Top 7 Use Cases of Process Mining in Finance [2023]

Process mining is rapidly emerging as a transformational technology for financial institutions. According to leading industry analysts, the global process mining market is projected to reach $10.3 billion by 2025 as more businesses realize the immense potential of their operational data.

As a financial professional, you likely handle endless streams of transactional data daily. Process mining turns this data goldmine into an analytics powerhouse to optimize critical business processes and extract powerful insights into your operations.

This comprehensive guide examines the top use cases for process mining specifically within financial services. With insightful examples and expert recommendations, you‘ll understand how leading banks, insurers, and capital markets firms are achieving real business impact – from substantial cost savings and productivity gains to improved compliance and customer experience.

Let‘s dive in to unlock the immense possibilities process mining enables for your financial organization.

What is Process Mining and Why It Matters Now

Process mining refers to specialized analytics techniques that allow end-to-end processes to be mapped, monitored, and improved by extracting knowledge from the trove of event log data generated as employees interact with company systems.

For instance, each time a mortgage application is submitted, a policy is underwritten, a credit card transaction occurs – events are logged with details like customer ID, timestamps, activities, and more.

Process mining takes this raw event data and reconstructs real processes, identifying:

  • Optimal process flows vs. deviations
  • Cycle times and bottlenecks
  • Variations across product lines, regions, channels
  • Automation opportunities
  • Non-compliance with business rules

Unlike traditional methods, process mining provides a 360-degree fact-based view of actual processes as they are executed – enabling true process excellence.

For financial institutions, process mining unlocks immense potential given the wealth of transactional data from core processes like lending, payments, claims, customer service, and financial reporting.

Leading analysts highlight rapid growth in process mining adoption among financial firms:

  • Gartner predicts that by 2023, 70% of organizations will use process mining in finance operations – a major increase from less than 10% in 2018.
  • A survey by Banking Frontiers revealed that 80% of banking executives plan large scale process transformation initiatives by 2025 with process mining as a key enabler.

The drivers behind this growth are compelling:

"Process mining enabled our commercial lending team to reduce loan approval decision cycles by 15%. The transparency provided by process mining is enabling enterprise-wide process transformation." – VP Operations, Citi

Let‘s examine the top ways financial institutions are leveraging process mining to deliver transformative business value.

Top 7 Use Cases of Process Mining in Finance

Here are seven of the highest ROI applications of process mining for banks, insurers, and capital markets firms looking to optimize processes, reduce costs, and innovate.

1. Increase Process Efficiency by Discovering Bottlenecks

For most financial firms, even small improvements in process efficiency deliver outsized impact by directly reducing costs and accelerating operations.

Process mining provides unparalleled visibility into process execution to pinpoint bottlenecks and obstacles slowing down critical workflows.

Armed with process intelligence, you can identify the root causes of inefficiency – whether long wait times between steps, repetitive rework, overprocessing, or manual errors – and implement targeted process enhancements.

"""Here‘s a real-world example:

A leading private bank used process mining to analyze their wealth management client onboarding process. The discovered process model revealed that 65% of onboarding cases were delayed over 2 days during KYC verification steps.

By tracing these delays to insufficient compliance staffing during seasonal spikes in client acquisitions, they were able to optimize resource allocation and reduce average onboarding time by 1.2 days. This translated into over $3 million in additional client asset fees per year.

This showcases the power of process mining to unlock major productivity and revenue gains by streamlining even complex financial services workflows.

2. Identify Automation Opportunities

By analyzing as-is processes, you can pinpoint the optimal automation candidates that will drive hard dollar ROI.

Process mining allows you to quantify current manual efforts around data entry, calculations, transfers, verifications and more – and identify high-volume repetitive tasks that are prone to human error and delays.

"""For instance:

A corporate bank used process mining to evaluate automation potential in their commercial loan approval process. Analysis showed that loan officers spent over 120,000 hours per year performing manual credit checks, data input, and document handling across thousands of loans.

By deploying software robots for these mundane steps, they were able to automate 54% of the process – saving an estimated $6.7 million annually in lower processing costs.

This example demonstrates how process mining enables financial institutions to maximize returns from their automation investments.

3. Compliance Checking

Regulatory compliance is both critically important and challenging for banking, insurance, and capital markets firms.

Process mining delivers a foolproof method for continuously auditing processes and controls to detect non-compliance and mitigate risks of penalties or losses.

Conformance checking algorithms compare your actual processes against internal policy or external regulations to identify deviations in real-time – before they escalate.

When a non-compliant process instance is flagged, you can analyze the end-to-end flow to uncover the root cause – whether a one-off employee mistake or systemic issue like a faulty system configuration.

"""For example:

A hedge fund used process mining to monitor their trade approval workflows. Within days, the solution detected that 12% of recent trades had bypassed the standard dual-control approval step.

Analysis revealed that a mistaken configuration change had allowed managers to single-handedly approve trades under $20 million without a secondary sign-off. By reverting the configuration and adding alerts, the issue was prevented from reoccurring.

Such use cases illustrate why process mining is invaluable for bulletproofing compliance while enabling issues to be addressed before audits.

4. Reduce Maverick Buying in Purchase-to-Pay

Process mining applied on procure-to-pay processes uncovers uncontrolled spending that flies under the procurement radar.

Analyzing historical purchase order and payment patterns reveals instances of maverick buying where employees make unauthorized purchases without going through proper channels.

"""For example, when mining their P2P workflows, a top insurance firm discovered:

  • Over $3.4M in IT software spending not in compliance with vendor contracts
  • Multiple business units directly purchasing marketing services bypassing procurement
  • Numerous examples of unauthorized vendor relations initiated by local branch employees

By curtailing maverick buying, they saved 11% in procurement costs – amounting to $7.5M annually.

Such hard dollar impact explains why 100% visibility into P2P processes is invaluable.

5. Diagnose the Root Causes of Process Issues

Process mining empowers you to diagnose why processes fail or underperform – whether delayed applications, erroneous transactions, missing documents or other operational hiccups.

By reconstructing and comparing end-to-end process flows, outliers and anomalies become evident. You can pinpoint what went wrong and where – enabling data-driven root cause analysis.

"""For example:

A retail bank used process mining to analyze why nearly 30% of new account applications were being rejected in their online channel vs. only 9% in branches.

Analysis uncovered that most rejects were due to missing customer social security number in the online application. By redesigning the web form with clearer data inputs, the online application rejection rate decreased by 11%.

Such examples demonstrate how process mining transforms troubleshooting from guesswork to forensic analysis.

6. Boost Customer Satisfaction

Customer processes directly impact client satisfaction and loyalty – making them a prime target for mining.

Gaining fact-based visibility into actual client journeys allows you to diagnose pain points and transformation opportunities.

Common use cases include analyzing client service call drivers to improve self-service, optimizing on-boarding to enhance first impressions, and streamlining claims/disputes to improve loyalty.

"""For instance:

A retail bank used process mining on thousands of customer service calls. Analysis revealed 40% of calls were driven by internet banking password reset requests even though the option was buried deep in their website.

By making it more prominent, online password resets increased by 28% and call volume decreased by 15% – creating a better customer experience.

Such process insights enable you to translate operational data into customer-centric action.

7. Proactively Manage Enterprise Risk

For financial firms, the stakes are high when process failures translate into regulatory breaches, financial losses or reputational damage.

Process mining enables proactive risk management by monitoring processes end-to-end to detect control violations, fraud red flags and other anomalies in real time.

Issues can be addressed swiftly before materializing into major regulatory fines or financial impacts.

"""For example:

A corporate bank detected a spike in high-risk loans from a recently added loan officer using out-of-policy exception approvals.

By analyzing all his loan applications via process mining, they uncovered systemic non-adherence to risk assessment protocols – enabling early intervention before major losses.

Such use cases showcase how process mining enables 360-degree process oversight to mitigate enterprise risks.

Key Recommendations for Leveraging Process Mining

Based on best practices from leading financial institutions, here are some recommendations to maximize your success:

  • Start small: Proof of value is critical. Focus initial mining efforts on 1-2 core processes with high optimization potential.
  • Ensure data readiness: Confirm required event attributes are being logged at the right level of completeness and granularity before starting any mining initiatives.
  • Maintain privacy: Establish strict data access policies and implement privacy enhancing measures like data masking, aggregation, and embedding controls.
  • Involve stakeholders: Generate buy-in by giving process owners the ability to interpret insights and act upon them. Make process transparency a joint effort.
  • Focus on outcomes: Maintain clear ROI-driven goals around efficiency, risk reduction, compliance, and customer experience – and track progress relentlessly.

The Future is Now for Process Mining in Finance

As illustrated throughout this guide, leading banks, insurers, and capital markets firms are already realizing immense value from process mining – from cost savings to productivity gains, reduced risks to improved customer retention.

However, we are still just scratching the surface of what is possible. Process mining enables a new paradigm for competing as data-driven, customer-centric, digitally transformed financial organizations.

The time is now for forward-looking financial institutions to embrace process mining as a core capability tightly integrated across operations, technology, and innovation teams.

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