Leverage planning technology to respond, recover, and thrive in Financial Services

By Mark Arnold

May 28, 2020

Henri Wajsblat, Anaplan’s Head of Financial Services Solutions, interviewed Deloitte Australia Partner Mark Arnold about the impact of the COVID-19 situation on the finance function of Financial Services organizations, the key role of planning to navigate the storm, and how technology can best support the Respond, Recover, and Thrive phases.

COVID-19 has changed—overnight—the ways of working for Finance in the Financial Services Industry. In particular, its reliance on shared service centers has been challenged when COVID 19 hit both on- and off-shore teams simultaneously. What should Chief Financial Officers be considering ?

The finance function has been a significant participant in leveraging the capabilities of shared service centers. There is an opportunity to consider redesign of finance operating models by embedding automation and virtual ways of working: to reengineer end-to-end processes and leverage accelerators such as robotic process automation (RPA), predictive forecasting, and advanced analytics that support virtual ways of working to accelerate Finance into the digital world.

So, what areas should Chief Financial Officers be considering?

Financial Services is a highly regulated industry. The obvious ones are around highly manual processes, whether core reconciliations, or statutory and regulatory reporting, which are generally structured in their delivery.

However, I believe the opportunity is to also focus on performance management and forecasting. The complexity of the business model in the Financial Services industry has made this challenging during times of crisis, such as during the recession 2008 and in the unprecedented situation we find ourselves today with COVID-19. The events of the last months have demonstrated the need for the capability to accurately predict, in a timely manner, how the business is performing against the current plan. These rapidly changing market conditions emphasize the need to review the utilization of resources, whether it is capital, funding, or people to drive the business strategy. No doubt, the use of predictive forecasting based on these changes give more concise and structured scenarios to manage the risks and challenge these decisions. This is extremely relevant in the current environment, as banks and insurers manage their exposures to the various markets they operate in. They need a clear strategy to access capital markets, from credit to market risks, to ensure that they are effectively capitalized. The somewhat cumbersome process that both banks and insurance companies experience to make these decisions with the link between the teams, both on- and off-shore, has made a quick response to change problematic. Deloitte’s view is that we are moving from the Respond to the Recover phase. Here is an opportunity to begin shaping the future of how Finance operates in a world that is fundamentally changing.

How should banks and insurers approach this?

We are finalizing our response to the Respond phase in managing continuity of the business. The Recover phase becomes about evaluating change in the operating model by leveraging technology, ways of working, and risk management. A number of banks and insurers have started to embrace these changes and move forward with a clear strategy based on the changes made in the last six to twelve months. That will be the final Thrive phase. The leading innovators in the market have already started enacting their plans. Finance’s ability to support the business is crucial to this success. I would not say I am an optimist, but I do see that often the organizations with the courage to react quickly during a crisis are the ones that thrive.

Talking about the Respond and Recover phases and how Financial Services organizations can leverage technology, Deloitte has recently created solutions to help banks and insurers navigate through the current uncertainties, leveraging the Anaplan platform. Could you share a few insights on how Anaplan can help banks and insurers succeed during the Respond and Recover phases?

Technology has a different role to play in the different phases of our response to the current uncertainties. During the Respond phase, technology that can be used to very quickly model scenarios in an agile and collaborative manner is key. Time-dependent scenarios based on key drivers, mostly internal, across many different inputs take into account extremes and all possible scenarios. In most cases, the steps taken to reach a particular outcome are important and need to be understood and recorded in the modelling process. As we know, more chaotic systems only require a small variation early in the process to drive a big change. During the Recover phase, technology needs to support and model the impact of both internal and external drivers, taking into consideration a multitude of data sources. Establishing a base model and continually assessing the model using internal and external feedback loops enables an organization to navigate with insight. This scenario-planning approach is essential to make sure that the business is able to re-align efficiently and effectively, and in a position to recover as quickly as possible. It’s also important to measure and monitor the outcomes and re-adjust the scenarios as new information becomes available getting the right data is key here. Lastly, organizations will enter the Thrive phase. This is where the current uncertainty has passed and the business has re-configured to the new environment, taking advantage of new ways of working or changes to existing business models. Here technologies that support Connected Planning across an entire organization will be the most useful. Organizations that can effectively bridge their plans from Respond through to the Recover and Thrive phases are well placed to adapt to whatever new uncertainty arises. Those with a next generation Connected Planning platform like Anaplan are able to effectively leverage the technology in each of the phases. Legacy systems supported by spreadsheet models will no longer be enough to get much further than the Respond phase.

For more information on Deloitte Financial Services solutions in response to COVID-19, join the webinar scheduled July 9th, 2020 at 2.00pm SGT / 4.00pm AEST.