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A finance operation automation solution using digital tools

Service overview

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.

PwC’s approach

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.

Use case

Reducing the impact of and risks associated with IFRS 17

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.

Reducing the impact of and risks associated with IFRS 17

Digitising expense analysis

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.

Digitising expense analysis

Digital tool governance

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.

Digital tool governance

Introduce and prioritise

  • Establish an on-going process to evaluate your maturity regarding digital tools.
  • Align with other strategic initiatives to generate demand.
  • Evaluate holistic improvement including data quality, process optimisation and organisation alignment.
  • Prioritise the roadmap and build business cases based on suitability, complexity and value.

Design and deploy

  • Design holistic solutions focused on end-to-end processes.
  • Select the best digital tools strategy and vendors.
  • Develop and deploy solutions with speed and quality employing agile solution development and rigorous project management.
  • Employ data, process and architecture standards and maintain inventory of documentation.

Govern and support

  • Ensure the right controls, security and risk mitigation are developed for digital tools and a digital workforce.
  • Monitor performance and coordinate solution maintenance.
  • Manage vendor relationships.

Benefits tracking and change management

  • Track capacity improvements and savings as well as enhanced maturity and service delivery.
  • Proactively communicate and manage change in partnership with the business, process and technology owners.
  • Advocate solution and benefits to generate demand.

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.

Decentralised model

BU:Business unit

Features

  • Regulatory reporting or critical management reporting developed by using digital tools are governed by a central function.
  • Individual BUs are responsible for the governance of their own digital tools development, data, validation and reporting requirements.
  • The focus is more on controlling the digital tools development and ownership stays with individual owners.
  • A central body defines and prescribes the governance policy for developing and managing digital tools.
Centralised model

 

Features

  • A central governance body drives the policies and standards for digital tools.
  • A central digital tool repository for templates and data is shared across BUs based on appropriate sharing policies.
  • This model is suitable for driving new innovation, because the central body controls all governance and growth of digital tools.
  • Digital tool governance policies are defined centrally and enforced in the BUs.
Decentralised model

 

Features

  • A governing body for digital tools is formed centrally and supported by every BU.
  • BUs actively participate in defining and adopting digital tool governance policies.
  • While BUs are responsible for their own digital tools control, the overall growth, regulatory and innovation aspects are handled centrally.

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Our Team

Ming Chai

Partner, PwC Consulting LLC

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Donna Lam

Manager, PwC Consulting LLC

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