7 reasons not to use Excel as your Treasury and ALM tool

Many ALM and Treasury departments of smaller and medium-sized banks still use Excel to manage their ALM and/or treasury. There are many risks and disadvantages of using Excel, and we’ll go through some of the main ones in this blog post.

Traditional Treasury and ALM solutions have been around for decades, and the technological leap has been huge. But still, many banks continue to rely on Microsoft Excel or other spreadsheets when handling Treasury and ALM functions in banks. Of course, we can all agree that Excel has some great benefits. Most banks’ employees already have it on their computers by default and know how to use it. It’s free, so you don’t need any budget for it and can start using it immediately.

However, we strongly feel the risks and disadvantages of Excel as a Treasury system heavily outnumber the benefits. Below we discuss the main problems with using Excel.

1. Starting from the data quality. If you are currently using Excel to calculate and store the data, and if you have only a few of your staff members to handle the Spreadsheet, this increases the risk of human error. When the amount of data in a workbook grows, so does the likelihood of formula errors and typos. Probably, all that data was inputted through cutting and pasting. You also probably have a challenge with the audit trail for data changes. This can even lead to problems with regulatory reporting, which is a concern in today’s compliance-heavy environment. Also, Excel was not designed to manage data sets beyond a certain size and level of complexity. While Excel can be used as a piece of the Treasury management workflow, in most cases, it is not efficient or effective enough to manage the entire process.

• Too many manual steps. Completed Excel spreadsheets can seem reasonable enough, but peek behind the curtain, and you’ll realise it took hours of pasting data, creating formulas, and changing the formatting. Excel requires a significant amount of manual effort to compile data, making it very tricky to access real-time data. Excel hardly allows robust data integrations and interfacing. This is not only time-consuming but makes real-time analysis impossible and, in that sense, affects decision-making.

• Trend analysis can be very hard to do in Excel. Excel can store static data, but it’s not made for the in-depth analysis that most banks require today. The ability to forecast is now more crucial than ever. CFOs of banks are constantly seeking ways to shift from reporting to predicting. Accurate forecasting is driven primarily by full data visibility, and Excel can’t provide that. The role of the entire treasury and ALM function is shifting from historical activities to a more strategic position for the entire bank. In support of this, treasurers are looking for technology platforms with forecasting capabilities.

• No standard reports available.  Data only becomes information when it adds value to a business process. Excel does have an easy-to-use charting functionality, but as your bank expands, you’ll need more complex reporting functions, and Excel has very defined limits. Visual reporting and dashboards add tremendous value to decision-making at all levels, for example, in the bank’s Boardroom.

• Collaboration within bank. Excel is not meant for collaboration. Excel remains a personal tool, and the information is contained in silos. Excel does not support the segregation of duties or role-based entitlements. Another problem is that it’s usually a locally installed application and not cloud-based. Collaborating on data using email is unsecure and inaccurate. Excel also lacks quality testing; it’s built only with few safeguards for data governance, data processing, or data quality.

• Problems with Regulatory Requirements and lack of audit trail. The regulatory landscape in banking is very complex. The regulators don’t like your Excel spreadsheets and might ask questions. Using Excel can lead you to struggle to answer the following simple questions: Who did what and when? What ties to what? Where is the audit trail? Where is the documentation? Spreadsheets are simple tools that expose your company to many risks and may cause failure when complying with regulatory requirements.

• Performance problems with the file sizes. Excel does have a limitation on the number of data, and when this limit is reached, the performance of Excel truly suffers. This can mean bugs and crashes of the software. Excel can store a lot of information, but the main problem is that your computer loads all of it simultaneously. So, if you need to analyse specific information compared to the entire file, it wastes memory, and your entire computer might run slowly.

We believe that banks’ treasury and ALM departments that rely only on Excel will be in the minority relatively soon. Don’t worry, despite all this; Excel can have a role in Treasury and ALM. But upgrading and integrating it with an intelligent system is a must.

Most banks that still use Excel as a primary tool usually don’t have time to implement a new system or budget for it. Our team can help you to prepare a business case with you to learn about the savings in the long run and to help to make the transition happen by saving costs and time.

We don’t blame you if you decide to stay with Excel, but you should give us a chance to demo how easy and painless it is to upgrade Excel to a proper tool. Book a free web demo.

Download: A guide to selecting a Treasury ALM system

Choosing MORS

What makes MORS Software stand out as a fintech partner is its ability to provide integrated and holistic treasury management, asset and liability management and liquidity risk management solutions in one modular system. Our solution is faster, more efficient and cost-efficient as well as easier to use than those of most of our competitors who can provide such coverage only by stitching together disparate software systems. This is particularly relevant for small to medium-sized banks.

By importing and managing the whole balance sheet at an individual agreement level, we are ahead of our competitors who usually aggregate information before loading it into their systems. This enables your treasury and ALM teams to drill deep into the details to provide fast and accurate analysis and reports, all of which can be viewed and reconfigured on screen, making for a convenient and userfriendly package.

Our research suggests that a large proportion of banks are yet to bring modern data management software systems to their treasury and ALM and risk management departments, given survey results that show lengthy lead times to complete calculations including banking book data. We strongly believe MORS Software can provide a cost-efficient answer thanks to the package’s ease of implementation, use and maintenance.

Thus, to the bottom line. Key license agreement details can be dealmakers or deal breakers. MORS Software license agreements include the rights to new versions without additional charges. The license agreements also cover regulatory changes, meaning that MORS Software will provide updates to the software as part of the service, should new regulation require that.

So, eliminate the drudgery of data management and slow systems that are hard to use. Free up talented treasury staff to do the important work of analysing calculation results and making well informed and timely decisions.