Reimagining the bank's financial close process end to end
First, we worked with the bank's finance team to conduct a thorough assessment of its existing close operations. To that end, we held design thinking workshops with a broad segment of the finance and accounting team to deep-dive into their challenges and pain points. We conducted 150-plus meetings and spent 2,000 hours of collective time to understand the bank's close cycle process with help from our proprietary framework assets, ProcIndex and Continuous Close Accelerator.
Then, we put our transformation roadmap to work.
We reshaped the bank's month-end general ledger and sub-ledger closing process. We integrated every aspect of it, making it holistic and seamless. We improved the data feed and made it easier to access, bringing in automation and introducing analytics across all upstream and downstream activities. We looked at every other factor that closing touched, too, including product control, liquidity, and risk management. And we focused on ways to reduce peak load using centralized governance and embedded controls.
Our three-pronged approach – process simplification, a new policy framework, and technology updates – played out in the following ways:
- We resequenced, restructured, and redistributed financial close tasks before, during, and after the process, balancing the team's peak load effort, relieving pressure, and reducing the risk of error.
- We defined a holistic materiality tolerance framework for all of the bank's segments and redefined the threshold limits for posting transactions – adjusting policies on cutoffs and frequencies associated with the close tasks. We also carried out data-driven scenario analyses of what impact a change in the threshold limit could have on the bank's earnings before interest and taxes (EBIT), revenue, earnings per share (EPS), return on average tangible common shareholders' equity (ROTCE), capital ratios, and other critical Securities and Exchange Commission measures. This analysis helped the bank define the right threshold limits and resequence close tasks.
- We integrated and automated front-, middle-, and back-office data flow, reducing manual handoffs for data inputs, data feeds, and upstream processes and enabling straight-through processing for transactions. This improvement created a seamless data flow from source systems to the general ledger through to consolidation and reporting with tight control of data integrity.
- We've also advised the bank on how to make the best use of its existing digital technology investments and suggested new ones, such as an automatic cash application, that will eventually improve the end-to-end financial close process even further.