From risk analysis to portfolio management, how digital tools help banks build resilience | Anaplan


Tom Gibson

Global Financial Services & Insurance Strategy Leader

The positive role of technology and digital investments in the banking sector has become increasingly apparent in recent years, but the rate of adoption has lagged behind other industries. Now, against the backdrop of a sudden banking crisis and a volatile economy, a new urgency has appeared.

The recent collapse of two regional banks in the U.S. has left many scrambling to shore up their portfolios in an effort to mitigate risk – especially as leaders continue to predict wider fallout. The crisis also underscored the importance of risk analysis and management and, hopefully, served as a wake-up call for banks who were not adequately assessing their exposure.

In this landscape, banks have a real opportunity to accelerate their digital transformation efforts to help enhance their risk management capabilities, modernize their planning functions, and better model their exposure in the future.

The following are steps banks can take today to leverage technology-enabled capabilities to better understand their risk exposure and make informed decisions to protect their financial stability.

Contextualize your risk and liquidity

Liquidity and risk management are critical for banks to ensure their stability and ability to withstand economic turbulence. Banks need to ensure they have enough liquidity to meet their financial obligations and mitigate risks to their assets and investments.

Scenario models have a crucial role to play in the risk analysis process for banks – especially when it comes to the stress testing required by regulatory bodies. With the right technology, banks can develop and leverage scenario models to evaluate the impact of various hypothetical occurrences on their overall portfolio.

For instance, a bank could create a standard portfolio model, then make changes to reflect a sudden or unplanned change in interest rates, economic or market conditions, geopolitical events, or withdrawals and investments. Decision-makers can evaluate the potential impact of each scenario, identify the bank’s vulnerabilities, then make adjustments to ensure the bank is prepared to withstand the event should it occur in the future.

Scenario models are also used in capital planning to ensure that banks have enough capital to withstand potential losses. By running scenarios, banks can assess the amount of capital they need to hold to cover potential losses and maintain their financial stability.

Manage your portfolio in one place

In addition to leveraging scenario models to identify potential points of failure, a bank can use advanced digital platforms and data analytics tools to plan more effectively, monitor the status of its assets in real-time, and keep its portfolio optimized for success.  

Historically, planning has been a time-intensive task for banks, requiring an army of individuals working across several different tools – and often hundreds of different Excel spreadsheets – to crunch numbers, compare data points, and try to align on a realistic plan across many business lines. Even in the best of times, this process is incredibly manual, takes many iterations, and is far too prone to error.  

Forward-looking banks, recognizing this planning pain, have invested in tools that automatically consolidate data into a single, easy-to-use environment. Teams can work together in the tool, in real-time, to analyze data, align on targets, monitor investments and market changes, and make informed decisions about buying and selling assets without manual iterations, with the inaccuracy and time that comes with disconnected planning.  

Not only does this give the bank a clear view of its entire balance sheet and investment portfolio, but this level of visibility and collaboration also makes it easier for decision-makers across the bank to monitor and manage performance to drive growth and opportunity. With a firm grip on its portfolio – and a real-time look at the market – the bank can take steps to improve its returns, identify new opportunities, and build greater trust and loyalty with its customers. Automation can also help to streamline banking operations, reduce costs, and increase efficiency.

Taking advantage of technology

It’s clear that digital investments have a significant role to play in helping banks contextualize liquidity and risk, manage their portfolio, and remain stable in a time of turmoil – but taking advantage of those investments can be tricky, so change management is critical. 

During our recent Anaplan Connect event in New York, Lisa Ganame, Executive Director of Forecasting at JPMorgan Chase & Co., discussed the important role senior sponsorship played in the bank’s successful adoption of Anaplan as a tool for forecasting. “The frequency of forecasting is happening faster and faster. You get something like COVID, and you need answers really quickly, then it happened again two weeks ago, another financial fire drill where you need answers really quickly. It’s a great point to remind executives why we need to invest in these tools.”

By adopting technology solutions that are business-friendly, banks, like JPMorgan Chase & Co., can empower their teams to work together in real time on planning tasks that will drive greater value, especially in times of complex change. Instead of sifting through spreadsheets, planners can focus on assessing and improving risk, optimizing the bank’s portfolio, ensuring regulatory compliance, and enhancing the bank’s stability and profitability.

The end goal? A resilient, agile, data-driven bank, prepared to weather storms, deliver value to customers, and seize new opportunities.