For many CFOs, controlling the implementation of the profit plan, finding sources of financing, consolidating reporting, budgeting, and analyzing the company’s performance are the main daily tasks. To understand how things are going, they use a variety of sources to collect information—in large companies, they analyze hundreds of indicators. Data is at the heart of the financial services sector, and the business environment produces more data than ever before. Terabytes of data come from spreadsheets, invoices, diary entries, and everything else you can think of. Such detailing is important: it allows you to collect big data, which, with further structuring and analysis, helps to find non-obvious but important patterns to make relevant, balanced, and reasonable decisions.
A CFO needs to be able to do a deep analysis of all types of data to get the most out of it, but it takes half a lifetime to do this. This is where financial Business Intelligence comes to the rescue. With the introduction of Business Intelligence solutions, your company gets:
Thus, the use of Business Intelligence for financial services is necessary to unlock the full potential of the institution, its products, and services, and to help make accurate and correct decisions. Let’s take a look at the role of Business Intelligence for financial services in today’s article.
Let’s start with theory. Business Intelligence (BI) is a technology for business analysis that allows you to calculate key performance indicators and visualize their dynamics to optimize data-driven decision-making. For accurate and timely problem-solving, a BI system needs high-quality data. All financial records received in the course of business activity are a key source of data, thanks to which, using the capabilities of BI for finance, you can get an idea about the business and use it to update financial indicators, optimize supply chains, and make more informed decisions on everything from marketing to mergers and acquisitions.
It often happens that Business Intelligence is confused with Business Analytics (BA), but be careful—these are two completely different concepts. Business Intelligence is about providing the right information to the right people at the right time and in the right way. For example, a CFO can view last month’s income and plan for the next month based on that. Business Analytics is more intellectual, as it’s used to help carry out forecasting (it becomes possible to look into the future). That is, using BA, the financial director will be able to understand why the processes affected income in certain ways and will be able to build models to predict its change in the future.
BI system works as follows:
Financial directors who keep up with the times and use Business Intelligence in financial services and thereby automate reporting and reduce the amount of manual and routine work in the activities of financial departments. They control all processes in the company, are engaged in strategic planning and business development, and are the right hand of the CEO and owner. And their assistant is a BI system that collects, analyzes, and integrates disparate data from all IT systems into understandable reports.
We have already mentioned the positive aspects of using Business Intelligence in financial services. Now let’s dig a little deeper and take a closer look at how businesses will benefit from the implementation of financial Business Intelligence.
Businesses around the world are proving the value of using BI systems in their work and increasing income through data-driven decision making. With the help of BI tools, you can easily track the company’s financial activities and assess the company’s market and credit risks and how a potentially chosen strategy can affect the profit received. Business Intelligence for financial services increases the efficiency of data analysis and, accordingly, the timeliness and accuracy of making strategically important decisions.
Let’s take a look at when Business Intelligence is a valuable ally. For example, the banking sector is subject to a strict regulatory framework, which requires particular vigilance and transparency in decision making. This is due to the management of large amounts of data in many areas: customers, indicators, banking data, market conditions, etc. With BI for banking, there will be no doubts about the reliability and accuracy of data processing tools without errors to be sure that certain decisions are made correctly.
Mechanical data collection and reporting take up most of the workday of analysts and financiers. A good BI system helps save time on data collection, entry, analysis, control, and use. With BI, businesses can quickly extract the data they need from vast amounts of disorganized information. Thanks to immediate access, financial experts can make better business decisions, and with automated reporting from BI for finance you can set up an algorithm for working with different types of data, and then use it an infinite number of times automatically.
Large business managers do not see the whole picture due to a large number of IT systems and poor integration between them. Accounting, CRM, invoicing, payroll and, of course, various other Excel sheets allow you to accumulate huge amounts of data, but do not make it possible to analyze and turn them into decision making tools. It is not easy to organize and combine a large amount of data from multiple sources. Can you imagine processing all this data manually? Not only is it inevitable to make mistakes (due to the human factor), but once you’re done, by then, the output will most likely be out of date.
BI systems solve this problem and work like clockwork. Business Intelligence for finance allows you to synchronize data not only for decision making, but also to minimize human error. So it allows you to look into the past or plan ahead and analyze how things would have been in a different scenario.
Despite the complexity and length of the reporting process, in Excel, we get data up to a maximum of the second level of detail. To delve into any of the indicators, you need to re-upload the data and consolidate the report, an endlessly complex process. How does financial Business Intelligence solve this issue? You will be able to delve into transactions and any primary document. BI allows all employees to see and analyze data simultaneously across all systems, and, of course, create detailed and understandable reports that allow authorized persons to quickly perform their duties.
With advances in technology, money hunters have quickly embraced the virtual space, so companies need to take steps to help them build confidence in fact-based information from ever-growing datasets and reduce the risks where possible. Fraudulent activities in the financial sector come in many forms, ranging from the illegal use of personal information to bank data theft. Moreover, both outsiders and employees of your company can act as perpetrators of fraud. Business Intelligence in the financial services industry ensures that risks are detected as quickly as possible and resolved as soon as possible.
For example, as banking becomes more integrated, fraud is number one on the list of things to get rid of. And with the use of BI for banking—namely the search for suspicious transactions, tracking the activities of employees, scanning overdue banking transactions, etc.—problems can be identified and risks can be reduced as quickly as possible.
The use of BI in finance allows you to identify patterns and trends in structured and unstructured data. This helps to collect a large amount of information, process it, find relationships, and adjust tactics and decision-making strategies. Companies can reduce ongoing costs and make the most of available resources and experience by analyzing processes and activities within a campaign.
With the help of Business Intelligence for finance, you can get accurate and timely information about regular and profitable customers, offer them new products and services, and increase sales and profits. Also, analytical services and BI systems, specially designed for processing, visualizing, and analyzing large amounts of data, will help you attract new customers by providing information such as the average sale of a new client, the cost of attraction, etc.
Financial regulation within the company is much easier when using Business Intelligence since all expenses are tracked automatically and almost in real time. Thus, if there is a situation of shortage or overspending of funds, identifying the source of the problem and a solution will not take long. And also Business Intelligence in finance lends a helping hand in planning costly waste or purchases, as the financial director can accurately determine the amount to be allocated and the time for which this amount will be reimbursed.
Even at the stage of planning a sale, based on a dataset, BI for finance enables detailed analysis that can shed light on potential dangers, allow you to understand whether the final results will fit into the business plan, and, if implemented, how accurate the projected sales revenues are. And Business Intelligence not only provides deep granularity, but it also does it very quickly, which is a critical factor given the urgency of executing transactions. BI helps not only with the evaluation of future transactions, but also with the formation of prices for products based on the analysis of the market of competitors, discounts, the number of refusals of purchases, etc., and with building a strategy by analyzing the profitability of certain products, payback, contributions to income, and much more.
If a company is going through a difficult time, BI can help CFOs sort through the data sets that are unrelated and disparate, based on which it is very difficult, and sometimes impossible, to fully diagnose the causes of unsatisfactory results.
Using data from Business Intelligence in finance processes helps companies track and analyze customer data to determine buying habits and patterns. By fully understanding the needs and desires of your customers, you can optimize services to increase current sales and ensure long-term loyalty to the entire company. Predictive data analysis can also reveal new markets and opportunities to expand your customer base.
Banking institutions, having information about the profitability of customers, can find more cost-effective ways to interact with them. For example, a customer who withdraws cash from a bank to pay bills can be persuaded to use online banking.
It is no secret that it is not enough to accumulate data: it is necessary to analyze it, manage it, and make it work—this is the most significant challenge for modern companies. Financial Business Intelligence creates the basis for the timely, accurate, and automatic analysis of various financial data for maximum efficiency in planning. The capabilities of Business Intelligence in financial services go far beyond predicting sales and earnings one quarter ahead. BI is useful in understanding almost any variable that can affect a company’s bottom line: billing and revenue generation, the impact of pricing policies, inventory levels, sales, customer service costs, and more.
A bad report is even worse than the absence of any. Therefore, it is extremely important to receive accurate and well-written financial reports. Business Intelligence in finance extracts all the necessary data from the company’s expense management workflow and ensures that you receive accurate, analyzed, and well-structured reports in the form of graphs and charts. Thus, the finance department can quickly identify errors, correct them, and make decisions based on facts, not assumptions.
In business, every delay in making decisions and finding malfunctions costs a lot of money. Business Intelligence for finance identifies specific issues your business is facing so you can make targeted improvements as soon as possible. With the help of BI, all employees can monitor the necessary production processes in real-time, and with the setting of alerts, they are immediately notified of problems. This prevents production shutdowns that can significantly reduce productivity.
BI can be any CFO’s best friend by providing the company with an automated system for analyzing historical, current, and forecast business operations. The finances of the enterprise require constant attention and control. Implementation of BI for finance is a necessary step for moving towards proactive management of the financial result of an enterprise. NIX United provides companies with robust Business Intelligence for financial services systems that help to measure big data and create useful forecasts based on your discoveries and analysis. Unleash the full potential of your business, its products, and services, and make accurate and correct financial decisions based on the data collected by BI.
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