Finance Bank

Finance Bank

Today, banking can seem very complex, but originally, the idea was to make life simpler. There are more than 30,000 different banks worldwide and they hold unbelievable amounts of assets. The top 10 banks alone account for roughly 25 Trillion U.S. Dollars. 11th century Italy was the center of European trading. Merchants from all over the continent met to trade their goods. 

This exchange business, which commonly took place outdoors on benches, is where we get the word "bank" from. From the word “banco,” Italian for bench. 

But there was one problem: too many currencies in circulation. In Pisa, merchants had to deal with seven different types of coins and had to exchange their money constantly. The dangers of traveling, counterfeit money, and the difficulty of getting a loan got people thinking. It was time for a new business model. Pawn brokers started to give credit to businessmen, while Genoese merchants developed cashless payments. Networks of banks spread all over Europe handing out credit, even to the church, or European kings. 

What about today?
In a nutshell, banks are in the risk management business. This is a simplified version of the way it works. People keep their money in banks and receive a small amount of interest. The bank takes this money and lends it out at much higher interest rates. It's a calculated risk, because some of the lenders will default on their credit. This process is essential for our economic system because it provides resources for people to buy things like houses, or for industry to expand their business and grow.

So banks take funds that are unused by savers and turn them into funds society can use to do stuff. Other sources of income for banks include accepting saving deposits, the credit card business, buying and selling currencies, custodian business, and cash management services. The main problem with banks nowadays is that a lot of them have abandoned their traditional role as providers of long term financial products in favour of short term gains that carry much higher risks. 

During the financial boom, most major banks adopted financial constructs that were barely comprehensible and did their own trading in a bid to make fast money and earn their executives and traders millions in bonuses. This was nothing short of gambling and damaged whole economies and societies. Like back in 2008, when banks like Lehman Brothers gave credit to basically anyone who wanted to buy a house, and thereby put the bank in an extremely dangerous risk position. This lead to the collapse of the housing market in the US and parts of Europe, causing stock prices to plummet, which eventually lead to a global banking crisis and one of the largest financial crises in history. Hundreds of billions of dollars just evaporated. Millions of people lost their jobs and lots of money. Most of the world's major banks had to pay billions in fines and bankers became some of the least trusted professionals.

The US government and the European Union had to put together huge bailout packages to purchase bad assets and stop the banks from going bankrupt. New regulations were put into force to govern the banking business. Compulsory bank emergency funds were enforced to absorb shocks in the event of another financial crisis. But, other pieces of tough new legislation were successfully blocked by the banking lobby. Today, other models of providing financing are gaining ground fast, like new investment banks, that charge a yearly fee and do not get commissions on sales, thus providing the motivation to act in the best interests of their clients. Or credit unions: cooprative initiatives that were established in the 19th century to circumvent credit sharks.

In a nutshell, they provide the same financial services as banks, but focus on shared value, rather than profit maximization. The self proclaimed goal is to help members create opportunities like starting small businesses, expanding farms, or building family homes while investing back into communities. They are controlled by their members, who also elect the board of directors democratically. Worldwide, credit union systems vary significantly, ranging from a handful of members to organizations worth several billion US Dollars and hundreds of thousands of members.
The focus on benefits for their members impacts the risk credit unions are willing to take. Which explains why Credit Unions, although also hurting, survived the last financial crisis way better than traditional banks. Not to forget the explosion of crowdfunding in recent years. Aside from making awesome video games possible, platforms arose that enabled people to get loans from large groups of small investors, circumventing the bank as a middle man. 

But it also works for industry. Lots of new technology companies started out on Kickstarter or Indiegogo. The funding individual gets the satisfaction of being part of a bigger thing, and can invest in ideas they believe in.

Whilst spreading the risk so widely that if the project fails, the damage is limited. And last but not least: micro credits. Lots of very small loans, mostly handed out in developing countries that help people escape poverty; people who were previously unable to get access to the money they needed to start a business because they weren't deemed worth the time. Nowadays, the granting of micro credits has evolved into a multi-billion dollar business. So, banking might not be up your street, but the bank's role of providing funds to people and businesses is crucial for our society, and has to be done. Who will do it, and how it will be done in the future, is up for us to decide, though. Subtitles by the wiryaone.com

Process of Management

Process of Management

Business process management is a process centric approach for improving business performance it combines information.

technology with governance methodologies so what is a business process exactly the business process is essentially a standardized way to convert a set of inputs into a desired output that a customer would find valuable an example would be a loan application at a bank the customer supplies an electronic application form typically via the bank's website this information becomes the input into the loan application process the business process itself may then consist of a credit check and other activities that enables the bank to make a decision about whether to approve the loan or not.

the output of the business process is a decision that is communicated to the customer followed by the money being paid into the correct customers bank account we can say that the business process transforms several inputs into specific and more valuable outputs in general we can define the output of the process as everything that emerges from the process the primary output is what is desired by the customer in this case the money they wanted to borrow the secondary output is perhaps an email notifying the customer of the decision the input to the process is provided by one or more suppliers.
this is often in the form of information the customer can be an internal customer like a manager at the bank or the external customer who applied for the loan even another subsequent process can be thought of as a customer that is consuming the information created by the first process any entity the demands and consumes process output is considered as a customer the three pillars of bpm is technology people and processes all three aspects need to work for a BPM project to be a success the business process needs to be fit for purpose and actually satisfy the demands of all the stakeholders.
the people aspect also need to work if the customer neglects to provide all the required information the webpage will alert him or her that the application form is incomplete if a manager forgets to approve a certain process step she will get an alert and if she still ignores it the alert will escalate to her manager and the so called process owner will also get an alert that the process is stuck this level of visibility is impossible to achieve without good technology for the automation to work smoothly.
the information system needs to work seamlessly all of the time only takes a large team of experts with IT and business knowledge to implement the BPM project the project team will study a related set of business processes in great detail and then try to redesign it with the objective of optimizing it so it is fit for purpose this happens during the design phase of the project with the processes are carefully designed to be as simple and straightforward as possible so it can be completed in the shortest possible amount of time without making mistakes of the project.

the process is documented in the form of an activity model it is then possible to simulate the behaviour of the system and try out different scenarios through a what-if approach once the process is approved by management it is deployed this occurs during the execution phase of the project the project team will then monitor the performance of the business process to see if anything goes wrong this is the monitoring phase if any problems arise changes will be made to further optimize the process to take care of exceptions this occurs during the optimization phase of the project a good BPM implementation will increase the visibility of the bank's activities making it easy to monitor and control the critical business processes of the bank it provides management with an increased ability to identify bottlenecks making improvements we need it and reassigned resources to meet customer demand it also provides an increased ability to identify further areas of optimization that will improve customer satisfaction or lower transaction costs good PBM system normally contribute significantly to reduce lead times the customer hears about the decision of the bank within days rather than weeks BPM ensures better definition of the duties and the roles of the employees of the company it's also a good tool for fraud.

prevention auditing and assessment of regulatory compliance ppm system prevents the unfortunate situation where a customer who phoned to inquire about a loan application is transferred from one individual to the next and to the next with all of them saying sorry it's not my decision but let me transfer you to the person who deals with it BPM uses a cross-functional approach so the work is automatically moved from one desk to the next without any need for manual intervention of course training is crucial to ensure employees and managers know what is expected of them before a BPM initiative is launched it is really important to get the buy-in and active support of senior management the project leader needs to manage the expectation of all the stakeholders once the system is operational the project is not yet complete the team needs to listen to the customer feedback and make further improvements in general all the principles of change management needs to be followed to ensure success because everybody's job will be a bit different after the project is done though gates once said the first rule of any technology is that automation applied to an efficient operation will magnify the efficiency the second rule is that automation applied to an inefficient operation will magnify the inefficiency it is important to remember that the information.

technology being used is simply an enabler that can take the business its processes and management to new heights it can create new faster and more effective businesses if used correctly but it can't fix broken processes the following are common mistakes when implementing a BPM system it is a bad idea to start configuring the software too early well before the business process has been studied and potentially re-engineered thinking in silos is also a bad idea many functions need to contribute to a business process and unless it crosses functional boundaries is unlikely to create true value for either the company or the customer ignoring end-users is also recipe for disaster their needs and wants must be paramount if the redesigned and newly automated process does not improve their experience of the service then it is unlikely to be a success never use a BPM project to reduce headcount as the primary objective people will find out and do their best to sabotage the project people like to say do it right the first time but this is often unrealistic in a complex business environment the idea is to build a flexible system that can be quickly adapted to changes in the business environment for example changes in banking regulations it is a very bad idea to hardwire the framework not supporting users through adequate training and support is also a common mistake and don't forget to celebrate when the system starts to deliver good results people need to see that their efforts are appreciated relying on long-held beliefs or gut feel is dangerous and it is better to trust the analytical data that the system generates to decide way to move your resources.

automating failure is a very common mistake a bad business process that becomes fully automated will simply do the wrong thing more quickly however if BPM is implemented in the correct way and a good change management process is followed it can have dramatic benefits for the business you