Connect with us

Finance

How finance leaders use analytics to manage risk and maintain profitability

Jon M. Deutsch, Vice President and Global Head of Financial Services  at Information Builders writes,

 

Using data to manage risk

The Amercian Institute of Certified Professional Accountants (AICPA) asked more than 400 finance leaders and chief financial officers about their risk management strategies. The survey, undertaken in partnership with The North Carolina State University Enterprise Risk Management Initiative, found that 65% of those surveyed had recently experienced an ‘operational surprise’ from an unanticipated risk.

Among the top five risk management pitfalls, AICPA identified lack of collaboration with the IT department, advising, “IT can provide key metrics for your risk analysis, help mine the data and assist in SWOT (strengths, weaknesses, opportunities and threats) analysis.”

Using technology to gain visibility

Jon M Deutsch

There are now so many more sources and varieties of data that integration tools are crucial to the success of analytics strategies. To gain reliable business intelligence, organisations need to ensure that they are able to integrate unstructured and structured data. For example, to gain insights into customer demand, organisations might need to combine structured enterprise data from retail sales, with unstructured textual information from customers’ posts on Twitter, Facebook and LinkedIn.

Many of the organisations we work with have unlocked the value of their business intelligence (BI) and data analytics investments by empowering frontline workers to use embedded analytics to generate their own reports and insights to anticipate risk and identify opportunities. It’s really important to remember that most users of operational data will not be trained data scientists, they will be line-of-business managers, call centre staff, or financial advisors. These colleagues need straightforward ways of reading from one or more repositories of trusted information that have been distilled from many sources.

Enabling user insights

Technology is only useful when it’s being applied. The key is to make it easy for all users. To encourage adoption, theWebFOCUS business intelligence platform allows authorised employees to simply search by account name, customer, product, or any other data characteristic available, to discover valuable insights and the detail necessary to identify opportunity and risk – a user experience akin to Google for business intelligence.

Democratising data analytics at PostFinance

 

Switzerland’s number one payment transaction provider, PostFinance Ltd., needs to provide 2,500 users with current operational insights. Using the WebFOCUS BI platform, PostFinance employees have role-based access to portions of the database, which are required to enable them to acquire current operational data. The BI platform goes beyond traditional reporting by enabling employees to conduct self-service analytics on their mobile devices, with the option to drill down into information to enable further decisions and actions.

Ensuring data quality

 

To encourage employees, partners and customers to embrace data analytics and make the most of BI investments, the data must be trusted. It is therefore crucial to address data quality issues before rolling out data analytics to the user base. By using BI platforms that can automatically refine data, organisations can prevent unreliable information making its way into dashboards, charts and reports, without having to devote additional human resource to manually fix bad data. It only takes one bad experience to see people going back to using Excel spreadsheets, calling on the IT department to generate reports, or installing shadow IT tools for data discovery. In addition to wasting the enterprise investment in data analytics platforms, shadow IT use will lead to data silos, disjointed reports and data quality problems across the enterprise.

A picture is worth a thousand words

 

International recruitment agency, Robert Half Finance & Accounting, asked 2,200 chief financial officers what keeps them awake at night. The responses revealed that CFOs are concerned about developing communication skills, as well as managing risk and steering the financial performance of their organisations.

The Robert Half survey revealed that to help their organisations navigate technological transformation, today’s financial directors need to hone their technical and communication skills, as well as their strategic skills. To assist financial directors with communicating key data points to the board and line of business managers, WebFOCUS makes it easy to automatically create infographics from operational data, so that trends, risks and opportunities can be rapidly communicated to those with the power to act.

Creating fresh revenues from data

 

In addition to identifying risks and protecting profits, when high quality data analytics are effectively implemented they can help financial organisations to identify fresh revenue opportunities. This was the case at First Rate Investments.

Each evening, after the market closes, First Rate Investments receives holdings and transactional records for more than one million accounts. Deborah Repak, managing director and general manager of the Products group at First Rate Investments decided to build a self-service analytics portal, ExecView, which transforms this large data set into data visualisations and reports that help clients to quickly see how their portfolios are performing.

First Rate’s clients saw that there were numerous other questions that could be answered using the same self-service application. Clients suggested several ways they’d like to view their data, such as ‘show me the top 10 holdings across selected domains’. What began as a customised product for one client, quickly turned into a general purpose product that First Rate Investments now sells to broker dealers and other financial services companies.

An investment firm can use the ExecView app to determine activities that may be driving increased revenue through fees, or look for areas where assets under management may be decreasing, or run checks and balances to reconcile accounts that are out of line.

ExecView also helps to prevent regulatory issues in trading, cash management and diversification, and helps wealth management firms to comply with U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) requirements by shedding light on trends and practices that might otherwise be overlooked. Data visualisation within the ExecView InfoApp makes it easy to detect pertinent trends and take appropriate action. Deborah Repak reports, “ExecView has resulted in a 10 per cent increase in our revenue per year as a value-added service.”

Keeping an eye on the future

 

CFOs are agents of change and need to keep abreast of technological developments. Organisations increasingly draw operational data from connected devices, online activity and social media, in addition to traditional EPOS, CRM and ERP systems. By liaising with their colleagues in IT, financial directors can ensure that operational intelligence can be gained from existing data sources as well as integrating business intelligence platforms with emerging technologies such as blockchain, and supporting integration with IoT devices and data science languages such as RScript, RServe and Python.

By delivering models and formulas within intuitive self-service applications, dashboards and reports, everyone in an organisation can be empowered with advanced analytics, without requiring them to become technologists or data scientists. Finance leaders can draw from trusted data sources to identify risk, returns and fresh opportunities and clearly communicate these to the business using familiar data visualisations.

 

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Finance

HOW TO MANAGE YOUR CASH FLOW IN UNCERTAIN TIMES

CASH FLOW

While the world is constantly changing, probably at a faster pace now than ever before, businesses need to manage cash flow and costs to drive success in uncertain times, says Matthew Thorpe, partner at Haines Watts Essex.

 

Managing people and expenses

There are certain costs that you just can’t avoid as a business – to keep your operation running seamlessly, but scrutinise the detail and cut down on any non-essential expenses. Check things like your SaaS subscriptions and look out for costs that auto-renew and if you do cancel, remember to also cancel your direct debits too.

You might want to put a freeze on hiring new people, but ensure that other roles and responsibilities are clearly and efficiently assigned across your team. The Coronavirus Job Retention Scheme (CJRS) has been introduced by the Government to help UK employers access support to continue paying part of their employees’ salary to avoid redundancies. Affected employees are classed as “furloughed workers”.

Once furloughed, the employee cannot work or they will not qualify for the scheme. For businesses that perhaps need to go further, there may be some roles they don’t need any more, but businesses should work sensitively with people to manage this.

 

Cash is king

In uncertain times, owner managers will need to keep operations going to ensure financial stability. You should look to manage debt more efficiently by negotiating extended payment terms with creditors. You could also renegotiate loans for longer repayment terms to give yourself a lower monthly payment, helping the business to set some cash aside each month.

 

Daily forecasting

As a business owner, you need to create a cash flow projection and update this regularly if you are to improve things. You can do this using financial information to create a picture of how the business will look in the next 12 months. The forecast needs to show revenue sources and expenses, which will show the ups and downs of business income and can be used to make sure that enough finance is in place.

 

Good house-keeping

While banks and other finance providers recognise that the cashflow of a business may be disrupted by the impact of Covid-19, they are still going to want to see that you are viable and continue to trade in these uncertain times. Make sure your business is organised and don’t let disorganisation cause unnecessary issues. You can evidence this by having detailed forecasts; current order books and projections (as best as possible).

Having instantly accessible, accurate financial information allows you to plan effectively, spot issues before they become problems and manage your money in the most efficient and rewarding way.

 

Embrace technology

Software is now incredibly user-friendly and accessible from anywhere. For a business owner embracing the technology, this means:

  • Invoicing can be done instantly when a job is complete, emailed to the customer with an easy to use link to a payment platform.
  • Comparison websites can automatically monitor and help maintain lowest cost for things such as light & heat, insurance etc.
  • Technology can be used in place of face-to-face meetings. It can also enable them to adapt production lines to different demands.

All of these things and more, used properly, can make managing your business finances quicker, easier and often cheaper.  You will also be able to bring clarity to where your business stands and prepare for the next steps.

 

Continue Reading

Finance

HOW FINANCIAL SERVICES CAN GET TO GRIPS WITH RISING SUPPLY CHAIN RISK

FINANCIAL SERVICES

By Alex Saric, smart procurement expert, Ivalua

 

UK businesses have never been more dependent on their suppliers to help them deliver goods and services to their customers. Be it retail, manufacturing or financial services, suppliers have a vital role to play when it comes to innovation and meeting customer expectations. However, as supply chains become increasingly global, businesses are potentially exposing themselves to more risk than ever before.

This is especially true in financial services. Whether it’s the impact of geopolitical events like Brexit or global tariff wars, supply shortages, security or the businesses impact on the environment, an organisation’s failure to identify and mitigate risk could see millions wiped off its share price, and its corporate reputation left in tatters. Risk can present itself anywhere and at any time, so financial services firms must be ready to address it. However, many simply don’t have the ability to evaluate suppliers for risk factors, leaving them wide open to business operations being hindered, or being slapped with financial penalties.

 

More suppliers, increasing risk

One reason why financial services firms aren’t able to evaluate suppliers is the breadth and scale of today’s supply chains. For example, French oil company Total said in in a recent human rights briefing paper that they work with over 150,000 direct suppliers worldwide. This is just one example of how large and varied the roster of partners has become. Research from Ivalua has found that financial services businesses on average are working with around 3,600 suppliers annually, which is evenly split between UK-based and international partners. That number is expected to rise, with 60% expecting the number of suppliers they work with to rise.

The expanding nature of suppliers is only going to expose financial services firms to more potential risk than ever before, yet 78% say they face challenges gaining complete visibility into suppliers and their activities.

A lack of supplier visibility leaves businesses unable to identify and mitigate against supply chain risk. In fact, almost three-quarters (73%) of financial services firms have experienced some type of risk during the last 12 months. These include; supplier failure (43%), environmental impact, such as pollution or waste (35%) and supply shortages (45%). Supply shortages can be among the most damaging to a business, as seen by both the KFC chicken shortage which closed stores, and the summer 2018 CO2 shortage which caused companies such as Heineken and Coca-Cola to pause production, impacting supply across Europe during the World Cup.

 

Businesses unprepared for the worst

One way financial services firms can better prepare for risk is to ensure they know what to plan for to reduce the impact. However, whilst some say they have a contingency plan in place to deal with risk, many of them are unprepared. Financial services firms admitted to not having comprehensive and deployed contingency plans in place to prepare the supply chain for risk such as; natural disasters (68%), supply shortages (67%), geopolitical changes (65%), environmental impact (63%), supplier failure (62%) and modern slavery (50%).

In order to effectively prepare for these types of risks, it’s vital that financial services businesses fully understand their suppliers, their business environment, global variations in regulations, geopolitics, and a host of other factors. But for many, there are multiple challenges when it comes to gaining this understanding. A prevailing factor is an inability to gain visibility into all suppliers and activity because supplier management data is stored in multiple locations and formats, making insights difficult to access. This leaves teams unable to review supplier activity and assess compliance.

 

Making supplier management smarter

It’s imperative that financial services businesses are able to respond or prepare for supply chain risk. Clearly, much more needs to be done to ensure they have complete visibility of suppliers, especially in an era where regulators can levy heavy fines for GDPR breaches and scandals spread in minutes over social media. These types of risks can be reduced in the future if procurement teams have a 360-degree view of suppliers which will help with contingency planning and risk management.

For example, in the instance of supply shortages, plans could be put in place that identify alternative suppliers to ensure any shortages do not impact end users. This type of supplier collaboration is paramount when it comes to managing and mitigating against supplier shortages. When it comes to regulations, financial services firms can’t allow a lack of visibility to limit their ability to ensure all suppliers are compliant.

To do this, teams must take a smarter approach to procurement that gives complete visibility into suppliers throughout the supply chain. This will allow financial services firms to identify and plan for risk, reducing the potential damage, and ensuring they are working with and awarding business to low-risk suppliers. Supply chain risk is rapidly becoming an overarching concern for financial services firms, but by providing the ability to assess suppliers, they will have all the insights they need to mitigate the impact on business operations.

 

Continue Reading

Magazine

Partner Events

Trending

Technology20 hours ago

HOW TO KEEP DIGITAL TRANSFORMATION ON TRACK AFTER THE PANDEMIC

Ashley Coker, CEO and founder, Slate   Introduction The global coronavirus health emergency has made it abundantly clear how dependent...

Banking21 hours ago

THE FUTURE OF CUSTOMER EXPERIENCE IN DIGITAL BANKING

By Richard Billington, Chief Technology Officer, Netcall Over the past five years, the digital banking revolution has had a seismic...

Banking21 hours ago

TRANSFORMING BANKING: WHY COVID-19 IS UNFREEZING CONSUMER HABITS

Raj Chakraborty, Senior Managing Director, Publicis Sapient   There is much debate about the impact of COVID-19 on the economy....

Business21 hours ago

IS YOUR OFFICE LEASE CRUSHING YOUR BOTTOM LINE? YOU HAVE OPTIONS

By Jonathan Wasserstrum, Founder / CEO, SquareFoot These are unprecedented times for us all. Nobody has a playbook to get...

Wealth Management21 hours ago

THE TRIALS AND TRIBULATIONS OF TRADERS TRADING FROM HOME

Steve Haworth, CEO of TeleWare Group Banks had hoped to keep their London trading floors open amid the worsening coronavirus...

Banking21 hours ago

HOW WILL REVOLUT’S MOVE INTO OPEN BANKING AFFECT US?

By Richard Mathias, Senior Technology Architect at LiveArea Despite current uncertainty, the financial services sector is experiencing transformative change year...

Technology21 hours ago

IN CONSUMER BIOMETRICS WE TRUST: AUTHENTICATION FOR THE DATA PRIVACY AGE

Jonas Andersson, Head of Standardization at Fingerprints Data privacy is high on the global agenda. In the wake of data...

COVID-19 COVID-19
Business5 days ago

CAPITAL MARKETS – LIQUIDITY MANAGEMENT DURING COVID-19

Tony Farnfield, Partner at management and technology consultancy, BearingPoint   When “Dr. Doom” predicted the 2008 financial crisis back in...

SONY BANK SONY BANK
News5 days ago

SONY BANK SECURES AND ENHANCES MOBILE BANKING WITH ONESPAN’S MOBILE SECURITY SUITE

App shielding, biometric authentication and additional technologies secure and improve the customer experience for Sony Bank’s mobile banking app  ...

MOBILE BANKING MOBILE BANKING
News5 days ago

KOREA’S KB BANK USES TRUSTONIC IN-APP PROTECTION TO ENHANCE MOBILE BANKING EXPERIENCE

Using Trustonic Application Protection enables KB Bank to dramatically improve the authentication experience for users of its mobile banking app...

Customer Customer
News6 days ago

CUSTOMER CARE TODAY WILL BUILD RESILIENCE FOR FUTURE CRISES

Cathal McGloin, CEO of ServisBOT writes, “The COVID-19 pandemic has created major spikes in calls to financial sector helplines dealing with customers...

CREDIT CARD MARKET CREDIT CARD MARKET
Banking1 week ago

THE CO-BRAND CREDIT CARD MARKET – SINK OR SWIM

By Chris Vinnicombe, VP Financial Services at Acxiom The co-brand credit card market is the result of the partnerships between...

CASH FLOW CASH FLOW
Finance1 week ago

HOW TO MANAGE YOUR CASH FLOW IN UNCERTAIN TIMES

While the world is constantly changing, probably at a faster pace now than ever before, businesses need to manage cash...

BUSINESS BUSINESS
News1 week ago

NEW IVALUA STUDY SHOWS TECHNOLOGY CHALLENGES ARE HINDERING PROCUREMENT TEAMS FROM ACHIEVING BUSINESS OBJECTIVES

Lack of system integrations and actionable insights are stopping organisations from accurately measuring performance   Ivalua, a leading provider of global...

FINANCIAL SERVICES FINANCIAL SERVICES
Technology1 week ago

WHY DIGITAL TRANSFORMATION IN FINANCIAL SERVICES IS ABOUT CULTURE FIRST, TECH SECOND

Stuart Templeton, Head of UK at Slack    In today’s world, there’s no such thing as a ‘non-tech fin’. Every...

COVID-19 COVID-19
Business1 week ago

STOP THE CONFUSION: HOW TO KNOW IF YOUR BUSINESS MAY BE INSURED AGAINST COVID-19

By Alex Balcombe, Partner at Harris Balcombe   The last few weeks has seen businesses in hospitality, tourism, retail, leisure...

PAYMENTS PAYMENTS
Top Stories1 week ago

BRAVE NEW WORLD: A FUTURISTIC VISION OF PAYMENTS

James Booth, VP, Head of Partnerships in EMEA for PPRO   Over the last ten years, the retail e-commerce ecosystem...

KLEVIO KLEVIO
Interviews1 week ago

A PROPTECH FOUNDER’S BEGINNING, THE START OF KLEVIO AND HOW ACCESS-TECH IMPROVES FACILITIES MANAGEMENT

An interview with Klevio’s CEO and Co-Founder, Aleš Špetič    What is Klevio?  Klevio is a smart intercom that allows...

COVID-19 COVID-19
Wealth Management1 week ago

HERE’S HOW YOU CAN LEARN TO TRADE RISK-FREE DURING THE COVID-19 MARKET CRASH

Trading app BullBear has launched new features to support budding investors looking to hone their skills against the backdrop of...

INSURANCE INSURANCE
Top Stories1 week ago

ENTERPRISE BLOCKCHAIN: DRAGGING INSURANCE OUT OF THE DARK AGES

Ryan Rugg, Global Head of The Industry Business Unit at R3   The history of insurance traces back to the development...

Trending