Financial institutions are currently undergoing a radical change within the financial services industry, and digital transformation is at the forefront. While technology has been part of these financial institutions and daily operations for quite some time, significant advances in technology and a wide range of new technologies have now made digitalisation and automation more realistic and accessible than ever before. Combined with the widespread availability and vast amount of data from financial institutions, the adoption of new digital technologies is now more important for financial institutions than ever. It is critical for these financial institutions to use their data to support their leadership teams with strategic planning, decision making, performance management and reporting for sales and other departments, supply chains, customer data etc. in real time. With the rise of new technologies and digital transformation also come significant regulatory changes and a need for compliance which can impact financial institutions and determine how flexibly their current technology infrastructure can adapt to these changes without impacting their finance operations. PwC’s experienced professionals can help you leverage digital tools such as Alteryx and Power BI to get ahead of the digital transformation trend that’s transforming the financial services industry, while also ensuring compliance with the relevant regulations.
Technology is seen as an integral part of financial institution operations and financial institutions have made strides to increase the scale and efficiency of technology over the years. However, financial institutions still have room for improvement in the areas of data automation, data preparation, data transformation and reporting. Many financial institutions today still rely on spreadsheets to handle their day-to-day operations, data processing and reporting. This makes it difficult to handle and process large volumes of data and brings a greater risk of data quality issues and non-compliance. With the vast amount of data that financial institutions transact and store today, this inevitably leads to inefficiencies, additional manual overhead and missed opportunities to use data to their advantage.
Financial institutions that still rely on legacy systems and solutions are at a significant disadvantage. With hours if not weeks dedicated to data preparation, consolidation and formatting, and with regulations and compliance matters changing on a regular basis, how can established operations adapt in this ever-changing landscape? In the following use cases, we will explore how the combination of digital tools has been effectively implemented amidst the rapidly changing landscape of digital transformation trends across the financial services industry.
In Japan, many domestic property and casualty (P&C) and life insurers are voluntarily complying with International Financial Reporting Standard 17 (IFRS 17), and this standard is expected to be mandated within the next few years. Many insurers are planning to implement IFRS 17 system conversion to ensure compliance with this standard, but this system conversion presents a significant challenge to not only preparers of financial statements, but also to existing data and systems architecture, especially concerning legacy systems.
Alteryx can connect to and blend data from various sources—including policy admin systems, actuarial systems and spreadsheets—to prepare, cleanse and automate expected cash flow, actual cash flow and profitability data. This is all made possible while minimising the impact on legacy systems so that the data is ready to be consumed by downstream systems for specific IFRS 17 calculations. Additionally, users at financial institutions that use Alteryx can trace each transformational step in their policy and actuary data to identify data quality issues, such as incorrect signage, changes in present value cash flows, coverage units and acquisition costs that exceed acceptable thresholds. These results can be directly visualized in Power BI, where actions are identified to allow greater control and visibility for improving data quality and governance. This approach not only increases automation and efficiency, but it also reduces the risk of non-compliance with respect to IFRS 17.
This second use case shows how pain points related to expense analysis can be alleviated by using Alteryx and Power BI in financial operations. Many users in the financial institutions spend a significant amount of time waiting for replies from cost centre owners on confirming changes, preparing and updating working templates, consolidating data from multiple HR and ERP systems in different formats and managing large complex spreadsheets to perform calculations and analysis. On the other hand, they spend less time digging into the data or driving insights from the expense reports. With Alteryx, repeatable workflows can be developed to automate time-consuming data tasks and can be scaled to handle large amounts of data from multiple systems in multiple formats, even when the master data changes. In this case, Alteryx is used to calculate the unit costs associated with each of the allocated expenses across different channels and processes.
Once the data is calculated and prepared by using Alteryx, we employ Power BI to generate captivating visuals that can intuitively outline the results the users want to focus on. In this example, we implement a visual comparison of the data by actual, budget and prior year expenses, as well as an in-depth 12-month trend analysis of the various unit costs. Additional functions such as drill-down reports for specific channels and processes are also included to allow users to firmly understand the full picture as needed. These functions illustrate the effective synergies brought forth by Alteryx and Power BI.
When introducing digital tools, you will also need to develop governance standards. PwC can help you establish a framework for your governance cycle, based on four key areas. This can help you maintain integrity and governance during your daily business operations. The foundation of the digital tool standard should be built on a cycle framework with four key areas. The purpose of this standard is to govern the development of work files using digital tools and to ensure that integrity and governance are maintained through standard business operations.
When developing a digital tool governance model for your organisation, there are three different types of model to consider. Depending on the level of governance and control that your organisation is looking for, you should select the model which best fits your needs and supports future growth.