Planning for a connected, digital future

Banking has truly transformed over the past decade to meet evolving customer expectations around the use of digital tools, online banking and apps. The pandemic has only accelerated this with health concerns and lockdowns limiting the amount of in-person customer contact.

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According to research by Anaplan, despite three quarters of banks seeing digital transformation as a leading challenge during this period, many institutions have been able to successfully overhaul their customer experience, making it more simple and seamless than ever before.  

"Banks will only be able to leverage the exciting potential of connected planning if they break down silos and bring data together across the organisation.”

But now, with the customer experience transformed, there is an opportunity for banks to leverage data to elevate operations, planning and strategy internally.

Research by Accenture revealedwhile 78 per cent of banks broadly use data, few are using key enablers like analytics (7 per cent) and artificial intelligence (5 per cent) to extract the full value of that data.

However, banks able to leverage AI and analytics over the coming years will be able to plan for uncertainties, have a clearer picture across departments and even be able to better monitor things like environmental, social and governance (ESG) commitments effectively.

That is only possible if banks are able to truly break down silos and connect data from legacy systems to one place. At Anaplan, we would argue connected planning is the solution to this and will spark a new era of transformation for banking.

As a broad concept, connected planning – sometimes known as integrated business planning (IBP) -means a more coordinated approach to planning that is designed to achieve greater alignment between strategic, financial and operational levels within an organisation.

That means connecting all planning capabilities throughout the entire business, for example connecting strategic plans with those of sales, operations and finance. It should enable balancing resources and funding with the business’s financial goals.

Of course, considering how many stakeholders are involved and the multitude of moving parts it can be difficult to implement this style of planning.

Breaking down silos

Banks will only be able to leverage the potential of connected planning if they break down silos and bring data together across the organisation. This not only includes functions such as marketing, human resources and sales but also divisions such as corporate, retail, private or small business banking. 

In many instances, banks are plagued with multiple on-premise legacy systems and outdated tools which are problematic when it comes to pulling data from across the bank. In fact, a study by S&P Global found 33 per cent of financial institutions still rely mostly on legacy infrastructure and 58 per cent use legacy infrastructure for "some" functions.

This opens the door for issues with version control and leaves little margin for error when it comes to planning. As we move into a more connected world, it is essential banks evolve from siloed planning models to connected planning models.

Navigating uncertainties 

Scenario planning and forecasting in the banking industry are critical tools for success. Connected planning may sound simple but it’s surprising how many banks are still relying on outdated planning models.

More than two thirds of bank executives find maintaining the agility to respond to economic volatility is a significant challenge. Moreover, when relying on tools like spreadsheets it’s nearly impossible to deliver accurate forecasts or change strategies in real-time when these challenges arise. 

The use of AI-driven connected planning can equip banking leaders with the information and insights they need to respond to incoming challenges. This new way of planning enables banks to leverage data to answer critical long-term questions around the business, such as how will rising inflation impact my finances next quarter? Or what would be the impact of a new government?

Embracing AI and machine learning will enable banks to answer these questions quickly and serve their retail customers more efficiently.

Planning for the future

Connected planning also gives banks the ability to deliver on their ESG promises. This is particularly important following the recent UN Climate Change Conference which has made minimising the impact on the environment a top priority for businesses. Many of the world’s largest companies and financial institutions have voluntarily announced bold new plans aimed at mitigating global warming.

More than 5,200 businesses have pledged to meet net-zero carbon targets by 2050. Around 450 banks, insurers and investors - collectively representing $US130 trillion in assets and 40 per cent of the world’s private capital - committed to making their portfolios climate-neutral during the same period. 

While making ambitious goals around minimising waste or reaching net-zero is great, banks need to make realistic plans to achieve these goals or we won’t see progress. Research by Anaplan found almost a fifth (18 per cent) of banks found it challenging to connect plans to executions and actions. In fact, it was one of the top three challenges.

Connected planning is a simple way to incorporate ESG targets with financial return on investment to transform sustainability goals and practices. It enables banks to make decisions that are good for the environment, good for business and holds them accountable to their goals. 

Even prior to the pandemic, it was a priority for businesses to make the most of the data that exists in their organisation. Research by McKinsey found total budgets for data-related initiatives have increased by 50 per cent over the past three years from 2019 to 2021. This is only set to continue to grow over the coming years so it is critical for banks to take planning to the next level.

The future of banking is connected and the banks that can harness data will ultimately make better decisions.

Andy Thiss is Country Manager and Area Vice President for Anaplan Australia and New Zealand

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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