We’re all watching our pennies these days, especially in banking. The cost of capital is increasing while regulatory requirements become more demanding. Every decision about the viability of lines of business needs to be an informed one.
An organisation can improve its offering, putting its pennies to work by evaluating the costs and returns associated with each counterparty and client. It’s important that this is visible so that a financial institution can put the information into context.
As quoted by the Financial Conduct Authority, ‘Investment and corporate banking market study: Terms of reference’ May 2015, “We will want to understand if there is significant cross-subsidisation between primary market activities and related activities or within primary market activities. We will also want to understand whether …bundling or cross-subsidisation extends … to secondary market activities and whether [it] has adverse effects on competition and clients."
But how do we keep track of it all?
To do this, and give information a wider value, it’s important to establish a set of applications that can organise and analyse that information. With a single source, or aggregation point for data, this information is easier to access. Organisations can then create a fertile field for a greater understanding of the business to take root and grow.
The granularity required by regulators and investors can create enormously detailed pictures of business areas, allowing their profitability and the dynamics that drive profitability, to be scrutinised.
Regulators want the answer to this question: “Which business do customers support?” while clients want to know the risk and value carried by individual desks or funds.
With access to this information insights can be taken to the strategic level of the business, so that delivering value becomes a constant, achievable goal, boosting profitability and client performance that enables organisations to look to the future with confidence.
Howard Mather is a Principal Sales Consultant for Oracle Financial Services. He can be reached at howard.mather AT oracle.com.