Finance Function Trends

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01
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Part
01

Finance Function Case Studies

DBS Bank in Hong Kong innovates its finance function by deploying new technologies, such as data analytics with data visualization and robotic process automation, as well as through the transformation of the team culture. The Citizens Bank's finance team has become involved in organization-wide strategic planning, working closely with the technology team in agile pods and using insights gathered from data analytics solutions.


DBS Bank (Hong Kong)

Overview

  • The innovation in the DBS Bank's finance function is a part of an office-wide digitalization strategy.
  • Among other technologies, the department started using data analytics for decision-making, which is further enhanced by data visualization, allowing the finance team to create interactive business intelligence dashboards.
  • DBS Bank's finance department also deployed robotic process automation (RPA), as well as tools dedicated "for detecting abnormalities to enhance risk and control management."
  • Along with introducing emerging technologies, DBS Bank is transforming its finance function by changing the team culture. According to Jacqueline Chan, managing director and chief financial officer (CFO) at DBS Bank in Hong Kong, her department started working as if they were a technology company.
  • There is less control over employees, who are allowed to make mistakes and learn from them, which Chan considers the best way to get familiar with innovative technologies. Also, financial specialists work closely with data experts and frequently collaborate with the bank's technology team. There are also data and tech people within the finance team.
  • DBS Bank believes that the most difficult part of the process of digital innovation is adjusting the culture, which requires developing a new mindset and a different set of skills, including digital leadership competencies. That is why they put an emphasis on the support between teams and encourage employees to learn through failure.
  • The collaboration between teams is facilitated by a platform approach, which replaced a project one. The teams have platform meetings that allow timely interventions. Also, having access to the platform allows finance to view planned technology updates in the context of the whole system architecture.

Problems It Is Trying to Solve

  • New technologies and tools are supposed to replace a system that is too complex and outdated.
  • With innovative solutions in the finance function, DBS Bank is attempting to make the record-to-report cycles shorter, increase the efficiency of all the team's operations, and improve the analytic capabilities for better financial prediction and planning.
  • Another goal is to improve communication and data flow between different teams within the bank for better allocation of resources.

Reasons for Inclusion

  • Digitalization of DBS Bank's finance function qualifies as an innovation, because it involves deploying multiple innovative technologies and solutions, such as data analytics with data visualization and robotic process automation.
  • Additionally, it includes a novel approach to team management and organization, with the team leader being aware that the innovation requires new skills and the change in mindset both from the leadership and employees.
  • Also, Financial Management Magazine, ACCA Global and Chartered Accountants all included this transformation as an example of an innovation in the finance function.

Citizens Bank (The US)

Overview

  • John Woods, CFO at Citizens Bank, notes that the responsibilities of a CFO in his bank have widened dramatically over the last years, taking over some of those that previously belong to a chief operating officer.
  • Presently, in addition to being responsible for financial matters, CFO plays a major role in developing the strategy for the whole institution. His responsibilities "as risk manager of liquidity and capital have intensified." At the same time, he needs to collaborate closely with technology and innovation teams.
  • The whole finance team is closely involved with deploying growth strategies, which are largely dependent on investing in data analytics to drive comprehensive insights and enhance security. For example, one of their consumer-facing products, the Citizens Access platform, is also used to gather and analyze insights regarding costs and profitability of potential new markets.
  • Citizens Bank believes that agile methodologies are better suited for managing a digitalized bank. The institution created agile pods, which are spaces of collaboration between finance and technology teams, which work together most of the time.
  • Thanks to this innovative management approach, the bank's finance function is better equipped to monitor and analyze the clients' financial results from digital channels, using all the available tools and solutions.
  • Woods acknowledges that digital skills are becoming increasingly crucial for the members of his team, which is why he frequently seeks new hires that not only have a traditional financial background but also experience with fintech or startup companies. Current employees are encouraged to take part in reskilling initiatives, such as "Development Weeks."

Problems It Is Trying to Solve

  • The bank's finance team, like the whole organization, is trying to balance the need to keep up with digital innovation, satisfy its customers' needs, and maintain a steady headcount. According to Forbes, it is one of the institutions that succeed in introducing emerging technologies without shrinking its workforce.
  • At the same time, the close collaboration between finance and technology teams aims to prevent the bank from missing strategic opportunities or badly allocating funds for digital investments.

Reasons for Inclusion

  • Forbes named Citizen Bank as one of the institutions that invest in innovative technologies. They conducted an interview with their CFO, in part to explain how the organization's financial team fits into its digital transformation.
  • The finance function's innovations are largely focused on data analytics, which is among the suggested areas of focus for this research.
  • Additionally, the case study describes how digital innovations in Citizen Bank drive changes in the responsibilities of the CFO and the organization of the financial team, resulting in an innovative management approach.
Part
02
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Part
02

Finance Function: Best-in-class

Robotic Process Automation (RPA) and Data Visualization are two best-in-class examples of a finance function in banking organizations. Both examples are best in class because they are sought and used by a majority of the bunch. While there is a global appetite for RPA in the banking industry, 90% of the top 50 banks worldwide make use of advanced analytics (which is inclusive of data visualization) in 2019.

Robotic Process Automation

  • Robotic Process Automation (RPA) is a software application for end-user device-level software robot (AI virtual assistants) to optimize efficiency in the banking sector by minimizing costs with the services-through-software prototype.
  • RPA enables finance function in banking organizations to offer better compliance, improve the overall consumer experience, mitigate risks, and reduce manual efforts by taking advantage of the profound benefits of robots.
  • With RPA, back-office staff in finance departments can pay less attention to monotonous tasks and focus more on the ones that carry significant value for the organization. For finance departments in banking organizations, RPA helps in processing the tasks that are repetitive at high speed without fizzling out.
  • The finance departments can use RPA for account maintenance, account closing, trial balancing, account processing, commercial banking operations, account reconciliation, fraud and risk review, print and statements, escrow, and in other financial areas.
  • This example is the best in class because it offers the department 100% accuracy while it functions at high speed. It is also the best in class because it allows for non-additional infrastructure requirements in banking organizations; enjoining automation suitability for the finance department.
  • RPA is a best-in-class example because of the global appetite for it in the banking industry. In 2018, it had more than 63% of year-on-year growth, and it will worth around $2.9 billion by 2022.
  • The growing popularity of this best-in-class example is because it is "a great tool for automating repetitive back-office processes and so directly increases efficiency, accuracy, and speed."
  • BNY Mellon gave indications of the success metrics of RPA in its 2017 annual report after adopting it in 2016. By using RPA, it took the latter one-quarter of a second to complete financial tasks, such as clearing trades, it normally requires 5-10 minutes for human staff to complete. Another success metrics reported by the bank is how RPA enabled "an 88% improvement in transaction-processing times and account-closure validations—across five different systems—with an impeccable accuracy rate of 100%."
  • The successful use of RPA by one European bank also points to the success metrics in the area of frequency. The bank implemented RPA with natural-language-generation software to produce monthly spending accounts. Instead of taking time to create such records by hand, the financial controllers of the bank automatically creates the 'spending story.'

Data Visualization

  • Data visualization is an advanced analytics system of highlighting data in graphical formats for trend analysis, identification of anomalies, and unraveling insights that could be missed through simple raw data.
  • Among the critical tasks of a finance function in banks is to analyze and present data that is accurate, relevant, and reliable. This makes it necessary for financial departments to equip themselves with managing technologies like data visualization.
  • Data visualization quickly enables financial decision-makers, like finance departments in banks, to immediately notice trends and patterns and swing into action. Its tools convert data into something tangible, visual, and relatable, and this affords key bank's data-driven decisions to gaining stronger buy-in.
  • Finance departments in banks use this advanced analytics tool in three probable manners to visualize cash forecast data. One such way is by showing how cash transits to a closing position from an opening position. Another way is by using it to quickly understand forecast variances, while the last way is by using it to examine precision across several categories of a forecast.
  • Data visualization is also a key communication tool for the banking industry. The finance departments of banks can use it for a board report or presentation to the CEO, for example.
  • This example is the best in class because, with the aid of data visualization, finance departments in banking organizations can easily spot insights that can be vague when using raw data, and this positions them as increasingly strategic to the overall entity of the business.
  • The increasing need to leverage on the power of clean data in the competitive banking space also makes this example the best in class. According to Accenture's Aron Elston, "data visualization is evolving from a ‘nice-to-have’ to a ‘must-have’ in the banking sector."
  • Lastly, data visualization is a best-in-class example because the technologies behind it are typically modular; which means finance departments in banking organizations can deploy it cost-effectively and quickly.
  • In finance departments of banking organizations, liquidity risk reporting is usually not accurate and timely because of incorrect data sourced from several systems. A case study on the success metrics of data visualization in this area shows how the latter enables the user to "run valuable insights on rudimentary data and use data as an approximation for processing." It depicts the successful use of data visualization in data complexity, intelligence, accessibility, frequency, and customizability.
  • Accenture acknowledges success metrics is in the area of frequency, saying that non-application of data visualization will typically result in analysts "spending 80% of their time on data load and preparation, and only 20% on producing analytics."

Research Strategy

We provided two best-in-class examples of a finance function in banking organizations by highlighting industry reports across the board. The two examples are concluded as best in class because they are sought and used by a majority of the bunch. While there is a global appetite for RPA in the banking industry, 90% of the top 50 banks worldwide make use of advanced analytics (which is inclusive of data visualization) in 2019. For a full grasp of this request, we identified the job requirements of finance departments in banking organizations.

Although there is a scarcity of specific bank names in our findings, we provided facts showing top banks worldwide are making use of these two best-in-class examples of a finance function in banking organizations.
Sources
Sources

From Part 02
Quotes
  • "a great tool for automating repetitive back office processes and so directly increases efficiency, accuracy and speed."
Quotes
  • "an 88-percent improvement in transaction-processing times and account-closure validations—across five different systems—with an impeccable accuracy rate of 100 percent."
Quotes
  • "data visualization is evolving from a ‘nice-to-have’ to a ‘must-have’ in the banking sector."
  • "spending 80% of their time on data load and preparation, and only 20% on producing analytics."
Quotes
  • "run valuable insights on rudimentary data and use data as an approximation for processing."