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Business Activity Monitoring: Improving Agility and Effectiveness of Next-generation Payments business

A few years ago, one of the top Australian banks had outages in its legacy payments system, causing several missed deadlines. The impact was severe - customer dissatisfaction, bad press, fines, legal claims, and of course losing leadership position in the ever-competitive banking business. The bank took days to identify the root cause and correct the problem. In an increasingly connected financial world, any such delay can cause systemic risk in the payments network and prove catastrophic for the bank's reputation.

With the ever-increasing connectivity and sophistication of IT systems, such incidents, where real-time business intelligence (BI) is not available for taking proactive measures, are increasing. To survive in a low margin (SEPA), low float (faster mass payments) environment, payments organizations are increasingly becoming dependent on automation and straight-through processing using payments service hubs (PSH). With increased dependence on IT, any system outage or process gap can increase operational risks. Hence in the ultra-competitive payments business, where banks and payments service providers need to monitor cost, time, risk, and regulatory compliance, all at the same time, real-time intelligence is becoming a key strategic advantage.

To fill this gap, next-generation business solutions are getting a lot of traction among forward-thinking organizations. They come in various avatars - business activity monitoring (BAM), complex events processing (CEP), or real-time business intelligence (RT BI). In this post, we will talk about Business Activity Monitoring (BAM). To get an overview on BAM we explore the what, why and how of it:

What: The BAM is a software which monitors, collects and presents business activities, usually in real time, to identify critical opportunities & risks in an organisation.

Why: A BAM solution is aimed at maximizing profitability and optimizing efficiency through real time monitoring.

How: It gathers data, effectively and promptly. Categorizes and identifies data points which will highlight specific concern areas and defines high-level business needs and critical areas to create data filters to make the data presentable and actionable.

On taking a closer look, we see that a BAM system relies on a seek-analyse-model-adapt approach. One of the main aims of BAM is to reduce the delay between the event and business response. At an enterprise level, however, BAM does not work alone; it works with BPM, BI, and BRM processes to complete the model-adapt-seek-analyse approach. Business rules management implements business models. The business process is adapted by BPM processes. BAM is used to actively seek and provide data and updates. This is further analysed by BI, which will use it to build models.


Fig 1: BAM Seek-Analyse-Model-Adapt Framework

BAM is an essential practical solution that every firm must have. Adopting BAM, albeit an operational decision, is meant to improve the way in which a firm or division manages finances and human resources. The possible issues in implementing BAM could be in the form of either the organisational structure of the firm not being one which facilitates effective real time monitoring or organisational behaviour biases against such a monitoring system. On another tangent, the cost and benefit of implementing a BAM solution is quite often seen as a major reason for abandonment. There are however, some best practices to overcome these. The following diagram maps the issues to the best practices for their mitigation. 


Fig 2: Mapping Best Practice Solutions to Problems

Tomorrow's winning businesses will be agile having near-real-time learning capability. BAM will be the secret sauce in that journey and organizations have already started investing in this capability. In the next few years, it will not be considered a competitive advantage but rather an absolute necessity to remain relevant.

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