Transforming a Financial Services Firm’s Back Office | Article

needle in haystackTalbot Financial Network (TFN), an insurance and financial services provider, was drowning in a sea of paper. “It was virtually impossible for our managers to access regulatory or financial documents from different locations,” recalls John Brackett, President of TFN. Finding a lost or misplaced document could be like finding a needle in a haystack.

Back-office inefficiencies were a big problem. So was customer service. TFN, the largest regional office of the Financial Network Investment Corporation, an independently managed subsidiary of ING Groep N.V. in Amsterdam, The Netherlands, realized it had to reduce cycle times in the approval process for client transactions and communications. “There are a lot of moving parts. All the steps could take up to four days if a document had to go to Honolulu for approval,” he explains.

New Technology and New Problems

The obvious solution for better control and accessibility was a digital imaging system. In March 2001, TFN attempted to accomplish this in house. Brackett says TFN became bogged down in a swamp of technology and escalating costs. “The in-house challenge was the constant improvement in technology. When we were housing it internally, we were constantly spending money and man-hours updating and upgrading our equipment every few months,” he recalls.

Simultaneously, the scandals of Enron and Worldcom brought increased pressure and compliance requirements from the Securities Exchange Commission (SEC) and the National Association of Security Dealers (NASD), American regulatory agencies. Additionally, these agencies hold electronic documents to a much higher standard of scrutiny.

A growing business with increased compliance standards plus the challenge of advancing technology drained TFN’s resources. At the same time, it continued to lose the war against paper.

Since this critical yet specialized process was not core, it turned to outsourcing to a niche provider. Susan Cournoyer, Principle Analyst for Gartner, says niche providers bring “a combination of business process expertise and improvements in the speed of services. They also have an incentive to invest on an on-going basis.” So, businesses find the value in outsourcing beyond cost savings alone. A Gartner survey on outsourcing found many factors pulled even with cost.

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“The balanced view of cost reflects recognition that other business goals, such as executing on business strategy, achieving revenue generation, and preparing for regulatory compliance have a critical role to play in the successful use of outsourcing,” says Cournoyer.

Finding Documents through Outsourcing

Brackett discovered Exigen, a business process solutions provider that specializes in working with financial services companies. One of its solutions is a customizable Web-based imaging system to digitize, store, and distribute documents as a managed service. Known as the Exigen Compliance Process Backbone, it is compliant with newly implemented SEC/NASD rules and regulations including electronic document management (EDM). The scanning process is similar to operating a fax machine.

The transition to Exigen began in June 2003. The planning involved a strategy for implementation as well as defining measurements for accomplishing business objectives. Exigen Vice President Mark Christiansen explains that the process and strategy is an ongoing relationship and the objectives will evolve as business needs are clarified.

“You want to use what you learn. As you gain insight into your business, you are able to make changes to your business processes to become more efficient,” Christiansen says.

The successful phased rollout began in September 2003 with a control group of banks and credit unions. Implementation culminated with retail advisers in February 2004. Emancipated from the paper and IT headaches, Brackett is jubilant. “The efficiency and accessibility is phenomenal. What used to take up to two to three days is now instantaneous,” he says.

The real test came earlier this year when regulators appeared. “On our last SEC filing, we just had to set up a laptop for the three auditors and they had access to our files. The more information you can make available to them and the shorter the period of time to make it available, the better. They were here three days instead of a week. They were happy and there is nothing like a happy auditor!” he adds.

Expanding Capabilities

Business agility and visibility are two goals for TFN. It is getting closer to those goals as it learns to harness the capabilities in reporting and data sets Exigen offers. For example, the optical character recognition (OCR) features can read most documents, even handwritten ones.

Getting rid of paper is just one benefit of using OCR. “The most important part is pulling information out of the images and being able to automatically route it to people and systems to process it,” Christiansen notes.

Brackett is extremely pleased by moving documentation into the 21st century. “Our experience has been excellent. The staff is less frustrated and more efficient. Exigen continually develops the software and manages it so it is not a cost I have to keep paying. They provide reporting tools and work with us on development.” Brackett concludes by alluding to a well-known credit card commercial, “Value, time, accessibility…priceless.”

Lessons from the Outsourcing Journal:

  • Cost reduction is no longer the primary driver to outsource according to a Gartner study.
  • Outsourcing makes the job of regulatory compliance easier by making the necessary data readily and instantly available to the auditors.
  • A digital imaging system provides better control and accessibility for an insurance company. It removes the need for paper and allows the staff to automatically route information to people and systems for processing. Now the staff is less frustrated and more efficient.
  • Outsourcing has increased business agility. A task that used to require as much as four days now can be done almost instantaneously.


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