7 reasons to upgrade your Treasury and ALM from Excel

This article shares 7 reasons you should break up with Excel Spreadsheets and upgrade to a Treasury and/or ALM System.

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; we listed 7 main ones in our previous blog post, read the full blog post here

Many banks have already adopted fully integrated Treasury and ALM Systems into their existing IT infrastructure so that they can free up their ALM and treasury teams to do the more important and interesting work of data analysis rather than data input and data management. If your bank is still using Excel, continue reading. Below we discuss the main reasons to upgrade from Excel to a Treasury and ALM System.

1. 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. The easiest way to achieve good data quality is to have one holistic system for Treasury and ALM with one common database. It makes perfect sense to use one single system, which can be accessed and used throughout different departments. This means that all team members can access and process the same data in the system as part of any treasury or ALM-related task – with positive consequences for data quality.

Another data quality related advantage with a Treasury and ALM System is automated data management, i.e., the way system manages and reconciles data. Treasury and ALM Excel sheets tend to be very data heavy and data-intensive due to the nature and volume of a bank’s balance sheets. An effective Treasury and ALM system must include powerful and intelligent data management. A next-gen Treasury and ALM System is also capable to handle transaction level data. Rather than importing lumped level whole balance sheet in one go, it will import transaction level data as changes occur in the balance sheet. This means only new, modified and matured transactions will be imported once the initial load of the balance sheet into the system has been done.

Excel is also a standalone application, not fully integrated with other systems that your bank uses. Treasury and ALM System providers investigate heavily in integration with your source systems, and design interfaces between the solution and for example your core banking solution(s).

With Excel, you also probably have a challenge with the audit trail for data changes. Treasury and ALM systems should always include an audit trail, which tracks all changes to transactions by time, and the date and consists of a user stamp. You’ll be able to show your auditors all the changes to your transactions during their life cycle.

2. User-friendly system with fewer 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. User-friendly systems with a clear and intuitive interface decrease manual steps and, in the end, a lot of your time. The banks are increasingly interested in dynamic simulation and planning. They are therefore looking to find user-friendly solutions where end users in Treasury ALM can run simulations without outside support. The transparency and auditability of a system come in many flavors and forms. The best systems have “drill-down” capabilities, meaning the user can always drill into the details of the calculations and reports, including liquidity risk management and multi-currency analytics.

Excel requires a significant amount of manual effort to compile data, making it very tricky to access the data in real-time. Modern Treasury and ALM systems work in real-time, providing instantly available calculation results and reports. This ensures the bank always has up-to-date analysis and calculation results and can make better-informed decisions. Given that regulators’ and banks’ internal needs now increasingly demand ad-hoc and instant “what-if” calculations, real-time information is a significant advantage for the bank.

3. Better trend analysis to release the staff from routine tasks to focus on high-quality analysis and decision-making. 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.

In support of this, treasurers are looking for technology platforms with forecasting capabilities. Forecasting capabilities enable banks to make projections of the future balance sheet that can be generated and take into account a wide range of assumptions, such as product mix, product volume, and pricing assumptions. Good forecasting tools also include earnings forecasts ranging from high-level to detailed forecasts, for example, by product. The forecasts should be presented either in detailed pivot reports or in easy-to-grasp browser-based reports such as the examples below.

The demand for forecasting and optimization functionality has grown in the past few years. This is partly driven by CFOs spending more time estimating earnings and projecting the future balance sheet, but the regulators are also increasing their demands on how banks forecast.

4. 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.  

Banks now have more and more data available, but its relevance to forecasting is not always established. An important and feature that should be included in your Treasury and ALM System is that all data items and calculated results should be available for the simple and configurable reports or to be exported to external applications. In a user-friendly system, this should be able to be done without the need for programming skills. Your system should also come with hundreds of pre-defined reports that can either be used for reporting or as the basis for creating custom reports. 

The ease of creating highly visual presentations is getting more attractive to banks. You should demand multi-device browser-based analysis and results in presentation. We have noticed that banks that use highly visual reporting and have accelerated their strategy towards visualising the integration of Balance Sheet and Income Statement metrics, complete with real-time Scenario Analysis, are better understood, for example, in the Boardroom. 

5. Collaboration within a bank. Excel is not meant for collaboration. Excel remains a personal tool, and the information is contained in silos. The holistic approach is increasing and becoming more beneficial for the banks the more complicated the changes in the world economy become. With a highly integrated approach, banks can streamline all risk surfaces within a single system that drives data-gathering across all lines of business to achieve effective analysis and strategic planning.

Banks should be able to break silos and cover multiple risk surfaces in one solution. Especially for small and medium-sized entities, it makes perfect sense to have one solution with both Treasury and ALM in one system. Providing one holistic and integrated system without the operational hassle and cost of operating two separate systems. The demand for holistic solutions is currently high and expected to grow in the coming months and years.

Another problem with Excel is that it’s usually a locally installed application and not cloud-based. Modern systems should have options to be implemented as full SaaS or private Cloud solutions. SaaS solutions help end-users discover solutions without extensive IT intervention, as the solution can be managed more efficiently and scale as necessary. SaaS solutions are also easily configurable, turnkey solutions. This makes the purchase, deployment, and management of systems super-efficient and cost-effective. 

6. Regulatory Requirements and 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.  

Complete Treasury and ALM Systems should also include fully integrated Regulatory Reporting. A vendor’s primary focus is on getting flawless supervisory data with the authorities in the proper reporting standard, with the correct parameters, and above all, 100% valid against the business rules imposed by the implementing technical standards. The system should also come up with an interface to immediately import calculated data in the right reporting templates for validation against regulatory business rules and extract it into the supervisory reporting format.

7. Performance. Excel does have a limitation on the number of data, and when this limit is reached, the performance of Excel truly suffers. 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.

Treasury and ALM systems should utilize modern technology and architecture. This includes multi-threading capabilities, hybrid Cloud capabilities, and transient cash-flows in calculations and reporting, enabling significant performance gains. Modern systems can operate in environments, for example, with 100 million live transactions gathered in real time from 20 source systems. Talented treasury staff can be freed from this mundanity and access many specific data points within minutes.

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.

What to do next?

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.