Unleashing the Benefits of Enterprise Performance Management in Banking

What Is Enterprise Performance Management?

An Enterprise Performance Management (EPM) solution enables businesses to efficiently complete financial and operational performance reporting and analysis while incorporating strategic initiatives into the planning and forecasting process. This is made possible when performance management is applied to all functions in the enterprise (e.g., sales, operations, finance, marketing, and other lines of business) and automation is introduced into critical enterprise activities, such as reporting, budgeting, planning, and strategy.

In addition to providing OCFO leaders with visibility into revenue and expense controls, EPM also empowers all departments to integrate cross-functionally and collectively work toward collaborative solutions.

Why Should Banks Deploy an EPM System?

The inherent complexity in bank organizations is compounded by:

• Uncertainty in the marketplace.
• Existing and emerging regulatory scrutiny and associated risks.
• Demand for continuous innovation, competitive differentiation, and new financial products.
• Customer experience pressures and improvements.

As banks grow, their systems architecture also expands with the addition of new platforms and processes designed to support new products and controls. Consequently, the data stored and flowing throughout these systems becomes more challenging to maintain, understand, protect, and act on. Often seen as one of the more significant issues in the industry, data quality and accuracy can easily deteriorate without appropriate interventions and upgrades.

EPM Benefits

EPM systems provide banks with a single source of financial truth amid uncertainty and challenges.

Leveraging data on transactions such as loans, letters of credit, deposits, trading desks, and debt capital market (DCM) transactions, EPM systems enable users to evaluate and report on performance while simultaneously monitoring the investments, budget, and impact of transformational programs the bank enacts in various areas of the business. As the bank pivots, changes, and improves, all progress (or lack thereof) is accessible and measurable in a single platform.

These benefits, among others, make EPM software an incredibly powerful tool for helping banks achieve stronger financial performance, mitigate risk, and deliver profitability.

For example, EPM software can improve loan portfolio management by assessing credit risk, monitoring loan performance, conducting scenario planning and forecasting, generating financial reports, and visualizing data through dashboards and visualizations. EPM software also provides powerful analytical tools for assessing these loan portfolio metrics in real time, enabling banks to quickly identify underperforming loans and take corrective action to minimize losses. EPM puts risk reduction, optimal loan portfolio performance, and improved bottom line easily within reach.

Selecting the Right EPM Software in Banking

The OCFO typically holds decision-making authority on EPM system selection, with common vendors being Oracle EPM and Anaplan. More recently, another vendor, OneStream, has gained market share in various industries.

To ensure users are empowered with the right combination of tools to make informed decisions on behalf of the bank, finance leadership should look for the following elements in their EPM software:

1. The software should accommodate flexible and extensive reporting, which allows for multidimensional and transactional reporting. Users from different departments, locations, and business lines gain access to core reports and robust dashboards that assist with reporting and analysis. With this level of granularity and access, the EPM platform eliminates the need for multiple reporting systems and synergizes the work of finance and operations staff.
2. The software must have interactive dashboards. Interactive dashboards allow users to easily make changes to the interface to drill down and examine information across the entire organization at the touch of a button. Dashboards should reflect the latest changes in upstream data, making them continuously updated and actionable.
3. The software should be scalable. The proper implementation of EPM allows for the system to meet the bank’s current and future business and regulatory needs. As needs change, new financial solutions are introduced, and the bank expands, the system should adapt and scale accordingly. That means that if limited dimensionality is needed at present, for instance, but the bank would like the option of more robust dimensionality in the future, the system is capable of accommodating this evolution.
4. The software should integrate with the bank’s existing systems. EPM systems should support banks’ desire and ability to integrate with other core systems, such as trading and loans platforms, treasury software, and Enterprise Resource Planning (ERP) systems. In addition to these enterprise systems, bank EPM software must integrate with widely used desktop solutions like Microsoft Excel and Word. 
5. The software should have extensive modeling capabilities. Leading EPM software accommodates driver-based modeling and scenario-based analysis (e.g., “what-if” scenarios). Modeling enables highly flexible calculations for the bank’s budget/projections and rolling forecasts. Since all the calculations and drivers are centrally located within a bank’s EPM system, modeling should be faster and more accurate as compared to having spreadsheets in multiple locations.
6. The software should be cloud-based. Cloud-based software has many advantages over on-premises software. Usually, the implementation timeline is shorter and, since the software is administered over the cloud, there is little to no investment in computer infrastructure. Cloud-based EPM provides a safe and secure storage system for banks’ sensitive data. Another advantage of cloud-based EPM is the very limited business interruption it might cause, as the cloud-based software is usually on multiple fail-safe data centers throughout the world. Lastly, upgrades to the system are typically performed very quickly and cost-effectively.
7. The software should be simple with a user-friendly interface as this is vital for user adoption of any EPM system. As any business leader can attest, poor adoption will tank any form of transformation or change management, resulting in reduced EPM ROI.

As an EPM platform is successfully deployed, the transparency and insights generated immediately make an impact. Leaders throughout the business can develop new strategies for efficiently running and improving operations, financial performance, and decision-making in support of corporate objectives. For banks that find the cost of EPM prohibitive, the lost opportunity cost is even more expensive. Implementing EPM software is critical to banks striving to enhance the accuracy and integration of financial processes, resulting in ROI in relatively short periods of time as more and more activities are migrated over to the new system.

For expert support implementing or optimizing EPM systems, contact CrossCountry Consulting.