Spreading financials - making the case for automation
By Rob Cossins on the 14th February 2023Banking
Banks are deploying new technology at scale. Automated financial spreading is fast becoming ubiquitous in banking, providing multiple advantages to banks and their clients. Here we explore the role of machine learning and AI in spreading financial information. You can read about the broader Risk and AI side here.
High accuracy, more efficiency and better decision making
The biggest benefit to automated financial spreading is accuracy and efficiency. Spreading financial statements manually is prone to human error (~5%) and time-consuming. When financial spreading is automated, the process is much quicker and more reliable, reducing the risk of errors. This saves time and energy, while enhancing the quality of the output and the overall reputation of the bank.
Automated financial spreading delivers real-time performance information on clients, allowing Banks to make fast, informed decisions. Enhancing the stability of the Bank will protect its clients' interests, allowing the Bank to identify possible issues early and take proactive actions.
Improved client experience, while delivering cost savings and regulatory compliance
Client requests often take weeks, when they should be taking days, because of manual financial spreading. By speeding up the administration, loans can be analysed and issued much faster than historically, particularly for existing clients. It's important to manage robust risk processes alongside automation. It’s estimated that the average large Bank spends more than 25 thousand hours annually copying numbers from private sets of financials into their platforms, or financial models.
This time would be much better spent elsewhere, on value-add analysis and insight. By unlocking monitoring and risk teams into higher value activity, they are able to provide intelligence support for front office relationship teams. Banks are highly regulated, and automating financial spreading helps to meet these regulatory requirements. Annual Reviews will be undertaken on time, and reporting will be highly accurate. This helps to reduce penalties, while minimising reputational risk.
Automated financial spreading provides multiple benefits, including better decision making, improved client experience, cost savings and regulatory compliance. It’s a matter of time before all Banks implement this at scale and those that implement it sooner, will obtain an edge over their competitors.
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