Connecting the Dots between Strategy, Risk and Performance
Scott Adams, cartoonist and creator of the Dilbert cartoon series, once proclaimed, "Informed decision-making comes from a long tradition of guessing and then blaming others for inadequate results." Thankfully, in an age of real-time data and analytics, financial institutions can do better than our friend Dilbert.
Every day, financial institutions make a host of decisions that impact profitability, risk and performance. The demand for immediate access to real-time, accurate financial data and performance analytics is growing, pushing the industry to connect information to strategic decision-making in new and exciting ways. Today, it's all about making sense of the mountain of available financial information – and expediting delivery of the crucial insights gleaned from it.
Good decisions are not made in a vacuum, but historically risk management and financial performance analysis have been siloed. Financial institutions are facing mounting pressure to increase capital while also managing regulatory requirements, making it more important than ever to link financial performance management with risk management. Unfortunately, addressing collaboration between risk and financial management processes – and using that information to make good business decisions – can be a struggle for many banks and credit unions.
The good news is that it's easier than ever to connect the dots between pieces of seemingly unrelated data and analysis to impact risk, budgeting and reporting processes. Technology can now enable monitoring of actual performance against strategic goals to make necessary adjustments. A Web-based enterprise performance management platform can be particularly effective in easing the costs and inefficiencies usually associated with implementing and maintaining software on multiple workstations or servers, giving financial institutions a way to access financial accounting, customer behavior analysis, performance management and risk management applications.
What's the day-to-day value of real-time data and analytics for financial institutions? With the right information, financial institutions can not only develop a business strategy, but monitor and manage it in real-time – quickly making changes where necessary. For example, financial institutions can direct marketing activities by gaining an understanding of which products and services customers are likely to buy.
Plus, when financial performance is evaluated in relation to risk, strategies can be updated to quickly respond to changing business conditions and pressures. If a bank is looking at an acquisition, decision-makers can have real-time access to credit, interest rate and market risk data to measure risk against the potential for growth – new customers, new services, money-saving efficiencies – and can outline strategies before the acquisition. Armed with rapid delivery of results data, the bank can then easily tweak its post-acquisition strategy to adjust to marketplace realities.
Although financial institutions have access to more information than ever before, what's the point if it's not integrated in a way that decision-makers can use it, monitor the results and fine-tune strategy on a daily basis? No longer forced to guess at possible outcomes, financial institutions can use real-time data and analysis to make well-informed decisions – and fundamentally change the way they execute strategy and manage their performance.