In Business World Finance departments within banks and other financial institutions have traditionally been slow to innovate. This is largely because most finance departments focus the bulk of their time and attention on supporting the organization’s operations and working toward its business goals. Tasks aimed at maximizing profitability and driving revenue generation, monitoring risk, and balancing expenditure and cash flow leave teams with little time to reimagine their value to the organization as a whole.
However, new global trends and evolving customer and market demands are necessitating higher levels of business agility and flexibility from banks than ever before. The challenges of the current business environment, in turn, are pushing banks all over the world to modernize their approach to finance. Modern finance enables finance teams to think beyond simply hitting organizational targets and to assume a larger role in crafting the company’s overall business strategy.
Leveraging digital technology to enhance analytics processes is one effective step banks can take on the road to modernization. Contemporary analytics solutions are capable of analyzing real-time data from across the company, allowing finance teams to stay abreast of changes in the wider business. The insights generated from this data analysis, in turn, will enable banks to ground their financial strategies in a comprehensive understanding of their institution’s unique needs.
Here are three important ways that robust analytics can help shape your bank’s modernization journey:
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Automates Basic Financial Tasks
Today’s finance professionals are expected to function less as simple number crunchers and more as involved and intelligent business strategists. To aid this transformation, banks must first strive to reduce the volume of tedious manual tasks their finance teams must perform. This can be done by leveraging analytics solutions to automate basic financial tasks and processes on a wide scale. In fact, experts estimate that up to 40% of a bank’s financial activities can be fully automated, while an additional 17% of activities can be mostly automated.
The artificial intelligence (AI) functions built into modern analytics solutions allow the software to manage everything from general accounting to cash disbursement and revenue management procedures. This, in turn, enables finance teams to devote more of their time and energy to higher-value tasks, such as data-driven advising, designing innovative new products and services, and forging strategic connections with external partners.
Accelerates and Improves Business Decision-Making
Many bank’s continue to depend on outdated processes and technologies to execute financial processes. Spreadsheeting applications, for instance, are still widely used among legacy banks for interdepartmental communication and reporting on company-wide activities. These manual methods of data gathering and presentation are highly vulnerable to human error, however, as up to 90% of spreadsheets can contain significant errors according to current research.
Uncertainty with regard to the quality of the data they’re working with can, in turn, make it difficult for banks to make important business decisions confidently. Depending predominantly on manual work also means it can take much longer for teams to analyze data, put together reports, and present their insights. These delays can hinder timely decision-making.
Modernization initiatives at banks are usually driven by the need to meet higher and more complex business demands that legacy systems simply can’t keep up with. Automating their data gathering and data management processes enables bank’s to generate, analyze, present, and store data efficiently with little to no risk of errors. This allows bank personnel to identify salient sources of risk and opportunity well in advance and take intelligent action in response.
Enables Effective Resource Allocation
Finance departments at banks often find themselves fielding demands from multiple departments and struggling to determine which projects to prioritize. Teams running antiquated legacy systems also frequently only have fragmented data and a limited view of operations across the business to work with when it comes to making these important decisions. In the long run, these conditions can lead to inefficient allocation of resources, faulty financial strategy, and lost productivity for financial institutions.
Analytics solutions give finance teams access to faster and more comprehensive insights about company activities and afford them a greater measure of control over departmental decisions. They can utilize interactive dashboards to view business performance across the entire company and identify key areas that contribute the most to driving financial growth. They can then present stakeholders with sufficient factual information to justify financial decisions, as well as make informed choices when it comes to spending and cost-cutting. With the right technological infrastructure supporting their operations, finance teams can be confident that they’re investing in only the most value-adding activities.
Improved analytics also improves finance departments’ ability to evaluate their internal processes accurately. With a clearer picture of how they’re currently spending their time and resources, finance teams can more easily keep their departmental responsibilities and roles in perspective while avoiding getting too caught up in tasks that produce the least value.
Modernization is a long and complex journey that will inevitably be different for every bank. Identifying your bank’s particular needs, strengths, and objectives and choosing software solutions that align well with these are key to achieving a successful transformation.