Financial Reporting for Banks is Not Just Looking Backwards Anymore!
This article will focus on how Financial Reporting for Banks has changed overtime to be more forward looking.
Tell me what happened: When I first started out as an Accounting Manager for a large regional bank, my job was to create monthly financials for each branch and tell them what they did last month. Payroll, loan, and deposit information were already at the branch level in the general ledger; but not much else.
To improve the Financial Reporting for the bank, my job was to allocate all the other costs such as rent, FDIC insurance, funds transfer pricing, loan charge offs, and more to the branches. This process took a team of five people a minimum of three weeks each month to accomplish.
Once everything was posted to the general ledger, my team would dump everything into a huge Microsoft Access database. We then wrote a macro that would step through all four-hundred branches to create Excel workbooks on a hard drive. Once created, we would print every report and send through interoffice mail.
By the time the branch network received their reports and started asking questions, we were already on the next month’s cycle. Branches were always asking what happened and never got timely information to take corrective action. It was just an endless cycle of number crunching and tree cutting.
Let’s speed things up:
With investments in report automation tools like Hyperion and later OutlookSoft, we were able to crush the process down to five work days. This allowed the branch network to ask many more questions. The problem was that the answers to the questions were very hard to find.
To improve the financial reporting for the bank, we then invested in a data warehouse that imported loan, deposit, and transactional data. With another tool called Brio, we were able to vastly improve the turnaround time in answering questions. By mid-month, the branch network was able to start taking corrective behavior on items like better CD pricing, cutting back on service charge refunds, and the like.
Too much information: Armed with a data warehouse and high speed printers, we were now able to generate reports an inch thick for the four hundred branch network the first week of every month. There were at least twenty different reports stack ranking every branch on many different measures.
The various reports by branch had names like Commercial Loan Production, Commercial Loan Fees, New Checking Accounts, Service Charges Waived, and more. What happened is that the calls from the branches dropped off to nothing and so did the overall performance of the company. Everyone was torn in so many directions that they did not know what to focus on next.
Get to the bottom line: Financial reporting for banks was now focusing on what the branches should be doing next to improve performance. At the end of the day, the branch managers were measured on twelve Key Performance Indicators (KPI’s). It would take a month or two after the year was over to compile all the information and disseminate the results.
What the branch network wanted to see was how they were doing on the twelve measures throughout the year and nothing else. All the data for the various measures was already in the data warehouse. The focus shifted from mass amounts of data being spewed out to just receiving Branch Scorecards.
Each measure was given a weight and a specific goal for the branch. Depending how a branch performed against its various goals and weights, they were given a sum total score. The branches were then stack ranked on total points. All of a sudden, branch calls went through the roof asking us how they could improve their score.
What to do next: Now that the branches were all about improving their scores, they needed to know what they should be doing next. We invested in a predicative tool that would predict what customers were likely to buy which product next. Another prediction was for what customers were about to leave the bank.
So not only were the bankers getting their scores, they were also getting lead lists with their scores. They would know who needed to be called next to talk about a certain product or service. Sales dramatically improved along with customer retention.
Along with customer profitability now being calculated, they also knew which customers to let go if they were about to leave the bank. Average customer profitability increased as well.
Get the right tools: There are many, many tools out on the market that help accountants become much more than a newscaster telling you what happened yesterday. Financial Reporting for Banks has become much more forward looking and proactive. In order for your institution to make the change, you will need to start with a Business Intelligence partner that can help you manage all that data. Here are a few of the leaders to consider.
SAP BusinessObjects (www.sap.com) – BusinessObjects (acquired by SAP in 2007) provides performance management, planning, reporting, query and analysis, and enterprise information management.
Oracle Business Intelligence Enterprise Edition (www.oracle.com) – 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 (www.ibm.com) – 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.
BI360 from Solver (www.solverglobal.com) 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 these solutions are offered as on-premise or web-based solutions. They all have Excel front ends to build the reports with the ability to drill into the data. They all can publish the reports to web portals and be viewed on mobile devices. The time to value can be as little as a couple of days or up to six months or more; so do your research.
Whatever you choose, get started today. Your competition is already figuring out a way to lure your customers away from you. Financial Reporting for Banks is not just looking back anymore. It now comprises information on how you grow and prosper your institution today and tomorrow. Solver, Inc. is happy to answer any questions and generally review BI360’s 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.