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Straight-through Processing: Lean transaction flow comes of age

    STP Defined

    Straight through processing (STP) are transactions executed without human intervention within or across entities. Lean process design combined with enabling technologies have allowed data to be relayed across systems without re-keying, reducing time to process in some cases from days to seconds. Although not limited to financial services the term is often associated with that industry where a major push has been on for years to reduce paperwork and settlement cycle times. Global banking leaders like Citibank are now recognizing regional banks for their ability to accomplish trades and payments with little or no manual intervention. In these institutions transactions only stop when they represent exceptions, when aspects are found to beNIGO – “not in good order.”

    Technologies that enable STP

    Core technologies that make STP possible include:

    • Optical character recognition(OCR) to convert paper documents to digital and scan them for sufficiency and data that can feed downstream systems
    • Work flow tools to automatically route documents based on business rules
    • Digital signing eliminating the need for paper forms to capture approval or consent
    • Mapping, monitoring and viewing tools allowing data to be mapped across systems and viewed or maintained from multiple points within the system
    • Reconciliation tools top ensure that data is synchronized across systems
    • Electronic funds transfer (EFT) to process payments
    • Analytics interpreting data, producing insights and feeding decision-engines

    As capability and reliability of these technologies improved they have been applied to an ever widening circle of processes, leaning out non-value adding steps of re-checking information already checked or entering of data into one system already entered into another. Implementation of new technology has tended to lag capability as legislatures, regulatory agencies and companies grappled with trust issues, balancing speed and efficiency with risk. But trust is building and the risk environment is shifting in STP’s favor. The suite of STP technologies is now being used to link entities in straight through networks across all industries. Health care in the US, an ecosystem of payers, providers, and government agencies with multiple touch points processing claims and payments represents a tremendous example of an opportunity for simplification.

    Aflac succeeded in enabling straight-through claims processing and direct deposit, resulting in 87 percent of online claims processed within one day

    STP and Lean Principles

    In addition to deep industry experience and process automation platform capability,Business Process Outsourcing (BPO) firms recognized as leaders in STP have strong Lean design capability through which they help clients redraw the picture of how work flows before investing in the technologies that enable that flow. As powerful as the STP automation toolkit has become, it is best used to complement a Lean approach to process design. Basic Lean principles represent a philosophy for STP:

    • Never overprocess – eliminating steps that do not add value or are redundant to steps already completed
    • Never wait – eliminating delay in flow of the transaction from one step to the next
    • Never allow defects – error proofing a process to ensure only good output moves on to the next step
    • Never engage in unnecessary movement – simplifying work to complete it with as little movement across spaces or systems as possible
    • Never transport work when it can be completed in place – getting work finished where it is without moving it physically or electronically to another location

    Why automate a process you do not need or a process step that does not add value? Before organizations invest in automation of key processes they need to zoom out, look end-to-end, and ask these questions in this order about any step along the way:

    • Can it be eliminated?
    • If it can’t be eliminated can it be combined with other steps?
    • If it can’t be combined, can it be simplified?

    STP Basics: To get started, look to your forms!

    In working with the State of New York on their outstanding Lean program we found example after example of flow constrained by the quality of forms used in starting a process like applying for a license or permit. These forms were often over-complicated, frequently resulting in citizens having to resubmit just to get the process started. When placed online these forms limited benefit of investment in online capability, holding up the process much like their paper ancestors did. Improving forms was a fast way to get work moving. Chances are your organization has forms right now – whether paper or electronic – that are frustrating your customers and employees. They are the tip of the iceberg, sitting atop processes that take too long, cost too much and with which few are happy. Eliminating or simplifying forms is a first, inexpensive step towards STP in your operations.