience yet with higher personalization and customization.    
• Stay agile. Speaking of composable architectures, the modular approach to automation in banking helps FIs flexibly accommodate process changes, leverage emerging technologies with faster results, and, eventually, better adapt to ever-changing market conditions.
• Avoid siloed automaton. Automating everything at once is not the best way to implement automation in the banking industry, often leading to technical debt accumulation and inconsistent customer experience. Start with a project that has a clear beginning and endpoints, such as a loan workflow, and move on step by step deriving a lesson from the experience. 

With these points in mind, let’s find out how Camunda workflow orchestration helps FIs overcome automation challenges.  

Launching Intelligent Process Automation in Banking with Camunda and IBA Group

IBA Group, a Gold Partner of Camunda, offers a dedicated Camunda BPM Service designed to ensure fast, smooth, and efficient automation in the finance industry. Our engineers are certified by Camunda and boast over ten years of experience in building custom solutions based on this platform. Our service includes: 

• thorough analysis of existing processes
• specifying requirements 
• processes rollout
• integrations with internal/external services 
• process optimization
• employees’ training
• warranty support

Get in touch with our experts by filling out the form, and we respond soon with a plan addressing your specific business needs. 

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