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Improving Customer
Service in the Banking Industry:
Implementing Automation
Around an Integrated
Customer Information System
Microsoft in Financial Services
®
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Enterprise Application Integration
Abstract
Over the last decade, banks have undergone many changes as mergers and acqui-
sitions, and regulatory changes shape the industry into one that provides more
than just the traditional deposit and loan products. As banks continue to provide
an increasing number of financial services and products, they face the challenge of
integrating these disparate systems into a coherent, efficient infrastructure, while
delivering the highest level of customer service and convenience without exposing
their customers to the bank's internal system integration problems.
This white paper is intended for business and technical managers working in the
banking industry. It examines not only specific scenarios that create roadblocks to
the ultimate goal of becoming customer-centric organizations, but also to the
immediate necessity for developing solutions to overcome the challenges.
Specifically, it discusses how they can connect with existing back-end transactions
and data, using mainframe and mid-range connectivity software. The document
also discusses the value of providing core messaging services, business process
management, and XML Web services.
The information contained in this document represents the current view of Microsoft Corporation on the
issues discussed as of the date of publication. Because Microsoft must respond to changing market condi-
tions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guar-
antee the accuracy of any information presented after the date of publication.
This white paper is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, IN THIS SUMMARY.
Complying with all applicable copyright laws is the responsibility of the user. Without limiting the rights under
copyright, no part of this document may be reproduced, stored in, or introduced into a retrieval system, or
transmitted in any form or by any means (electronic, mechanical, photocopying, recording, or otherwise), or
for any purpose, without the express written permission of Microsoft Corporation.
Microsoft may have patents, patent applications, trademarks, copyrights, or other intellectual property rights
covering subject matter in this document. Except as expressly provided in any written license agreement from
Microsoft, the furnishing of this document does not give you any license to these patents, trademarks, copy-
rights, or other intellectual property.
©2003 Microsoft Corporation. All rights reserved.
Microsoft, BizTalk, Visual Studio, and Windows are registered trademarks of Microsoft Corporation in the
United States and/or other countries.
Other product and company names mentioned herein may be the trademarks of their respective owners.
Microsoft Corporation • One Microsoft Way • Redmond, WA 98052-6399 • USA
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Scenario One:
Creating and Managing an Operational Customer . . . . . . . . . . . . . . . . . . . . . . . .5
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Solution Blueprint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Scenario Two:
Achieving “Once and Done” Service Requests from Customers . . . . . . . . . .10
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Scenario Three:
Originating New Accounts or Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
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Enterprise Application Integration 2
Introduction
According to the American Bankers Association, the average cost to acquire a new
customer in a bank in the United States is $3,500. As a consequence of these
high costs, retaining and growing the existing customer base becomes increasingly
important. This realization—in addition to mergers, acquisitions, and regulation
changes—has resulted in the banking industry increasing the number of services it
provides to include more than just deposit and withdrawal.
The growth in new products and services has required financial institutions to add
many new systems to their core product system of customer records—one for
each type of account or service, as shown in Figure 1. This additional recordkeep-
Figure 1:
A bank’s product
system of records:
multiple customer
information files.
ing has created a mix of systems that may not interoperate seamlessly. While the
business objective of offering new products and services has been to cement rela-
tionships and retain customers, the consequences of the systems’ proliferation
have often been poorer levels of customer service, resulting in customer frustra-
tion and attrition. In addition, this dispersed infrastructure requires manual
processes, which involve heavy human interaction and paperwork.
Achieving this high level of integration and automation can be accomplished with
Microsoft® products, such as Microsoft Host Integration Server, Microsoft BizTalk®
Server, and Microsoft Visual Studio® .NET.
• Host Integration Server provides the “First Mile” in end-to-end enterprise appli-
cation integration solutions. This connectivity suite provides application, data,
network, and security integration services. Customers can leverage this product
to create a bidirectional transaction and data pipeline between mainframe and
mid-range systems to the Microsoft Windows® platform. Host Integration Server
supports near real-time and batch computing environments over both System
Network Architecture (SNA) and Transmission Control Protocol/Internet Protocol
(TCP/IP) networks as the gateway server managing connections and data traffic
flow between mainframe and WAN/LAN environments.
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Enterprise Application Integration 4
• BizTalk Server leverages Host Integration Server to integrate easily with main-
frame and mid-range transactional and non-transactional applications and data.
BizTalk Server provides award-winning graphical XML tools, core messaging
services like XSL transformations, baked-in, multi-protocol support for native
messaging integration points, including FILE, MSMQ, and HTTP/S. BizTalk
Server delivers business process definition, execution, and management ser-
vices “out of the box” to allow banking customers to streamline and automate
manual processes.
• Visual Studio .NET provides standards-based tools with which developers can
consume and produce XML Web services from Host Integration Server compo-
nents and BizTalk Server applications, published using connectivity solutions
like the BizTalk Adapter for Web services. The combination of these technolo-
gies decreases the cost of designing, constructing, and maintaining solutions
and, in the end, improves the levels of customer service provided. The section
entitled “Improving Service with Integrated Technology” discusses specifics.
• Scenarios that illustrate situations banks encounter on a daily basis, with solu-
tion blueprints to help them become more customer-centric.
The following sections present common scenarios that banks face on a daily basis,
along with examples of how to improve by implementing these solutions into their
existing infrastructures.
Scenario One:
Creating and Managing an Operational Customer
Overview
Without a fully integrated system of records, it is difficult to ensure that the accura-
cy of operational customer information reaches the necessary level, especially
when each system has a separate Customer Information File (CIF) that stores cus-
tomer data. For example, a customer, who has several accounts with a bank,
moves. Ensuring that this customer’s information will be updated in every system
requires time and effort from both the customer and the bank because change
requests must be made and processed for each separate account. However, with
an integrated system, this change can be propagated automatically to the other
systems, eliminating the need for manual intervention on the part of the bank, and
the customer only has to make a single request.
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Enterprise Application Integration 6
Figure 2:
The CIS becomes
the System of
Records of
customer
information.
Challenges
Introducing a CIS to an existing infrastructure poses some challenges, ranging
from ensuring consistent service through every customer channel to simplifying the
customer analytics environment. All these challenges, however, can be addressed
by building business processes into the middleware layer. The following sections
provide more detail about each challenge and offer a solution blueprint that illus-
trates how Microsoft solutions can address each.
not have all the information that the individual CIF’s contain; instead, the CIS con-
tains only core customer information. Therefore, it follows that the channel applica-
tions must maintain support or specific information needs for these individual
CIFs. The goal should be to remove this dependency and to integrate seamlessly
with the information managed by the CIS. However, if more than one CIF requires a
piece of information, it can be stored in the CIS (for example, social security num-
bers are likely to be required in all systems, so they would be stored in the CIS).
The CIS should be the central hub used to update customer information across all
other systems. It is true that the more accounts and associated CIFs the customer
has with a bank, the longer an update will take; however, the customer does not
need to be aware of this relationship. After the information has been updated in
the CIS, any subsequent updates made to information stored in the CIF should
occur asynchronously. For example, if a customer updates his or her information
on the Internet, the customer doesn’t need to wait hours to receive confirmation of
the transaction while the system processes the change. Instead, as soon as the
change has been submitted, the customer can receive instant confirmation that
the change request has been received and is being processed. The CIS can move
forward with updating each relevant CIF as needed. This asynchronous approach
minimizes the assumptions that need to be made about the technology infrastruc-
ture of the individual CIFs, and thus allows for these CIFs to be outsourced, batch-
driven, online, or offline. A business process controller, with the CIS as a hub, will
ensure that the updates happen and will also manage any related exception
processes, allowing the channel applications to receive a “successful update”
message while the actual change is in process.
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Enterprise Application Integration 8
Solution Blueprint
As indicated in the challenges, the solution blueprint needs to support a variety of
connectivity mechanisms. These mechanisms also need to support both synchro-
nous and asynchronous means of exchanging information, as well as specialized,
exception-processing business methods, to ensure that the customer network func-
tions properly. Figure 3 illustrates such a blueprint.
Figure 3:
Solution blueprint
from managing
operational
customer
information.
As mentioned earlier, EAI technology is key to enabling the overall solution. The
first step is to integrate existing systems and, as demonstrated in Figure 3, Host
Integration Server can become the fusion point for existing systems in the bank’s
infrastructure, allowing these systems to share information with one another. The
second step is to implement BizTalk Server, which becomes the central location for
all customer-related requests. Using components such as BizTalk Orchestration,
banks can define and build robust, distributed business processes, which enable
automation and can overcome the challenges discussed earlier. (For detailed infor-
mation about these products, please see http://www.microsoft.com.)
Once EAI technology has been implemented in the infrastructure, along with the
appropriate business rules and processes, customer information can be seamless-
ly synchronized and customer requests automatically processed.
1. Customer inputs address change request, using any one of the available
channels.
2. BizTalk Server receives the request and queries the CIS through an ODBC
script, which allows the BizTalk Orchestration engine to verify the validity of the
request. If there is an error in the input parameters, and the request cannot be
executed, BizTalk Server returns an error message to the requesting customer.
If the request can be executed, BizTalk Server updates the CIS through an
ODBC call and returns a success message to the requesting customer.
Figure 4 displays—in greater detail—the BizTalk Server process for updating a cus-
tomer’s information.
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Enterprise Application Integration 10
Figure 4:
Detailed view of
BizTalk Server
process for
updating customer
information.
core role of this system is to ensure submission of only valid requests. Typically,
this system would integrate with an event/contact history system to keep track of
high-level progress requests. The service request system helps reduce the amount
of paperwork otherwise involved with customer requests and enables exceptions
to be analyzed for continuous improvements. In addition, the system integration
and event/contact system vastly improve customer communication by creating a
closed-loop feedback system. Because the status of requests has been tracked
and is readily available, this information eliminates potential causes of customer
dissatisfaction—such as experiencing unknown transaction errors or having to
make duplicate requests for information. As a result, the total support costs for
the bank have been reduced.
Figure 5:
Process for
integrating a
service request
component.
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Enterprise Application Integration 12
Examples
By another example of how integrating a service request system and an event/con-
tact history system will help a bank achieve Once and Done—thereby enhancing
customer service with technology—the following sections take a closer look at pro-
cessing two common customer actions, with and without Once and Done. One
activity is requesting a copy of a check and the other is initiating an ATM dispute.
The section concludes with a solution blueprint that specifically illustrates how the
Microsoft solutions fit into the infrastructure.
1. The customer submits a copy of check request through a call center agent.
2. A customer representative enters the request into a call center fulfillment sys-
tem, which may consist of a proprietary “request ticket” generating system that
is either stand-alone or integrates with a customer relationship management
system.
3. The system generates a paperwork ticket that the call center fulfillment group
sends to a back-office research department.
4. The research analyst re-keys the information into an image research system.
5. A third bank employee, who works in a records retrieval location, receives the
request, creates a copy of the requested check, and mails the copy to the cus-
tomer.
In this instance, the time lapse between a request submittal and the check
retrieval might stretch to 10 days or more, because the request must pass through
so many departments and bank employees. In addition, no confirmation or feed-
back system exists, so during the waiting period for a copy of a check, the cus-
tomer might decide to resubmit the request.
1. Customer accesses the service request system and selects the “copy of
check” request form.
2. Given appropriate customer identification, the form pre-fills with the customer’s
address and available accounts.
3. The customer fills in several informational items about the check and submits
the request.
5. When the check image processing system locates the check (through automat-
ed or manual processes), the system makes a copy, forwards it to the cus-
tomer, and updates the event/contact tracking system to reflect the resolution
of the request. If this process involves a check written several years past (thus
requiring more time to locate the physical check), the check image processing
system can update the event/contact system with its progress. If the customer
calls the bank at any time during the process to inquire, the call center repre-
sentative can communicate the correct status, avoiding a duplicate request.
This new process successfully streamlines and automates request creation and
the processing events, achieving the goal of Once and Done. And the feedback
loop allows banks to track events at a customer level, instead of at the account
level, thereby providing banks with a more complete picture of the customer. This
feedback loop also improves the communication between the bank and customer,
often improving customer satisfaction as well. In addition, a feedback loop can
save the bank time by reducing duplicate requests and customer calls to check on
the status of a request.
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Enterprise Application Integration 14
“I would estimate that we Currently, when an ATM dispute has been initiated, a bank incurs added expenses
have seen a 15 percent to have an employee research the dispute. It is widely known throughout the bank-
increase in our customer ing industry that in 90 percent of ATM dispute cases, the customer is correct and,
base simply because of therefore, researching these disputes becomes a costly process for banks. In addi-
our ability to offer them a tion, the bank employee typically manages each dispute on separate paper forms,
fairly painless way to get making it difficult for banks to determine if a customer has made multiple claims—
their systems talking to information that could be useful when determining whether or not to provide a
ours.” refund.
— Daniel Jordan,
IT Operations Similarly as with the process for requesting a check, a more efficient and consis-
Manager, AUSMAQ tent process for resolving ATM disputes would implement a service request system
and an event/contact tracking system, both supported by the CIS. Banks can build
business logic into the dispute process that establishes parameters for determin-
ing if a customer will receive a refund. Perhaps, if a customer is at a specific profit
level or has no previous record of initiating an ATM dispute, business logic can be
implemented that automatically approves a refund. Business logic can also be built
into the back end, thus providing an automatic refund if a dispute initiates for an
ATM that has been demonstrating routine problems.
Both time and money can be saved with an automated process because the need
for human interaction has been eliminated. The customer experience also
improves because the bank can now ensure the customer a consistent experience
whenever he or she initiates a dispute, regardless of the channel—be it a call cen-
ter, the Internet, or a branch bank.
Solution Blueprint
The blueprint for this second scenario is a natural extension of the CIS blueprint in
Scenario One. The BizTalk service request components must be integrated with the
CIS and various back-office systems. Also, these systems must have the ability to
return their updates to the CIS/event history area.
Figure: 6
Solution blueprint
for enabling Once
and Done.
The BizTalk Server “service create” processes are similar to the process described
in Scenario One. However, they introduce an additional, new step: BizTalk Server
must also process status updates that have been received from a back-office sys-
tem, not just the various channels. The back-office systems can send update
requests asynchronously, without expecting a reply from BizTalk Server. The receiv-
ing orchestration process, alone, handles the update request and logs any error for
exception processing. See Figure 7 for an example of this orchestration map.
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Enterprise Application Integration 16
Figure 7:
Service
request event
orchestration map.
Scenario Three:
Originating New Accounts or Business
Overview
Currently, when a new customer applies for a new type of account, it is common
for the bank to send the customer’s information through a third-party system to
determine if the customer is qualified to open the account. Inefficiencies in this
process materialize when an existing customer applies for a new type of account.
Without an integrated infrastructure, the bank has no way of recognizing the cus-
tomer as an existing customer, and sends the information through the same third-
party system, ultimately paying someone else to make a decision the bank itself
should be able to make using the information it has on hand.
By integrating systems and leveraging the information in the CIS, banks can distin-
guish between new and existing customers. With this capability in place, banks can
introduce additional flexibility into their new account qualification process. Each
type of account—from checking to loan to mortgage—is likely to have a separate
set of qualification criteria. By creating a centralized scoring infrastructure, tightly
integrated with the CIS, a tiered approach to qualifying existing customers for new
accounts can be created. This integration further allows banks to split the scoring
and the fulfillment components of several loan origination systems. After these sys-
tems have been split and integrated with CIS and the event/contact tracking sys-
tem (as shown in Figure 8), banks can use information already in the CIS during
document preparation; customers don’t have to provide duplicate information. In
addition, the feedback loop created with the event/contact tracking system allows
the bank to take the lead in managing or monitoring the status of accounts, and
communicate with its customers in a more timely fashion.
Figure 8:
Scoring and
decision-making
as a general-
purpose utility.
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Enterprise Application Integration 18
The new qualification process for existing customers delivers a more positive cus-
tomer experience, reduces the time to open a new account, and reduces the cost
of sales for the bank. The integration allows the bank to leverage information it
already has, so existing customers only have to provide additional information the
bank needs. In addition, the entire process is faster because third-party systems
don’t have to be accessed, eliminating a step in the process and an outside ser-
vice, thus helping to reduce the cost of sales for banks.
Solution Blueprint
Again, the previously developed blueprint can be extended to provide another solu-
tion to accommodate new accounts or business, as shown in Figure 9. A set of
Figure 9:
Solution blueprint
for integration of
origination-related
components.
EAI Benefits origination-related components can be integrated: a scoring engine that integrates
with the CIS and an outside credit information provider, and a back-office system
Enterprise Application to provide support for those processes that require human intervention.
Integration (EAI) offers the
following benefits to the The “First Mile” in an end-to-end solution is the connectivity to back-end transac-
banking industry:
tions and data. Host Integration Server provides the application, data, network,
• Enhanced customer and security services to link quickly the Windows platform with IBM mainframe and
service mid-range systems. Host Integration Server also creates software components that
• Streamlined processes Visual Studio .NET and BizTalk Server consume as part of their applications.
BizTalk Server operates as the centrally controlled communication and financial
• A more flexible
services hub of the origination processes, a hub that solution builders can access
systems infrastructure
and reuse as solution components for other business processes captured by
BizTalk Server Orchestrations to represent scoring, credit services, profiling, and
other key, middle-tier services. BizTalk Server also provides connectivity to 300+
adapters that support all CIS (customer profile and event history) and SOR back-
end systems, and access part of the core messaging and infrastructure services.
Now these same back-end access components can be reused in support of a sce-
nario for creating new accounts or business opportunities.
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Enterprise Application Integration 20
A Customer’s Story
Conclusion
Company
Zurich Financial Services BizTalk Server provides tools and infrastructure allowing the implementation of busi-
ness-oriented middleware systems that leverage Host Integration Server to connect
Customer Profile customer channels to the bank’s system of records and back-end systems rapidly.
Zurich Financial Services This core services layer lets the bank focus on multi-channel, customer-centric, and
is a global leader in finan- delivery-focused architectures and solutions. Once additional business processes
cial services and has a have been layered in, the banking industry does not have to change its core system
portfolio of well-known
of records. As a result, the lower cost of acquisition and total cost of ownership
brands, including Allied
benefits come into clear view, and a more integrated and automated system can
Dunbar and Eagle Star.
quickly become a reality in many other sectors of the financial services industry.
Opportunities for increasing revenue through lowered cycle times and richer cus-
Business Situation
tomer service experiences at a lower cost occur by converting manual processes to
To achieve EAI, take
automated processes that can be included in one or more solution scenarios.
advantage of a more flexi-
Consolidation of large numbers of back-office mainframe and mid-range systems can
ble solution, and integrate
be achieved in companies by using Microsoft .NET-connected technologies.
its suite of products,
Zurich Financial Services
implemented an advanced Enhanced Customer Service
workflow documentation
The true benefits of a fully integrated and automated system come from the focus
and diary management
placed on the customer experience. Banks are able to reach their goal of becoming
system, using Microsoft®
truly customer-centric because they can build a complete picture of their customers.
BizTalk® Server.
The feedback loops that are in place also improve customer communication,
because the banks—instead of being reactive—can take the lead in notifying cus-
Benefits
• A flexible, reusable
tomers about the status of their requests. In addition, automated processes make it
solution possible for customers to experience consistent and reliable service, regardless of
the channel they use to submit requests. The bank has now established the links
• Reduced costs through
between systems to make decisions with a greater degree of certainty by cross-ref-
business automation
erencing and consolidating customer records to provide a single, integrated view.
• Improved productivity Bank employees know if they are interacting with the same customer known across
• Improved customer multiple internal systems, recognize easily and quickly the level of service that is
service required and, therefore, have an opportunity for offering additional services that
enhance existing ones or augment those with new service offerings. As a result of
For a copy of this case implementing a customer-centric infrastructure, banks will realize a higher rate of
study, go to: customer retention.
www.microsoft.com/
casestudies
Streamlined Processes
By leveraging business process automation in their systems, banks can also realize
the benefits of faster, more streamlined execution of customer transactions. Manual
processes that once introduced errors can be automated using tools like the BizTalk
Server Orchestration Designer to streamline, test, and debug to maximum efficiency
and accuracy. Banks can deploy these business processes on their middle-tier mid-
dleware to greatly reduce the number of errors caused by human beings. Bank
employees can concentrate on providing more service to each customer and focus-
ing on analytical banking tasks, activities which ultimately help the bank to save on
employee costs by reducing cycle time for completing banking tasks.
These automated processes have a direct effect on the enhanced customer experi-
ence, and better customer service leads to better banking operations. Many banking
institutions have experienced receiving fewer requests for new services. As banks
automate more service requests and improve status tracking, they will achieve a
dramatic decrease in the number of errors and transaction resubmissions. Also, they
will see a decrease in the number of customer calls to check on a transaction sta-
tus. As the banking systems become more reliable, and tasks are completed faster,
customer confidence in the new automated services will increase, and the need for
human-oriented interactions between the bank and the customer will decrease.
Streamlined processes can reduce the size of back-office workloads, decrease the
amount of back-office-type work from call centers, and help to centralize the remain-
ing back-office functions.
As stated at the outset of this white paper, according to TowerGroup, banks spend
an average of 81 percent of their money maintaining their current infrastructures,
systems that offer little to no benefit to customers. However, with an integrated and
automated system, the customer experience greatly improves, thus the cost of
maintaining the system furthers a bank’s goal of becoming a customer-centric
organization.
The enviable level of integration and automation discussed in this paper is possible
with Microsoft solutions such as Host Integration Server and BizTalk Server. Host
Integration Server components allow data and application integration, letting banks
preserve the investments already made in their existing systems of records and
helping them to implement new architectures and products that are offered for the
Microsoft Windows platform. By reducing the complexity of EAI, and overseeing the
automation of business processes, BizTalk Server lowers the cost of implementing
an integrated solution. The combination of these products is a powerful solution
that makes it possible for banks to thrive as never before.
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