How a Large Bank Automatized Its Financial Analysis Process and Saved 28,694 Hours Yearly11 min read
According to research by Forrester, inefficient processes cost organizations up to 30% of their annual revenue, and digitalization can save up to 90% on operational expenses. Therefore, almost all companies are heading toward digital transformation. Banks are no exception.
One of the critical topics in the digitalization journey of banks is financial statement preparation. Utilizing different templates for financial documents, trial balances, and statements, the repetitive character of tasks, and the manual data entry prone to errors make this process an ideal candidate for transformation. However, it is easier said than done. In this case study, we will share our thoughts and experience on overcoming these challenges in one of the largest banks in Turkey.
The bank suffered from an excessive workload caused by interim period financial statements preparation for their commercial credit customers. During this process, bank supervisors collected the trial balance and declaration from the customer, standardized the financial documents, composed the balance sheet, and stored it in a non-digital environment. This process was executed by only a handful of people in the bank since it required specialization in the trial balance. When other departments in the bank needed this data, officers would send the interim period financial statements via e-mail. As each process was handled manually by employees, these steps typically took 30 minutes for each interim period financial statement, and there was always a risk of human error. Employees could only fulfill these processes for some customers, so they prepared and stored only 1,200 interim period financial statements in the bank's database. These repetitive tasks annually consumed 600 valuable hours of employees.
In addition, if employees prepared the financial statement for the fiscal period, they spent additional hours on financial analysis, including making financial adjustments and preparing financial analysis reports. The bank had digitalized the balance sheet of the fiscal period declarations. However, some critical parts were not digitizable. Branch employees with little time to spare during their daily routines did a significant portion of this tedious work. The financial statement adjustments typically took 55 minutes per customer. Given the sheer size of the customers (~13,000 commercial customers), these repetitive tasks consume an estimated 11,916 hours of valuable employee time annually. Generally, employees' adjustments gave the minimum amount of information to the system, so the financial statement adjustments were inaccurate in the bank's system. Moreover, these financial documents were not fully digitalized, so the bank could not capitalize on this critical data and information in its other processes.
How did DefineX help?
Given the bank's context, we teamed up with them and devised an approach that blends Robotic Process Automation (RPA) with custom development. While the bank's internal resources implemented a 3rd party RPA solution for automating manual tasks, DefineX created a technical solution for the financial analysis application of the bank.
In the new solution, bank users have simple tasks that anyone can easily do with minimal business knowledge. They start the process by creating a new financial statement process and uploading the financial documents of the customer to the bank's legacy financial analysis application. Afterward, the RPA solution takes it over. It periodically pulls these documents and initiates the automation process. The automation process requires customers' financial data, such as fiscal period credit limit and risk data. It needs the previous fiscal period trial balance data and the latest interim period financial statement data, which are retrieved from the bank's database by APIs.
After the automation process, the data is sent back to the bank's database using APIs. The automation process steps differ for the period of the financial statement created, the uploaded document types, and the customer's industry. For example, the solution prepares the balance sheet, standardizes the trial balance, and sends them to the bank's database from the uploaded trial balance and declarations to the interim period financial statement. Furthermore, we also created a notification infrastructure to inform users about the previous status after the automation process. In addition, we developed an alignment solution that transfers stored data to the bank's other systems so that all these documents become digitally available for many different processes.
The Bank Association of Turkey (TBB) must supply data for the solution. This system retrieves the financial data from the TBB and stores them in the Bank database. To retrieve this data, we scheduled a monthly background process for eligible customers.
The bank completely digitalized the financial statement preparation process at the end of the project, and we successfully delivered the bank's primary objectives, even exceeding them. While the bank reduced the financial statement entry, adjustment, and analysis duration by 98%, this extra time freed 12,290 branch employees to focus on more worthwhile tasks. At the end of July 2022, this translated into 7 (6.82) Full-Time Equivalent workday savings, resulting in a break-even period of 2 years.
In addition, since each bank employee can start the automation process with minimal knowledge, they enter more financial statements into the bank system. Interim period financial statement entry numbers increased by 2,703%, and the bank saved 15,947 hours of effort in 6 months. The bank fulfilled the fiscal period financial statement adjustment operations in detail, increased entry numbers by 3.9%, and saved 457 hours of effort previously spent on the old solution in 6 months. As a result, at the end of July 2022, the new solution handled the financial analysis work that previously required 9 (8.69) Full-Time Equivalents. This implementation enabled employees to enter more interim period financial statements into the Bank system; hence, the data's dimension is diversified.
Table 1 – Financial statement process durations of old and new solutions
In mid-2022, the outputs for the project were:
● The duration to produce interim period financial statements decreased from 30 minutes to 0.5 minutes (a reduction of 98%), and the time to make adjustments for fiscal periods decreased from 55 minutes to 1 minute (a reduction of 98%).
● 30,000+ trial balances and 13,000+ fiscal term declarations are processed and stored in the bank's systems used in other bank processes.
● The new solution provided a 93% success rate with different trial balances and declarations.
Digitalization is one of the game changers for companies that complete huge operational workloads manually. Despite banks being frontrunners in this long marathon, we delivered promising results. Our experiences and project outputs show that digitalization significantly impacts companies regardless of size and industry. With the solutions and innovations we introduce, we can assist our clients in clearing the path for their digital transformation journey.