The explosion in management information and the need to present it quickly and efficiently has had a major impact on financial services firms.
In particular, there is a real demand to present information in real time – or at least very close to real time.
This means the one time-served management tool – the humble spreadsheet - could be consigned to the dustbin of business history.
“Too many firms are clinging on to their spreadsheets and it’s time to let go,” says Gordon McHarg, Managing Director of AutoRek, a Glasgow company which specialises in data management, financial controls and regulatory reporting solutions.
“Spreadsheets are cumbersome. They lack the data integrity demanded by the regulator and they lack auditability.”
McHarg says there are a number of reasons why firms need to move towards real time reporting – to ensure the safety and efficiency of their own operations and to keep the regulator happy: “Organisations particularly need real time visibility and analysis, whether that is relevant to regulatory requirements or to remove or reduce business risk. This can be achieved through a combination of real time dashboards and operational reports, while maintaining a strong focus on financial controls.”
The cornerstones of this approach he argues, are accountability, responsibility and fully automated processes.
“With increasing regulatory requirements, automation of processes is an absolute must,” says McHarg. “It can’t be about relying on spreadsheets and taking on more people to report more frequently; it has to be successful automation to ensure efficient reporting.”
Bringing in more people to tackle the problem and persisting with old technology will result, inevitably, in a lack of competitiveness. Successful automation ensures that employees are moving away from time-consuming and manual processes that are prone to human error.
“More straightforward data management processes must be automated for two main reasons,” argues McHarg. “Those simpler processes can be executed in a timely and effective manner and staff can concentrate on the more challenging problems thrown up by the data.
“If firms want to grow and manage the corresponding increase in data volume, it is very difficult to achieve that if it is just about taking on more heads.”
This raises a crucial point about the difference between legacy banks and the mobile-first challenger banks like Monzo and Atom.
“Legacy banks have a history of business processes that are dominated by people,” says McHarg. “To compete, challenger banks need to concentrate on the transactional volume and not the relationships between people – and they cannot cope with a corresponding increase in staffing if they want to achieve their target of double-digit growth.
“With the legacy banks, this means that cost-efficiencies are difficult to achieve on a significant scale. That’s a big challenge.”
Financial services platforms are still populated by legacy systems where data moves between those platforms. “The data is often checked using manual processes and it is important to automate those integrity checks – which is particularly salient at a time when the number of transactions is increasing significantly” says McHarg.
AutoRek is currently working with one large banking group and several of the challenger banks, as well as asset management and insurance companies. “We cut across the financial services industry, rather than being in just one niche subscetor, including the insurance market – both the general insurance market and Lloyd’s of London - although the regulation is slightly different”.
Across financial services, McHarg argues, all firms must get better with their data - and must update their mindset as well as their technology when it comes to automating processes.
“In an environment where new fintechs are challenging the major banks, the big banks really need to change their mindset and invest in new platforms,” says McHarg. “The cost of the service has to be unrelated to the volume of transactions.”
And that change of mindset certainly includes getting rid of spreadsheets.
For more information visit AutoRek.com