Design and Implementation of a Budgeting System for a Commercial Bank

BACKGROUND

Our client is a banking entity in Eastern Europe, known for offering a broad spectrum of financial services to both individual and corporate clients. The client needed a solution to effectively manage and optimize their enterprise’s financial performance, focusing on both enhancing revenue and controlling expenses.

CHALLENGES

• Designing and creating a budgeting system for all core and supplementary budgets, such as OPEX, CAPEX, and more.
• Acceleration of budgeting, negotiation and approval processes.
• Scenario modeling and forecasting.
• Exploring the possibility of correct budgets according to budget methodology.
• Creating a system of analytical reporting: plan/fact/variance.
• Training users to work in the system and providing support in day-to-day activities.

SOLUTION HIGHLIGHTS

• Development of the solution architecture and its integration into the existing IT landscape, together with the methodologist and the bank’s IT team.
• Implementation of a budgeting system using IBM Cognos Planning.
• Realization of the main and auxiliary budgets calculations: operational activity budgets, non-operational expenses, capital expenses, etc.
• Implementation of basic normative calculations, such as capital adequacy ratio, instant liquidity ratio, current liquidity ratio, ratio of operating assets to non-operating assets, ratio of non-operating expenses to operating profit.
• Performance optimization of cubes.
• User access rights management according to the bank’s policy.
• Work with users — options for working with data both through an add-on in Excel and through the web interface.

KEY RESULTS

• Transition from Excel planning to a full-fledged budgeting system.
• Significant reduction of the budgeting process from months to 2 weeks.
• Accurate scenario analysis and profitability calculation of banking products.
• Control and monitoring of expense limitation and rationing in different fields, e.g. time, cost and profit centers.
• Ability to modeling the optimal size of administrative and economic expenses, depending on the level of bank business activity and separate business directions.
• Ensuring data security through the delimitation of access within the system.