Best Management Reporting Tools for Banks
At first, this article was going to be about the Best Reporting Tools for Banks. I then realized that there are many different types of reporting needs for banks that tools focus upon.
Regulatory Reporting covers reporting for the FDIC and SEC. The FDIC has a battery of specific templates that need to be filled out each quarter that result in the Call Report. The SEC also has its own set of disclosures that need to be tagged with XBRL technology. The tagging has to conform to a quasi SEC chart of accounts that crosses all industries for comparability.
There also a slew of reports that cover risk management. They are designed to review such things as the risk of cyber-attack and what defensive measures has the bank taken to mitigate it. The reports need to address what each bank is doing about fraud, robberies, foreclosures, and anything else that may be a threat to its operations.
There are reporting tools that focus on Asset and Liability metrics. The focus here is how well balanced are the various portfolios are when it comes to interest rate maturities. For example, if the bank has $100 million dollars in loans that are about to reprice for the next nine months, does it also have a $100 million in offsetting deposits that can that can support those loans at a profitable interest rate spread?
All those tools are necessary to run a bank. But if you want to improve performance, you will need to invest in a good management reporting solution.
What Should I be Focusing on to Improve Bank Management Reporting?
When it comes to management reporting for banks, the focus should be on measures that the individual bankers can actually have an impact on.
New Checking Accounts
When I was growing up in the banking business, I was always told that if you got the customer’s checking account and got them to use it, they would consider you to be their bank. That is why there are so many gimmicks from banks on getting a customer to use their account.
Home Equity Loans Originated
Opening a home equity loan is considered golden for a banker. It is secured by a very safe asset. The proceeds can be used for virtually anything such as buying a car to paying off credit cards. Getting that Home Equity Loan from a customer is a gateway to many other products that will increase your bank’s share of wallet.
Interest Rate Exceptions
Net Interest Margin is the biggest source of revenues for banks. If you have bankers that are pricing loans below the price sheet, they better have a good reason. Conversely, if you have bankers giving away CD rates higher than the recommended rates, they need to be able to back up their decision. Measuring rate exceptions on a daily basis can protect the bank’s net interest margin from collapsing.
Monitor Service Charge Waivers
We have all been there. A customer comes into the lobby mad as fire complaining that they have been charged a Non-Sufficient Funds Fee and they want it waived immediately. Not wanting to cause a scene, you quickly waive the fee. It turns out that the customer has no other balances with the bank and they are constantly overdrawing their funds.
Without customer profitability, how will you ever know which customers need to be charged full price and which ones can have a fee waived. Knowing your customer’s profitability is crucial to making profitable decisions.
Comparisons to Goals
There are many goals that bankers need to achieve each year in order for the bank as a whole to meet its objectives. Individual bankers need to know where they stand on their loan and deposit growth goals. They need to know where they stand on expense management.
Banking Management Reporting Software Criteria
When it comes to finding the best management reporting tool for banks, they need to meet certain criteria. At a minimum, the tool must have access to the following modules.
The general ledger holds the basic financials of a bank. It is typically detailed down to the branch level. It will measure such things as loan and deposit growth, expense compared to plan, and other basic measures.
The loan module will supply loan production, interest rates, fees (as well as waivers). The nice thing about the loan module as that performance can be traced down to individuals within the bank in addition to the branch level. This allows goals to be set at the employee level.
The deposit module will supply checking account production, interest rates, service charges (as well as waivers), and activities such as teller items and electronic banking items. Again, individual tracking and goal setting can be achieved.
Customer Relationship Management (CRM)/Customer Profitability
Having access to these modules is crucial to effective management reporting for banks. You need to know what accounts belong to each individual that you front line is interacting with as well as that customer’s profitability.
Funds Transfer Pricing/Activity Based Costing
There needs to be some methodology for allocating funds transfer pricing rates to your various loan and deposit instruments. The bank needs to be able to allocate costs for various activities at those same instruments. These two pieces are vital to the bank’s ability to calculate customer profitability.
Budgeting & Forecasting
Being able to track all the various elements that go into good performance is not enough. You need to be able to establish goals and standards for each measure as well as customize those goals by branch and individual.
Different Types of Reporting Tools
So that is a lot of stuff on your shopping list for a good management reporting tool for banks. The tool needs to be able to report against all of your various modules of data as well as be able to set and track goals. Below are some of the industry-standard solutions:
- SAP BusinessObjects – BusinessObjects (acquired by SAP in 2007) provides performance management, planning, reporting, query and analysis, and enterprise information management.
- Oracle Business Intelligence Enterprise Edition – OBIEE (comprised of Siebel Systems and Hyperion Solutions that were both purchased by Oracle) delivers reporting, ad-hoc query and analysis, OLAP, dashboard, and scorecard functionality with a rich end-user experience that includes visualization, collaboration, alerts, and more.
- IBM Cognos – Cognos (acquired by IBM in 2009) provides a toolset for reporting, analysis, scorecarding, and monitoring of events and metrics. The software consists of several components to meet the different information requirements in a company.
- Solver – Solver is a complete Business Intelligence (BI) and Corporate Performance Management (CPM) suite with reporting, budgeting and dashboard modules. The BI360 suite also offers a data warehouse to combine your data sources and to empower all business users with self-service analytics critical to fast and efficient decision-making.
All four of are very scalable. They are optimized for very fast summary reporting with the ability to drill down to the most detailed level of data. For the most part, reports can be designed with an Excel add-in and viewed in both Excel and a web portal. Some of the solutions typically take months before you see any valuable results while a solution like Solver can in certain cases be up and running in just a couple of weeks.
Choose Solver to Improve Your Bank Performance
If you are interested in improving bank performance, you need to invest in the best management reporting for banks you can afford. The competition is investing them right now and you do not want to be left behind servicing unprofitable customers that nobody else wants! Solver, Inc. is happy to answer any questions and generally review our easy-to-use, Excel-powered consolidation tool for banking and finance industry users with both real-time or data warehouse integrated analysis, comprehensive reporting and collaboration as a way to accelerate organizational performance management.