We’ve seen that some banks are moving toward an Everyday Bank vision, shifting toward a digital, data-driven approach for serving customers and surrounding them with a personalized ecosystem of providers and services. We know banks will need to undergo a lot of change to reach this vision.

One function that will need to change dramatically is finance and risk. To reach the Everyday Bank vision, banks will need more agility when it comes to finance—but they will face more exposure when it comes to risk.

For many financial institutions there’s a common pitfall—a stumbling block that makes the finance and risk function unwieldy: a silo mentality. Siloed finance and risk structures exist because there was a time, not even that long ago, when silos allowed different business units to specialize around the kinds of risks most relevant to them.

But, as reported in CFO Magazine, finance and risk silos come with very real negative repercussions. Collaboration with other business units doesn’t happen in a siloed infrastructure. Sometimes each silo within an organization becomes its own, mini ecosystem, with its own finance and risk culture and practices.

The inefficiencies inherent in a silo-driven infrastructure are precisely what an Everyday Bank does not need. To drive an Everyday Bank vision, finance and risk must be integrated and fluid, ready to respond rapidly to market conditions that are changing in the blink of an eye.

The reality is, many banks don’t yet have a finance and risk function that can help them reach their Everyday Bank goals. Our recent report, Remaking Finance and Risk for the Everyday Bank, found 60 percent of banks still deploy about a quarter of staff time on credit and operational risk activities that should be automated. Risk and finance processes often remain highly routinized and structured, making it tough for the function to respond dynamically.

Our report highlights three ways in which an integrated finance and risk function can increase its agility:

Mobility and security risk, analytics in budgeting and forecasting, and real-time KPIs and KRIs.

  • Become proactive around mobility: An integrated mobile fraud and security approach is equipped to self-monitor and continually identify new threats in light of new regulations.
  • Be strategic with analytics: Effective use of the vast data stores generated by banks can help CFOs offer strategic guidance, contribute to profitability and identify opportunities to improve performance.
  • Build advanced monitoring and reporting capabilities: Using real-time KPIs and KRIs can open a much bigger window into helping the bank improve capital management, build agile operating models and respond dynamically to changing finance and risk scenarios.

What’s the end goal? A newly designed, agile, responsive finance and risk function that eliminates silos and operates seamlessly.

In my next few posts we’ll talk about other keys to revamping the finance and risk function, including protecting the bank’s reputation and dynamically responding to challenges. Stay tuned, and see our report for more information in the meantime.

3 responses:

  1. Gary, you’ve got an interesting point here. As big banks become increasingly electronic, they’ll be able to cater to customers on a far more intimate level. What’s the role of the everyday branch employee when everyone’s taken care of by the app in their phone.

    Still not totally sure what “Everyday Bank” means, care to give a definition?

    Thanks,
    Will

    1. Will,
      Thank you for your questions. You raise a good question: What happens to the branch as banks increasingly go electronic? That answer will vary across the spectrum, depending on a bank and its strategic goals. For some, the branch will disappear. In other cases, branches will take on new roles: Some banks are converting branches into cafes, where customers can sip a beverage, enjoy free wifi and—if needed—handle banking activities. Either solution points toward the Everyday Bank approach. We define an Everyday Bank as one that works to put itself at the center of an ecosystem customized to each client, anticipating needs and offering needed services and products to clients at reduced fees, thanks to the high volumes it generates for its ecosystem partners. To learn more, visit our interactive site and download the full report on the Everyday Bank.

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