The Modern Banking Workplace – Putting bankers at the helm to navigate choppy risk management seas
Running a banking business demands accurate, up-to-date insight into trends, statistics and performance. But while banks have huge volumes of data that can provide those insights, in the past they have struggled to harness its full potential. “In many banks, data is scattered across the organisation and often it isn’t shared,” says Jean Acosta, director, worldwide financial services industry at Microsoft. “Producing reports or other document involves a serial process that sees them handed over from one person or department to another, with the originator having to collate and respond to comments from multiple sources. Accessing the required information often involves asking the IT team to create an extract of a live database. By the time it reaches the banker, that data might be weeks old – and things may have changed dramatically during that time.”
In the age of digital intelligence everything – from market trends to risk management factors to customer requirements – moves faster. Bankers need real-time market, counterparty and customer insight from internal and external data feeds to navigate these choppy waters. Modern workplace technologies and advanced business intelligence (BI) tools can provide market and customer insight, enabling faster, simpler and more accurate processes that will transform the way executives manage the business.
“Harnessing the power of information involves two key components: a collaborative environment where all stakeholders can work together in real time, and live, interactive documents for them to work with,” says Acosta. “Collaborative tools like PowerBI, machine learning and advanced analytics enable bankers to create a fluid document with up-to-date information that they can slice and dice with a single click. This, combined with the ability to create striking visuals, means their data tells a dynamic story instead of the static snapshots that traditional spreadsheets and presentations provide. Instead of spending hours poring over the numbers, bankers can see the latest trends, impacts and comparisons in a way that is relevant to their role. The ability to access data and have your information refreshed, without losing all your formats, algorithms and thought processes, changes the whole conversation.”
The Microsoft Treasury group is already using these technologies to analyse and present the vast amounts of data needed to manage $158 billion in assets. The group acts as an in-house bank for Microsoft’s operations in over 190 countries, monitoring thousands of bank accounts and providing just-in-time cash management on a global basis. In the past, it used manual processes to create daily snapshots for asset tracking. This required exporting data from third-party systems to create spreadsheets and slides that were then shared through email, screenshots or print-outs. The resulting report might be as up-to-date as possible, but there was no way to pivot it for a different perspective or access related data in response to any questions. This meant that important details could be missed.
By integrating Power BI and harnessing the power of machine learning and advanced analytics, the group has transformed the way the it works. Now, a shared Power BI dashboard makes it fast and easy to find specific information amid millions of rows of data so people can access the rich analysis they need, wherever they are. Real-time data from multiple sources is automatically refreshed, removing the need to manually search for information to update reports and empowering decision-makers to act quickly, accurately and with confidence. Specific dashboards for high-level and low-level insights mean that relevant information can be shared automatically and securely, on a permissions basis, with the people who are authorised to see it.
The combination of real-time insights, advanced analytics and customised presentation has the power to transform the way bankers work across the entire business. “It’s not just about P&L or running data; it could be risk management analysis,” says Acosta. “You could put machine learning behind processes in the product space and generate reports that filter out for compliance, risk management and legal, giving much better market, counterparty and customer insight to the exposure of the bank. You could provide insight into customer flows for sales, relationship, risk and treasury teams so they could understand the exposure to a customer and proactively address potential problems around overdrafts, exposure and unpaid transactions. Being able to predict those issues accurately changes everything and makes it possible to mitigate the risk.”
That future-focused view, enabled by advanced analytics, is critical to success in an industry that is subject to rapid change and stringent regulations. “To manage performance effectively, bank executives need a daily picture of what they’re doing so they can take a forward-looking view and adjust the business against actuals in a real-time way,” says Keith Waterman, president and co-founder of BankBI which provides cloud-based reporting integrated to the organisation’s systems. “For example, during a 30-day campaign the CFO traditionally spends most of their time accumulating and reconciling data and trying their best to catch up with what’s happened. But daily insights on business performance flip that process on its head. Bank executives can harness the power of information with predictive modelling, forecasting and the ability to run scenarios to show, for example, how a decision would impact the balance sheet. That decision-making filters down to the branch managers, loan offices, portfolio managers and other roles enabling a very granular understanding of business performance.”
Waterman says that by identifying the relevant data sources for individual processes, banks can quickly transform their business management. “Historically, where projects involved big data warehousing projects, these could take 12-18 months to deliver,” he says. “But by having a pre-packaged application with pre-built integration with banks’ general ledger and core banking systems, and the ability to deploy quickly using powerful cloud architecture, we can take clients live in one to ten days.”
For example, one global microfinance company uses BankBI to deliver performance management for each of its divisions in 32 countries, with the ability to consolidate those insights into a single view at group level. In Jamaica, BankBI supports all the regulatory reporting for a newly-merged entity comprising banking and securities businesses. The solution also merges banking and securities data to produce management reports for the individual entities and board packs for the group financial consolidation process.
The full transformative impact of collaboration, BI and analytics tools will be clear as banks use them to harness the power of data over the coming years. “Over the next few years we’ll see banks putting this approach in place a line of business at a time,” says Acosta. “It will take longer to transform the entire organisation, but in the next three to five years there will be enough pieces in place for us to see a more effective and productive approach. We’ll see more realistic information coming out of banks, and changes in pricing and in the products that are offered.”
Planning, budgeting and forecasting processes will be transformed too, says Waterman. “Putting the capabilities in place to enable a daily view of the business and how it’s performing against their needs will empower bankers to look at the data from a different perspective. For example, as banks enable themselves to make more accurate, timely use of their data we’ll see much more frequent and shorter budgeting cycles with quarterly and revised budgets in addition to an overall budget for the year. That in turn will drive more strategic planning because bankers are getting their information on a timelier basis. They will be able to pivot more on how they grow and transform their business because they have a lot more information and are able to run various scenarios. They can measure their business performance against that of their peers or the market itself. This gives the visibility, especially at the CEO level, to explore alternative scenarios and ask what the business can do to improve returns, and assess the impact of business decisions.”
Ultimately, advanced analytics and collaborative insights will empower bankers to manage their business performance in a fluid, responsive way. “Bankers will have better insight into business performance with no guesswork or inaccuracy,” says Acosta. “They’ll have all the information they need to make confident decisions to drive performance and risk management, ultimately improving their standing with regulators and shareholders.”
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