Fssa conference 2014 cfo group unified financial performance management

Unified Financial Performance Management in the Financial Services Sector

GEOFF NOBLE CFO GROUP

2014 The Year of Opportunity

AGENDA

•  What we mean by Financial Performance Management •  Financial Performance Management needs in Financial Services •  Financial Performance Management systems and the pitfalls •  A unified approach to Financial Performance Management •  Benefits of a unified approach •  Some case studies •  Possible next steps and Q&A

What we mean by Financial Performance Management


FINANCIAL PERFORMANCE MANAGEMENT PROCESSES

Planning

Budgeting

Forecasting

Closing

Consolidation

Management Reporting

Statutory Disclosure

Regulatory Reporting

Scenario Modeling

Group / Corporate

Opera-ons / Divisions

Financial Performance Management needs in Financial Services


WHAT CFOS IN FINANCIAL SERVICES HAVE TOLD US

General themes about the finance function: -  Drive to become business partner / advisor / catalyst / strategist

-  proactively bring opportunities to the business

-  Reduction in cost of finance -  streamline processes and off-shore mundane -  achieve or beat the top performer benchmarks for costs % revenue

-  Increase regulatory attention

-  Improve the quality and timeliness of information

…and automa*ng Financial Performance Management supports all above


WHAT CFOS IN FINANCIAL SERVICES TOLD US

Specific needs for Financial Performance Management: -  Group / Corporate consolidation of plans, budgets, forecasts, and actuals

-  consistent reporting and analysis at the group / corporate level -  management, statutory and regulatory reporting and disclosure

-  Operational planning, budgeting, forecasting, and reporting -  branch, region, product, customer segment

-  Contract level detail to drive out revenue budget/forecast for existing portfolio -  each individual loan/deposit/policy

-  Driver based budgeting and forecasting for new portfolio and costs -  Payroll, opex, capex and ICT budgeting -  Cost allocations and profitability analysis by product

Financial Performance Management systems and pitfalls


FINANANCIAL PERFORMANCE MANAGEMENT SOFTWARE

The software industry calls it xPM

FPM

CPM

BPM

PM

EPM

Large so5ware vendors


MANY SOFTWARE VENDORS HAVE BOUGHT MULTIPLE PRODUCTS

Planning

Budgeting

Forecasting

Closing

Consolidation

Management Reporting

Statutory Disclosure

Regulatory Reporting

Scenario Modeling

Disclosure Management tools

Planning tools Consolida-on tools

Strategy Management tools

Business Intelligence tools

Closing tools

Data Warehouse tools

Data Integra-on tools


PITFALLS OF MULTIPLE PRODUCTS

Multiple specialists Too many cooks Cost é Time é Complexity é Value ê

A unified approach to Financial Performance Management




HOW TO SIMPLIFY FINANCIAL PERFORANCE MANAGEMENT

•  Put the right people on the job •  Ex-CFOs and technically-savvy accountants •  Talk finance, business and technology •  Have a passion for financial performance management

•  Use unified software platforms •  One product is better than many •  Must be functional (for financial services) and scalable •  Finance friendly and not require extensive IT involvement

•  Apply an outcome focused methodology •  Top-down from vision and goals to staged implementation and use •  One solution architect (and not too many cooks)



Business logic and financial rules

Data Model: Processes: Data Sources: Outputs: Goals:

Vision: Provide a unified system for financial performance management across the organisation

•  Less effort and pain to produce the information

•  More relevant information

•  More accurate and consistent information

•  Transparent rules and assumptions

•  More timely delivery of information

•  Less costs to own, maintain, run and use

•  Flexible platform to meet future needs

Statutory and Regulatory

Management -‐Group/Corporate -‐Ops/Divs

Scenarios and Analyses

Ad Hoc and other outputs

Dimensions: •  Periods •  Scenarios •  Categories •  Currencies •  Accounts •  En--es •  Products •  Customers

•  Other

Opera-onal systems

Manual Input

Financial systems/ GL

Other sources

Plans

Management Actuals

Scenario Modeling

Plans, Budgets and Forecasts

Dimensions and calculations to support outputs

Statutory Actuals

Forecasts

Budgets

Exis-ng porMolio

Benefits of a unified approach


BENEFITS OF A UNIFIED APPROACH

•  Successful implementations - on time, on budget, happy users

•  Get the consistent numbers out faster to the people that need them

•  With less pain and effort

•  Reduce costs

•  Increase staff satisfaction in both Finance and in the business

•  Provide far more time for analysis…

Become the business partner introducing business opportunities

Some case studies


Results/Benefits: •  Single chart of accounts to manage •  Improved auditability and decreased risk •  Integrated disclosure management •  Easy expansion to additional processes •  Competence center and lower TCO •  Shorter closing cycle

System Scope: •  Financial consolidation and regulatory

reporting •  Statutory and management reporting •  Budgeting and forecasting •  Segment reporting •  KPIs and executive dashboards •  Disclosure management •  Reporting for Chief Risk Officer

The Group •  Revenues €40 billion •  Global 500 #154 •  Largest bank in Central-Eastern Europe

Financial Performance Management system Size: •  3,800 users •  800 fully consolidated entities •  9 sub-consolidation sites •  300 participants in disclosure management


CLOSE

From close to disclosure in Financial Services

>  Local close

>  Consolidation

>  Intercompany reconciliation

>  Journals and adjustments

>  Controls and validations

>  Financial reporting

>  Management reporting

>  GAAP, IFRS, XBRL

>  Board books

DISCLOSURE

>  Segment reporting


> Bank-wide/Insurance company-wide budgeting by company / operation / region / product / customer segment

> Existing portfolio projections at the individual loan/policy/contract level

> New business portfolio projection

> Driver based payroll, opex, & capex

> IT cost budget

> Cost allocations

> Budget consolidation

> Actual vs. budget reconciliation

Planning, budgeting and forecasting in Financial Services

Q&A and Possible Next Steps


NEXT STEP TOWARDS UNIFYING FINANCIAL PERFORMANCE MANAGEMENT AND BRINGING OPPORTUNITIES TO THE BUSINESS?

•  Apply some of the methods covered today back at the office •  Informal meeting with us to discuss your situation

•  Formal Financial Performance Management review

•  Copies of Case Studies…email me for copies

•  Opinion Leader Lunch Series…email me for details

•  Q&A

THANK YOU

[email protected]

Documents

Fssa conference 2014 cfo group unified financial performance management