Object Oriented Product Meta-Model for the Financial Services Industry

Banks and other financial service providers are confronted with increased claims of their customers. They expect products and services tailored to their personal needs. At the same time, banks and insurance companies face an enormous pressure to increase the efficiency of their operations. An approach to combine the satisfaction of individual customer needs with the realization of economies of scale is the concept of mass customization. A prerequisite for an efficient implementation of mass customization is the description of financial products within product models. However, the analysis of product models in the financial services sector shows that existing concepts have strong limitations regarding the support of mass customization processes. The main focus of this article is therefore to develop an object-oriented approach that extents existing models and allows for a comprehensive modeling of financial products. It enables the product designer to specify business rules referring to product structure, attributes, and functions. In addition, the supply of different processes with relevant product information is enhanced through the definition of views. In this way the product information embodied in the product model can be made available for different operational business processes and application systems, thereby reducing complexity and costs connected to the distribution and production of individualized product offerings. 1. Mass customization and the role of product models Deregulation of markets and changing customer behavior are signs of a lasting structural change within the financial services sector. In particular, banks and other financial service providers are confronted with increased claims of their customers. They expect products and services tailored to their personal needs. At the same time, banks and insurance companies face an enormous pressure to increase the efficiency of their operations. This is especially true for the retail segment, due to the relative low returns on equity earned in this business segment. An approach to combine the satisfaction of individual customer needs with the realization of economies of scale is the concept of mass customization (Pine, 1994). Thereby customers have the opportunity to configure products according to their individual needs and preferences with the help of personnel advisers, or on their own using configuration tools. A prerequisite for an efficient implementation of mass customization is the description of financial products within product models. In general, product models contain a detailed description of product structures which arises from the composition of a product from product components and the properties (attributes) of the product components (Grasmann, 2000). By using product models, the product information embodied in the models can be used to support different operational business processes and application systems, thereby reducing the complexity and costs connected to the distribution and production of individualized product offerings (Figure 1).