Most banks struggle with their data. This is especially true for regional and community banks. They have financial and risk data scattered between their general ledger, loan and deposit systems, spreadsheets, and emails. As a result, they have a lack of visibility into their financial performance and risk profile, and they struggle to accurately quantify the level of risk in their loan portfolio.

Financial reporting, performance metrics and risk are all critical for bank executives to make strategic decisions. Typically banks all have this data, but this data is scattered across the organization in multiple spreadsheets, reports and/or multiple systems, sometimes in multiple locations.

Further complicating strategic visibility for banks is the fact that they also struggle with merging risk appetite with financial performance.

Key Risk Indicators (KRIs) are used to provide an early signal of increased risk in different facets of the organization. However, KRIs often aren’t overlaid with budget information, resulting in financial operations and risk appetite becoming out of sync with strategic vision. Furthermore, using KRIs without considering financial demands can lower the confidence interval, making executives guess at what the real impact of their strategy will be.

Merging finance and risk, what we like to call Finance. Risk. Unified is where it all comes together. When your finance and risk data is unified, leaders can monitor and manage the business day-to-day using a highly-graphical and intuitive interface for operating, performance, and risk metrics. This is about making risk-adjusted decisions to optimize your organization’s strategic plan.

This short webcast (4:00) discusses 5 Ways to Modernize Your Banks Finance Department in more detail.

It All Starts with Managing the Budget with Technology to Gain a Competitive Advantage

As a result, producing the budget for most regional banks is a painful and time-consuming process. Manually adding risk information further increases the difficulty and lengthens the budgeting process considerably. More often than not this is because they are using outdated, highly manual tools.

Using manual tools and fragmented data, it can take several months and many iterations to complete a budget. Additionally, manually revising the budget as new information becomes available often makes this an on-going, highly time-consuming process. Stale, out-of-date data quickly makes a budget obsolete. A software solution that integrates financial and risk data and presents it in easy to consume dashboards and scorecards makes updating budgets and reports easy.

Steps to Unify Financial and Risk Reporting

Integrating financial and risk data to produce unified reports is a multi-step process. The first steps start by creating a series of reports and models based on your general ledger data.  Next you need to build out a variety of custom reports, including company-wide, executive and board level reports. External financial reports can also be created if required. Finally, individual reports at the products, services and branches help managers track actual performance vs projections and budgets for more informed decisions.

On the budgeting side, models are setup for loan and deposit portfolios to help balance yields, risk and performance over time. Other models include:

  • Non-interest income
  • Expense
  • Employee-level compensation
  • Staffing
  • Capital Expenditures
  • Depreciation
  • Amortization

The scope of available reports is only limited by your imagination and data. The key aspect is that all these models integrate data from the rest of the organization – removing the data silos that inhibit effective decision making.

Once your data is integrated within a single platform, your reports and budgets become even more valuable as operational and strategic tools. You have the ability to grant access to specific users to produce the reports they need without overwhelming them with unnecessary data. Additionally, the data presented encompasses all aspects of operations, powering meaningful decisions and driving strategic change. Comparing actual performance against expectations just became much more meaningful in a simple, easy-to-understand report.

A Little More About Finance. Risk. Unified.

Sola Analytics and OnPoint Risk Advisors have collaborated to provide banks with best practices for Financial and Risk Management delivered inside a cutting-edge technology solution.

SOLA Analytics delivers a Microsoft-based solution. The database is Microsoft SQL Server and Analysis Services. The front end is Microsoft Excel. So it gives users a tool that they’re familiar with and have lots of experience with. The solution can be deployed locally, on the bank’s servers, or hosted in the Microsoft cloud, Azure. It is SSAE-certified and audited on an annual basis and has best-in-class security measures.

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