Business rules are the playbook that dictates how your organization operates. They codify business practices and procedures with an If This, Then That mindset, instructing employees and software how to make decisions. When these criteria are met, business rules say, do this next.
How business rules guide an organization’s decisions
For example, if you’re a college administrator and a student wants to drop a course, you might have a set of criteria to consider before granting the request:
- Does their major require this course?
- Will the student fall below the number of credits needed to maintain full-time status?
- Has the deadline passed to drop a class?
These three questions ultimately direct your final decision. You might implement them as a business rule so your fellow administrators adhere to the same thought process. You can also easily codify your logic so automated software can follow a similar decision tree. This formal playbook dictates the payout of sales incentives, the potential of a college application, or if a shopping cart total earns free shipping. You can put rules in place to guide decisions like:
- If a sales team member has reached $375,000 in sales that month, cut a bonus check.
- If an SAT score is below a certain minimum, move a student to the “no” pile.
- When a customer orders more than $200, ship their items for free.
When applied to automated workflows, business rules reduce the amount of manual interference needed to come to a decision. Common scenarios are made as “black and white” as possible to leave the heavy-lifting of more nuanced decisions for human staffers.
How banks can use business rules when modeling loan application workflows
Rules can be as simple as “respond to customer service inquiries within two hours of receipt” or more corporate culture-based like, “on Fridays, employees can dress casually.” They can also govern more elaborate processes that consider multiple parameters, like when to decline a loan application or award a customer with Platinum status. Banks are very familiar with rules engines. They use them to determine eligibility for loans, credit cards, and new bank account openings. Consider the workflow behind a new loan application. When an application workflow lands on the “Loan Prequalification” task, the customer’s information is fed through a rules engine. This could include identity verifications, credit score assessments, or checks against anti-terrorism blacklists. Your rules engine pits the results of each check against your preset qualifiers to determine the customer’s eligibility. If all runs smoothly, the process moves onto the “Qualified” step, sending an email to the customer to celebrate their loan qualification. Suppose a database has red-flagged the application or the applicant’s credit score is below your preferred threshold. In that case, the workflow knows to follow the “Unqualified” path and notify the customer that the bank has declined their application.
