How Performance Analytics Can Change the Game in Banking

Tamar Alairys and Omer Sohail
December 29, 2008 | COMMENTS

Chief financial officers of financial services companies face a broader range of demands as their roles evolve from passive scorekeepers to active strategic partners in enterprise management. Often, the CFO is responsible for identifying performance and value drivers and sharing them across the organization. Cost reduction and process improvement are also in the CFO's domain.

A 2007 Accenture survey of CFOs revealed that enterprise performance management is a key driver of shareholder value and a focus of future investment as they seek to improve insights into their businesses and ultimately help them achieve high performance.

No wonder. Enterprise performance management helps companies make better, faster decisions, reduce risk and integrate budget with strategy. Effective performance analytics software for financial institutions can improve performance reviews with individual dashboards, scorecards and report—and help establish one version of the truth through the entire company. Moreover, performance analytics is economical—traditional approaches can cost over $1 million more and require six to 12 months longer to implement.

Analytics and High Performance

Accenture's research into high performance business found a powerful link between organizations with pronounced analytical orientations and superior market performance. High performers are much more likely to value fact-based decision making and have the skills and capabilities in place to effectively use analytics across their organizations.

There are three characteristics common to every bank or credit union that uses analytics successfully:

1. Their senior leadership teams are deeply committed to building their organizations' analytical capabilities and competing on analytics.
2. They use analytics to leverage their distinctive capabilities, the sum of the integrated business processes, and competencies that allow them to serve customers in differentiated ways, creating a formula for lasting business success that is hard for competitors to replicate.
3. They stress tactical execution, using data, data management tools, decision support tools, and other resources to deliver on the promise of analytics consistently.

An Analytics Solution

An effective enterprise performance management program helps financial institutions gauge how well management decisions implement business strategy. This includes components that:

• Allow decision makers to analyze, plan, and monitor across the entire organization
• Allow managers to understand the business better, make decisions, and motivate and compensate personnel properly
• Provide a standardized approach to structuring management processes

The solution can help CEOs and their CFOs use a strategy map to visualize how different value drivers link up to the bank's objectives.

The solution can provide the following benefits:

1. Alignment. The solution automatically relays the CEO's targets across the organization, thus aligning management decisions with the company's strategy.
2. Data integrity. The solution acts as a single data pipeline across business lines, divisions, and geographies.
3. Better budget process efficiency. The solution provides the ability to easily manipulate, collect and export data to commonly used spreadsheet applications such as Microsoft Excel.
4. Faster reporting cycles and budget preparation. The solution offers an automated series of individual dashboards, scorecards, reports, drill-down screens, and alerts to expedite preparation of budgets and reports.

Aligning Data with Decision Making

It is important for managers to know that decisions from top to bottom align with the business strategy. They need to know, in near real time, where their firms are creating value and where value is being destroyed. However, multiple systems can deliver multiple incompatible, even contradictory, versions of the truth. The difficulty in accessing reliable information is a key reason why budgeting takes so long, and why the budget process seems to add little, if any, value.

An effective enterprise performance management program can help address the information deficit and automatically align all targets with executive strategy. It offers effective performance review mechanisms, including individual dashboards, scorecards, and drill-downs, which can help smooth and speed the budgeting process, facilitating a single version of the truth that is accessible throughout the firm.

The goal of enterprise performance management is to enable managers to deconstruct a corporate strategy into appropriate metrics and then translate those metrics into reporting and analysis. When managers and C-level executives have what they need to monitor, analyze, and plan effectively, they can make decisions that directly support their company's chosen strategy and deliver high performance.

Accenture is a global management consulting, technology services, and outsourcing company. Visit www.accenture.com or call 877-889-9009.