IFN515 – Fundamentals of Business Process Modelling2019 semester 2Assignment 1Sander Leemans

IFN515 – Fundamentals of Business Process Modelling
2019 semester 2
Assignment 1
Sander Leemans
Queensland University of Technology
1 Key Information

2 The Assignment
Your group is working as a consulting team, and are engaged by Denver Shirley from Sunshine
State Bank to conduct a comprehensive process modelling project for their end-to-end business
loan process, as described in Section 3. You are expected to deliver the process models in the form
of a detailed collaboration diagram, laid out over different levels of abstraction, which captures how
each activity and/or step in the business loan process is conducted in the current situation. More
specifically, you are required to:
• use BPMN 2.0 to specify the process models
• capture the three main perspectives (i.e. control-flow, data and resource perspectives) of the
business loan process in the process models
• present the hierarchy of process models (i.e. a hierarchical view of the positioning of the
process models at different levels of abstraction)
• present the modelling conventions you used for the models and explain them well
• provide an overview and explanation of all the assumptions made during the completion of
this assignment
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You need to produce a short report (at most 25 pages including everything) (Appendix A lists
an example report structure). Refer to Section 4 for details about assignment expectations and
marking criteria.
3 Case Narrative
3.1 Preface
This case considers a business loan process of a financial institution known as Sunshine State Bank.
It has been sourced and was adapted from a real case study with a local Australian financial
institution. After some background information about the bank, a narrative of its business loan
process is discussed. The names and salaries are fictitious.
3.2 Background
Sunshine State Bank (SSB) is a leading provider of both personal and business banking services
with more than 150 branches across the nation, and prides itself on achieving some of the highest
customer satisfaction rankings in the Industry. With a rapid growing base of almost a million
customers nation-wide, SSB faces some unique challenges with maintaining timeliness and quality
of loan services and competing with the other major players in the banking sector. Recently,
the business loan process, a core process in SSB, has been identified as a prime candidate for
improvement. Several concerns have been raised by senior SSB management regarding the efficiency
and effectiveness of this process due to instances of long cycle time and high process costs. In
addition, the manual, iterative and paper-based nature of this process has also been questioned
with numerous handoffs to external contractors and minimal checks and balances on data quality.
All of these can lead to customers taking their business elsewhere. The business banking services
(BBS) team and commercial lenders within the various business banking portfolios or branches in
SSB are mainly involved in the processing of business loans. The primary role of the BBS team is
to support the branches and relationship managers (those not especially skilled in business lending)
with handling business loan applications. Denver Shirley, a business performance manager of the
business banking division in SSB, is designated to review and investigate the current situation of
the business loan process, and to report to the division’s general manager a summary of findings
and suggestions to improve the process performance during their monthly meetings. Being aware
of the lack of BPM-skilled resources internally, Denver has contacted your consulting team to assist
with this improvement initiative.
3.3 Business Loan Process
3.3.1 Overview of the Current Situation
The business loan process has been designed to facilitate the provision of finance to business customers of small, medium, and large scales across the nation. The process involves both internal and
external stakeholders and there are strict legal and regulatory requirements that must be met along
the process. In brief, the process commences with a loan application (through various channels),
followed by an internal assessment of this application in SSB, and if such application is approved,
the supporting loan documentation is forwarded to an external loan centre for processing prior to
loan settlement.
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The business loan process is long overdue for a review. An initial process efficiency exercise
has been conducted by Denver to capture metrics around the amount of time spent on activities,
particularly non/low-value adding activities. The data is used to determine if these activities
are aligned with SSB’s business strategy and to explore alternative options to reduce the amount
of time spent on them. Some metrics captured as part of this ’time and motion’ study across all
business banking activities show that the application and assessment of a business loan process take
up 30% of business banking’s time and about 8% is spent on documentation and loan settlement
processing. Overall, lending activities account for approximately 65% of their time. This ultimately
leads to an average loan processing period (excluding loan settlement) of around 15 days, which
in today’s highly competitive financial services sector could certainly be improved. In addition to
strict legal and regulatory policies in place for this process, there is also a demand for a high level
of information quality and completeness on each loan application. Due to the changing nature
of the financial services regulatory environment, adherence to policy and procedure is critical to
minimise SSB’s financial risk in granting a business loan. Unfortunately this may also impact upon
the timeliness of loan settlement.
3.3.2 Process Description
A business loan process commences with a business customer lodging an initial business loan request
with SSB. Such a request can be lodged in person at a bank branch, via the bank’s website, through
a SSB relationship manager, or via a broker. Hundreds of business loan requests are received each
month. Among these, approximately 30% are submitted on-line (these are directed to the customer’s
local branch), 20% submitted in person at a SSB branch, 40% submitted via a relationship manager,
and the final 10% via a broker (who engages the BBS team by phone or email to assist with their
client’s loan request). If the financial value of the proposed business loan is less than AUD 5
million, a business banker at one of the SSB branches is usually able to complete the transaction
(depending on the specific loan amount and the authority level of that branch). Any business loan
carrying a value of AUD 5 million or more is directed, mostly via a relationship manager (ten staff
nation-wide with an average remuneration of AUD 140,000), to the BBS team straight away. All
branch-initiated requests which are beyond the specific branch/bankers authority are also forwarded
to the BBS team.
Once the appropriate lender is identified, an interview is scheduled with the customer (via
any medium which is most appropriate). A careful customer needs analysis will help the lender
determine the correct loan product that will best service the customer’s requirements. This can be
difficult as choice of loan products available is ever-changing and not all staff may be aware of the
updated policy and product information. Often this is also compounded by procedural ambiguity
and difficulty with navigating SSB’s Intranet site. In addition, for loans of AUD 5 million or more
(about 25% of all business loans fall into this category) the complexity of loan structure and the level
of risk management involved requires a much more personalised approach to customer engagement.
Once the sufficient customer information is received, the prospective loan request can be validated
and a preliminary customer file can be established.
To progress with a business loan submission, there are a number of highly manual steps including data collection activities as specified in the so-called ’Business Loan Submission Checklist’
in SSB. This document must be checked off to the satisfaction of the bank. Once completed, the
lender creates an official loan application document and the BBS team forwards this document to
the customer and the customer’s guarantor (a guarantor is not always required). After the loan
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document has been successfully completed by the customer and returned by mail or in person, the
lender checks the application before the customer file is formalised. If additional information is
required, the customer will be contacted by mail or telephone.
Completing the above activities in a timely and accurate manner is crucial to ensure the business
loan can be correctly assessed. It is not uncommon for loan requests to be continuously delayed
due to gathering of missing customer (or guarantor) information before the application can proceed
further. Ideally most loan requests (up to 75%) handled can proceed to the assessment within a
few days. However, depending upon the financial value of a business loan and the complexity of the
business loan structure, some applications may take up to three months to complete the paperwork
before they can progress to loan assessment. Managing the different loan values, financial structure
complexity and customer expectations during the initial application period is a key concern of SSB
senior management.
The purpose of loan assessment is to ensure that a potential customer meets all of the requirements for the business loan product being offered. The process during this stage is often time
consuming and, as a result, some customers may seek other sources of finance. At first the proposed
loan application is reviewed by the risk assessment staff (five employees in such position in the risk
assessment team with an average remuneration of AUD 100,000) to ensure that the product offered
is not only suitable for the customer’s requirements but also complied with the ’Business Loan
Compliance Policy’ in SSB. If this assessment determines an unacceptable financial risk, the lender
will advise the customer that the loan application will not proceed. Up to 9% of loan applications
are rejected at this stage of the process.
Once the business loan suitability and compliance are confirmed, the lender then reviews the
application for any loan risk, conducts customer’s credit check, and creates a risk assessment profile to add to the customer file. Some of the issues that constitute an unacceptable risk include
a lack of customer equity in existing property, insufficient financial projections for the business
being purchased, or a poor credit history of the customer. As part of this assessment, the lender
arranges customer reference reports and company & title searches (for business or property valuation) through a credit reporting agency called RCS Data Intelligence (or RCS for short). This task
can take between one day and several weeks (in extreme cases) depending upon the complexity
of the loan arrangement and dollar value sought. The lender and the risk assessment team both
review these reports and, if satisfactory, the valuation is completed.
The complete submission is again reviewed by the risk assessment team to provide advice to
the lender on whether or not the business loan application will be accepted. Once this decision has
been made, the customer is advised of the outcome by mail or through the relationship manager
via whom the loan request is submitted. If approved, the customer has the option of accepting or
rejecting the loan offer in writing and posts it back to the lender. If the customer accepts the loan
offer, the lender prepares any legal documentation and collects the initial application fee, which is
usually 0.75% of the approved loan. All customer documents are then printed out into a hard-copy
file ready for distribution to the external loan centre.
At SSB, incoming and outgoing mail is facilitated by the mail service team (MST). In general
if an outgoing file is received by the mail room by 3pm, it will be included in that day’s final mail
delivery and normally reach the loan centre at the end of the following business day (mail not
received by 3pm is only included in the following day’s outgoing post, so is actually received by the
external loan centre at the end of the second business day after it leaves the lender!). Plus, if the
lender is based in another city or state, this file delivery may take longer (up to five days). Due
to the high volumes of postal mail handled by MST in SSB, occasionally files get “lost” and the
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entire process has to start again. To mitigate this risk, lenders located in the local CBD sometimes
physically walked the customer file two city blocks across town the loan centre for the finalisation
of all loan documents (around 20% of the time).
In December 2017, a system known as the ’Business Loan Tracker’ (or Tracker for short) was
introduced, which automates the tracking of files as they move through a business loan process and
provides a view of application status direct to the lender. Commercial lenders update customer
information into the Tracker and the status is updated by the risk assessment team as the file
progresses through the loan assessment. A current limitation of Tracker though is that the system
does not follow customer files once they have been sent off to the loan centre for processing.
Once the customer file has been received at the loan centre, the existing customer information
received from the lender is used to generate the customer documents required for the loan to
proceed. The loan centre completes their paperwork by manually re-entering the information in to
their own internal system. There is minimal quality assurance on the accuracy of data supplied &
the details are taken at face value as the contract with the loan centre prohibits them from making
any corrections (even when experienced loan centre staff member suspects there is an error!). The
contract between SSB and the loan centre simply requires the customer documents to be generated
and sent back to the lender for re-checking. This is affected by standard postal mail, which arrives
at the SSB mailroom. MST staff open all post and, when a loan document is identified, delivered to
the BBS, relationship manager or branch-based banker who is looking after the loan. The customer
documents are reviewed, and if any errors are found, corrections are marked-up and sent back to
the loan centre. It is not uncommon for the documents relating to a single loan application to
require multiple revisions before being verified as correct by the lender.
The correct customer documents and loan application are then mailed to the customer to approve
the completed loan application. When this paperwork has been returned to SSB by the customer, it
will be checked again by the lender for completeness and accuracy (i.e. actually signed, appropriately
witnessed etc.).
The lender will engage a solicitor or conveyancer to ensure all of the legal requirements for
loan settlement have been met. Once all the finalised loan documentation has been correctly
provided to the lender by the customer, the file is forwarded back to the loan centre (again either
in person or via post mail) to commence pre-settlement checks. Meanwhile, the lender advises
the solicitor/conveyancer about the pending loan settlement. The loan centre books in the official
settlement date with the nominated solicitor/conveyancer and completes the required pre-settlement
checks (if any) two days prior to this date.
On the actual day of settlement, the loan centre prepares settlement instructions and brings
a printed copy of these to the settlement meeting (held at an external location). Settlement may
or may not be effected at this meeting. Settlement won’t be possible if, for example, any of the
parties is unable to make the meeting as scheduled (e.g. due to bad traffic). Settlement will also be
prevented if the customer doesn’t have the identification required, or if a previously undiscovered
error is spotted in the paperwork. Whatever the reason, settlement may need to be rescheduled
(though frustrated customers sometimes, at this point, simply just decide not to proceed).
If settlement is effected, the loan centre forwards a settlement notice to the lender who then
establishes a loan account in the SSB system. Then loan centre prepares a customer letter, waits
four days, and completes post-settlement checks. A settlement letter is then posted to both the
lender and the customer. The lender will then complete all their post settlement activities and
finalise the official business loan file once this settlement letter is received. During this time, the
loan centre is responsible for preparing loan stamping and registration details, and formally lodging
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the mortgage with the Government Titles Office.
4 Marking Criteria
This is a draft of the marking criteria we will use to mark the first assignment, to give an idea what
we’re looking for. The points sum to 100 and count for 25% towards the unit score. Penalties apply
for reports that exceed the page limit. Plagiarism will be reported to the SEF student misconduct
committee.
Make sure that the text in the model is machine-readable (see Appendix B).
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Deliverable Unacceptable Needs work Acceptable Good Excellent Max points
0 – 1
5
15
–
25
25
–
35
35
–
45
45
– 1
Presentation format of
report (structure, layout,
grammar & spelling, consistency, readability of
model, . . . )
0 criteria met 1 criterion met 2 criteria met 3 criteria met 4-5 criteria met 10
Executive summary
summarises report, summarises key findings, with
right abstraction level
missing 0 criteria met 1 criterion met 2 criteria met 3 criteria met 5
Introduction purpose of
report illustrated – wellstructured
unclear &
ill-structured
unclear or
ill-structured
acceptably
structured &
illustrated
well-structured &
-illustrated
exceptionally
structured &
illustrated
10
Conclusion summarises
main findings, discusses
limitations, outlines next
steps
0 criteria met 1 criterion met 2 criteria met 3 criteria met 3 criteria met well 5
Assumptions missing many assumptions
missing
with some gaps,
assumptions lead to
model
assumptions
naturally lead to
model
assumptions
naturally lead to
model & well
motivated
5
Modelling conventions
consistency, completeness,
justification, adherence
missing 0-1 criteria met 2 criteria met 3 criteria met 4 criteria met 5
Process Hierarchy hierarchy organised, vertical
scoping justified, decomposition explained
unacceptable needs work acceptable good excellent 10
Control-flow syntax, behaviour, semantics
badly aligned, too
many mistakes
poorly aligned/many
mistakes
acceptably aligned,
some mistakes
well-aligned, minor
mistakes
perfectly aligned,
correct
30
Resources alignment
with text
badly aligned poorly aligned,
major differences
acceptably aligned,
some differences
well-aligned, minor
differences
perfectly aligned 10
Data corresponds to case missing badly aligned poorly aligned,
major differences
well-aligned, minor
differences
perfectly aligned 10
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A Example Report Structure
This is an example of a report structure you can follow. It is not necessary to follow this example.
• Executive Summary (1 page)
• Table of Contents (1 page)
• Introduction (1-2 pages)
{ Purpose of the Report
{ Project Goals
{ Structure of the Report
• Overview of Process Models (1-2 pages)
{ The process model hierarchy is presented.
{ Justifications of vertical scoping and decomposition of the process models are discussed.
• Modelling Conventions (1-2 pages)
{ Discussions of the modelling conventions used in the process modelling practice, accompanied by adequate justifications
for their use.
• Modelling Assumptions (1-2 pages)
{ Discussions of all the assumptions made when modelling the process described in the case scenario.
• Process Models (10-13 pages)
{ A detailed collaboration diagram, laid over different levels of abstraction, which captures the three main perspectives
of the business loan process in the current situation (i.e. ‘As-Is’ process).
{ The process models presented in a structured way and, if necessary, accompanied with short explanations.
{ Discussions of modelling decisions made when creating the process models.
• Conclusion (1 page)
{ Summarise the main findings/outcomes of this report, and if possible, the next steps or future work.
• References (1 page)
B Model Export
First step is to create a PDF file:
• In Signavio, use the print button to export your model to a PDF file.
• In Camunda, choose File ! Export as Image ! save as SVG. Then, open the SVG in Inkscape (free and open source),
and choose File ! Save as ! save as PDF.
Then, if you are using Microsoft Word:
• Convert your PDF model to Word using https://smallpdf.com/pdf-to-word
• Copy and paste the converted model into your report
• Use the save as function of Word to export your report to PDF for submission
Alternatively, use a PDF editor to export your report and put the model in place.
Check that the text is machine readable by opening your final PDF. If you can select the text in your activities, copy it, and
paste it in Notepad, then the model is machine readable.

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