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

WHY SUBSCRIPTIONS ARE KEY TO THE FUTURE OF THE FINANCIAL SERVICES SECTOR

Michael Mansard, Principal Director – Subscription Strategy at  Zuora

 

The business world is wondering: what does post-pandemic growth look like?

A phenomenon known as the “Subscription Economy” might give us a clue. This term describes a new business model where customers pay a recurring fee at regular intervals — weekly, monthly, yearly, or just based on a customer’s usage — to access a product or service.

Unlike the more well-known “Product Economy”, which relies on one-off transactions, subscription business models are built around generating stronger lifetime customer value.

For the financial services sector, this could mean more opportunities to upsell and cross sell services to customers, helping to reduce customer churn and to unlock new revenue streams.  Amid a decade of challenging regulatory frameworks, a wave of digital disruptors, failure to pivot business models accordingly could spell the end for many businesses operating within the financial services industry.

 

Signing up to the Subscription Economy

The subscription economy is just getting started, and use cases are likely to continue evolving as the technology develops to meet demand. During the COVID-19 lockdowns, many digital-based subscription business models fared well due to their promise of convenience and strong business continuity. Research from our recent Subscription Economy Index has shown that companies that embraced subscription-based models grew at 400% on average over the last 8.5 years, outpacing S&P 500 revenues by almost 6x during the pandemic last year.

One of the recurring success factors for these organisations across the board is personalisation – those that embrace customer-centric business practices prevail over those that don’t.

Tailoring a product or service to a customer’s needs in a time of immense change is a sure-fire way to gain loyalty and win over those who previously favoured more traditional financial organisations.

Subscriptions also help cast a wider net to expand an organisation’s addressable market. Financial services companies can expand their addressable market by making their products and services more affordable, not necessarily by reducing the overall cost, but by allowing customers to spread their payments over a longer time period. Given their ability to grow user bases, subscriptions can boost revenue growth in the long run.

 

Accelerating digital transformation with subscription services

Though the transition to the Subscription Economy is still in its infancy for the financial services industry, we are seeing significant traction from organisations in this area, outlined in our recent whitepaper, A new formula for growth for The Financial Services Industry (FSI).

Multinational wealth management and financial advisory company, Charles Schwab, for instance, shifted to the subscription model on just one of their product lines. Charles Schwab automated investing to build and manage clients’ portfolios for $30/ month fee for accounts with at least $25,000, and in doing so brought in $1B in new client assets, primarily from younger investors.

Financial services company Wells Fargo took a slightly different approach, leveraging subscription services to develop a hybrid digital advice platform. The service provides access to both a robo-advisor and human advisor through an annual subscription model which was recently lowered to 0.35%, with the aim to attract more mass and emerging affluent clients taking their first steps into investing.

Insurance provider Metromile, on the other hand, used their subscription model to offer pay-per-mile car insurance through its driving app, basing pricing on usage in addition to a monthly base rate. Metromile claims that the service allows its customers to save on average $741/year.

Meanwhile, in the B2B space, Serai (by HSBC) leverages HSBC’s trade banking client network, connecting buyers and sellers around the world and helping them to simplify the complexities of international trade. For “high touch” B2B offerings, the sales force is a crucial building block of sales strategy.

Since most established FSI players are using the same operating models they’ve used for decades, a shift to a completely new approach can seem daunting. Industry transformations are never fast, and never easy. But the good news is that financial services companies don’t have to dive in and completely change their business model to reap the benefits: new revenue streams, churn reduction, upsell and cross-sell to name a few.

Transitioning to the Subscription Economy can be an iterative, try-and-learn approach. That said, in a time of upheaval and rapid industry changes, financial services companies can’t afford to ponder the relative merits of the Subscription Economy for their business. Industry leaders need to be asking not if, but how they can adopt subscription models to position their organisation for growth and success.

 

Continue Reading

Finance

FUTURE-PROOFING FOR THE FINTECH INDUSTRY WITH NETWORK INNOVATION

Alan Hayward, Sales & Marketing Manager at SEH Technology

 

As the years pass, it is becoming far more difficult to determine what the next decade will entail in relation to technology innovation, due to the speed of digital transformation. This means it is important for organisations to future-proof their processes in the best ways possible. Network management and innovation is key to this, particularly for the FinTech industry due to the ever-rising data traffic in that sector.

Financial technology is used to describe new tech that seeks to improve and automate the delivery and use of financial services. ​​​Essentially, FinTech has the ability to help companies, business owners and consumers better manage their financial operations and processes, meaning it’s vital to focus on future-proofing the industry to ensure guaranteed success across businesses.

Evolving technology is one of the primary causes for the shifts taking place in financial services across the whole industry. Emerging FinTech developments create opportunities which result in a rising demand for network capacity. As well as this, there are many other factors which play a part in fuelling this increased demand such as increased competition, innovative services, regulatory requirements and new technology. It’s vital that FinTech organisations innovate their networks to be sure they are staying ahead of the game.

 

The importance of innovating your network

Innovation in itself is very important and is at the centre of any successful business. Staying innovative and changing with economic and industrial trends helps organisations to effectively meet business growth goals, increase productivity and profitability, and respond well to industry disruptors. Upgrading your network and its capabilities is one of the key methods you can adopt to be sure to do this.

As industries change and companies grow, the technology that each company has implemented must change with it. Many organisations may find that they are in a position where much more data needs to be managed than it has in the past, or new manufacturing equipment has been implemented and data management processes have to change. Innovating your network can help solve these problems and can create much more streamlined processes with regards to managing and controlling data.

 

Changes in the FinTech industry

When the COVID-19 pandemic first hit, the majority of businesses struggled to adjust to changes in the marketplace and had to work extra hard to stay afloat in their selective industries. There were a small handful of businesses which showed an upward trend and those in the FinTech industry were some of them. It’s vital that these businesses keep up the momentum as we move back to a sense of normality, even as digitisation takes over.

The financial sector is undergoing profound shifts with many insurers, retailers and global banks choosing to go digital, something which is extremely necessary in this day and age. Many FinTech organisations are considering a move to the cloud because of the immense role it can play in driving large amounts of data into the network. Smaller businesses and start-ups can take a more relaxed attitude towards adopting new networking technology but large, established banks don’t have that luxury and must act fast if they wish to stay relevant in the changing market.

Another area that FinTech businesses must be aware of is the limitation of bandwidth in the network. To be able to grow on demand, businesses must have already implemented an effective, reliable networking system which is compatible with the changes that a company is choosing to make.

 

Upgrading for the future 

For a small number of FinTech organisations, little appears to have changed in recent years. A small sized bank may have connections in a number of centres but to optimise this opportunity, businesses must invest in networking innovation to keep the company connected and to prepare for the future.

Production processes and organisations are constantly changing with new products, services and business models emerging in industries across the whole world, not just FinTech industries. It’s important to upgrade and innovate your network to allow your company to stay relevant and reduce the risk of it falling behind and becoming outdated with its processes as we enter the next decade of technological change.

Network innovation is the way forward for many industries, due to the capacity for the technology to adapt to changes in a company’s needs and goals. FinTech, as well as many other industries, should constantly consider how to prepare for the future, particularly during a time where business trends can change so quickly. Developing your network can not only provide a stronger sense of security and reliability for your company and its employees, but will also prepare you for problems which may arise in years to come.

 

Continue Reading

Magazine

Trending

Finance11 hours ago

WHY SUBSCRIPTIONS ARE KEY TO THE FUTURE OF THE FINANCIAL SERVICES SECTOR

Michael Mansard, Principal Director – Subscription Strategy at  Zuora   The business world is wondering: what does post-pandemic growth look...

Banking11 hours ago

MODERN BANK HEISTS: FINANCIAL INSTITUTIONS ARE BEING HELD HOSTAGE

By Tom Kellermann, Head of Cybersecurity Strategy, VMware Security Business Unit, @TAKellermann   The modern bank heist has escalated to...

Finance11 hours ago

FUTURE-PROOFING FOR THE FINTECH INDUSTRY WITH NETWORK INNOVATION

Alan Hayward, Sales & Marketing Manager at SEH Technology   As the years pass, it is becoming far more difficult...

News11 hours ago

HSBC JOINS BIAN TO COLLABORATE ON IT ARCHITECTURE DEVELOPMENT

The global bank brings an international perspective to the not-for-profit organisation   BIAN, the independent not-for-profit, and HSBC today announce that...

Business11 hours ago

FASTER REACTIVITY TO END-OF-LIFE DEADLINES IS KEY TO COMPLIANCE

Mat Clothier, CEO, Cloudhouse   Across global industries, the financial services sector is among the most regulated. Ensuring compliance is...

Finance11 hours ago

HOW DOES THE CREDIT CARD TOKENIZATION WORK?

Narendra Sahoo, Founder and Director of VISTA InfoSec    Credit card tokenization is the process of completely replacing sensitive data...

News12 hours ago

DELOITTE ADVISES AL FALEH EDUCATIONAL HOLDING ON ITS DEBUT LISTING ON THE VENTURE MARKET OF QATAR STOCK EXCHANGE

Deloitte Middle East acted as the listing advisor for Al Faleh Educational Holding Q.P.S.C. (Al Faleh) for listing of 240...

Business4 days ago

PUTTING TECHNOLOGY AND EMPATHY AT THE HEART OF SMB LOAN SERVICING

Luis Huerta, Vice President and Intelligent Automation Practice Head, Europe at Firstsource By the end of March 2021, over one...

Finance5 days ago

THE PUSH AND PULL OF IDENTITY SECURITY ADOPTION IN THE FINANCIAL SERVICES INDUSTRY

Ben Bulpett, Director, SailPoint There is a dual movement spurring on the adoption of identity security in the financial services...

News5 days ago

GENIUS GROUP LAUNCHES 4-WEEK INVESTMENT MICROSCHOOL FOR ENTREPRENEURS TO BUILD A FUTURE-PROOF INVESTMENT PORTFOLIO

In response to the increased volatility in the global financial markets created by the Covid-19 pandemic, Genius Group is launching...

Business6 days ago

THE SPAC BOOM: WHY COMPANIES AND INVESTORS ARE INCREASINGLY LOOKING TOWARDS SPAC IPOs

Maxim Manturov, Head of Investment Research at Freedom Finance Europe Special purpose acquisition companies (SPACs) have long been part of the...

News6 days ago

HARDSOFT KEEPS CUSTOMERS CONNECTED WITH BLOCK DISCOUNTING FROM SIEMENS FINANCIAL SERVICES

One-stop leasing and IT solution expert HardSoft Ltd has expanded its offering with Block Discounting from Siemens Financial Services (SFS)....

Business6 days ago

5 REASONS SMALL BUSINESS OWNERS NEED FINANCIAL ADVISING

With everything else a small business owner has to deal with daily, having a financial advisor to help keep both...

News6 days ago

JSCRAMBLER X DOTCONNECT: JSCRAMBLER ENABLES THE SECURE DELIVERY OF DIGITAL BANKING SOLUTIONS FOR TWO OF THE FASTEST GROWING BANKS IN THE UK

-dotConnect successfully applied Jscrambler during the delivery of digital banking solutions for Al Rayan Bank and UBL UK- -73% of...

Business6 days ago

IT’S TIME SPECIALIST BUILDING SOCIETIES, LENDERS AND BANKS JOINED THE INSTANT ECONOMY

By Andrew Dellow, Director of Strategic Accounts at Modulr, the payments platform. Building societies, lenders and other specialist banks are...

Technology6 days ago

THE FINTECH REVOLUTION: BALANCING INNOVATION AND SECURITY

By Altaz Valani, Director of Insights Research at Security Compass. At a time of significant disruption for the financial services industry, a...

Business7 days ago

THE EVOLUTION OF BUSINESS TRAVEL ACCOMMODATION

By Cherry Wang, Country Manager, UK & Ireland, Homelike. Business travel accommodation is undergoing drastic changes as the sector moves...

Business7 days ago

HOW NEW DATA SOURCES CAN ACCELERATE OUR JOURNEY TO RECOVERY

Jonathan Westley, Chief Data Officer, at Experian UK&I With the growth of e-commerce and streaming of everything from music to...

Business7 days ago

TOP 5 INVESTMENT TRENDS THAT WILL SKYROCKET IN 2021

By Roger James Hamilton, Founder and CEO of Genius Group Since March 2020 we have seen unprecedented movements in the...

Technology7 days ago

GETTING THE TIMING RIGHT FOR CLOUD

Daily life has changed a lot in the past year. Decades of innovation have occurred in mere months, as industries...

Trending