Banking Analytics: The Insights Corporates Need
Corporates have traditionally used financial accounts as their primary source of financial information. Recent developments in Big Data and the cloud facilitate new ways of processing information without investment in costly infrastructure.
Bankhawk Analytics provides chief financial officers (CFOs), finance directors and treasurers with insights into banking data using analytics and data visualisation. Data is processed and analysed at Bankhawk’s Global Banking Analytics lab in Dublin, Ireland with the goal of helping corporates become more competitive and profitable.
gtnews recently spoke with Brian Weakliam, founder and chief executive (CEO) of Bankhawk Analytics, on what data corporates are looking for, and what they need to do to get it.
gtnews: What is changing in the treasury and banking space, from an analytics standpoint? Are banks finally catching up and providing more information to their corporate clients?
Brian Weakliam: The banks have come to the party late but are now embracing technology. More banking data is now available electronically, which presents a huge opportunity for treasurers to gain new insights. They have more information available much quicker than heretofore. The flipside is that they now have a vast amount of data coming at them and need better means to exploit it.
What are some of problems that treasurers run into in managing all of that data? Are the difficulties they are having simply the result of not having access to this data until very recently?
BW: The better quality of data coming from banks now is helpful but the data is not always user friendly. They are moving beyond just providing transaction and balance information but are being dragged kicking and screaming into the analytics space. This reluctance might be short-sightedness or down to the fact that they are running creaking mainframe systems. Paranoia around data security might also be a factor which is understandable.
Corporates have to make their own investment to convert this data into more useful formats for business intelligence. With existing systems this can be cost prohibitive when budgets are tight. Treasurers use our analytics to help them easily manipulate the data and decide which reports are most useful. Some of our clients use their analytics for strategic purposes, like supporting the business case for investment in new treasury and payments systems.
Don’t forget how powerful the banking information is. Every cent that flows through an organisation flows through its bank accounts. Strong bank account analytics are an invaluable tool for companies. The bank doesn’t lie; the bank account data is rich resource of information – revenue analytics, spend analytics and cash flows.
Why has this space been neglected and how does this translate to business?
BW: This space has been neglected because many banks still use cumbersome legacy mainframe systems. With the explosion of credit pre-financial crisis, banks were too busy making money from lending to think about the information needs of their customers. They did not see the need to invest in providing better information for their customers. Since the global banking crisis and the credit crunch, banks have realised that the world has changed and in order to have a sustainable business, they need to focus more on the needs of their customers by providing better quality data.
What makes this data so essential for corporates?
BW: The banking data is a treasure trove with mines of useful information. How money comes in, how money flows out, how funds flow through the banking system. What the real costs are, and what happens if there are changes. What and where the risks are. What liquidity looks like.
What components of the data are your corporate clients most concerned with these days? Where specifically are they looking for more information?
BW: Organisations’ banking data is a very valuable asset, but it typically sits on a hard drive or in a filing cabinet once processed. Treasurers and finance directors want clear insights into how efficiently funds flow through their organisations and where the leakages are. They are seeking key performance indicators they can use to optimise financial activity and improve their bottom line.
Furthermore, most treasurers right now can only see their own data. They are primarily looking to benchmark their costs against the market and their peers. Even the best treasurers and the best treasury management systems can’t properly measure efficiency if there is nothing to measure against. As the old saying goes ‘if you can’t measure it you can’t manage it.’ Treasurers typically like key performance indicators (KPIs) like companywide cost-per-transaction by bank and by channel, transaction costs per €100m of revenue and speed of funds flow.
You’re in the middle of launching your WorldClass Banking analytics. What is driving this effort?
BW: Corporates are looking for analytics that allow them to easily analyse their banking activity and measure against their peers, and WorldClass Banking is an offering that allows them to do that. Companies can generate KPIs and benchmark them. Essentially a huge amount of data is digested and presented using succinct dashboard style analytics. There is no major system implementation required. Treasurers can have leading analytics capability with without having to invest much treasury team time.
Can you provide an example of a client you’ve worked with who was able to make improvements after looking at KPIs? What did they discover?
BW: One client of ours is an insurance company. Their main funds flows are premium income and claims payments. Their banking structure was very cumbersome and a large amount of cash was effectively ‘trapped’ in the banking system. We worked with the company’s treasurer and helped them measure the speed of cash flow through the organisation and identify the blockages. Building a model of their banking structure using our data visualisation tools showed them how to easily rectify the problem using new pooling structures with their banks.