Balance Sheet Budgeting & Planning for Banks

Fundamental Issue

The Budgeting process for Banks is quite different from most industries. The focus begins with the Balance Sheet, and the reflection of the instruments already generating revenue and cash flows, at various rates and maturity dates. This then serves as the basis of the budget going forward as new volumes are forecasted.

To add to the complexity, accurately calculating instrument cash flows can be arduous at best. Taking into account the details of each instrument’s interest rate, maturity and payment stream often requires importing data from various systems into complex spreadsheets or home-grown systems that are difficult to maintain or change. Adjusting prepayments to reflect changing interest rate forecasts further complicates this effort.

The challenge for banks is that most available budgeting solutions do not have the ability to track the balance sheet details needed without a significant amount of coding. The result is similar to other industries - they supplement the shortcomings of their system with spreadsheets or home-grown applications.  


Effective Margin Planning Needs One Solution

For comprehensive planning and forecasting, banks need the combination of the spreads and payment streams of their existing instruments combined with the expected volumes and spreads of their new business. Having one solution that houses both allows for quicker and more accurate forecasting and enables better decision making.


Beyond the Basics

These most basic needs of banks go beyond the capabilities of most applications that are not custom made. Now let’s add the other elements that are also part of the cycle:

  • Forward Funds Transfer Pricing
  • Monthly Close & Management Reporting
  • Regulatory Disclosures and Call Reports
  • Branch & Customer Profitability

All of these things combined into one system that is easy to use and maintain, by Finance, seems like a dream. Well that dream is a reality with Tagetik. We have successfully implemented these solutions in banks all around the world, with sizes ranging from smaller regional banks to the largest multi-nationals.

The Proof is in the Savings

One of our clients was able to quantify their significant returns in a relatively short period of time. They reduced their planning process time by 35%, shortened their close process by 2 days, and slowed the growth of their finance department by 50%.

This was done with one system. Not a number of applications linked in the back-end, or supplemented with Excel. One system where they can all share in the single version of the truth for all their budgeting, planning, and reporting needs.

What are your thoughts? How well are your Budgeting needs met today? Do you have a single system for all your budget, planning and reporting needs? If not, what would such a solution mean for your business?


Tagetik unified Budgeting, Planning and Forecasting solution

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