Why do banks run their business on Microsoft Excel?
Let me be clear – Microsoft Excel is a great tool, used the world over, and has almost unlimited uses. It is a great value product; accessible and affordable to businesses, families, and students.
However, it is quite evident that this accessibility and affordability has enabled some financial institutions to create sophisticated and complex spreadsheets that run some parts of their business. Yes, they do have mainframes, accounting platforms, payment systems, and extensive databases. But a number of critical processes are being run on spreadsheets, such as reconciliations, management information, reporting (including regulatory reporting), complaint management, and budget forecasting & planning. In some cases, customer data is even held in spreadsheets.
Spreadsheets are, by definition, end-user-computing (EUC) solutions. They are flexible, allowing the user to create data structures, format them, create and run macros, and compute and calculate many outcomes – all without any audit trail, control, or governance. So we have two considerations here which stem from the same fundamental issue – the uncontrolled use of EUC solutions.
Consideration One: Banks need to address the proliferation of spreadsheets to hold and interrogate data that simply should not be in spreadsheets. They need to be in technology solutions that cannot be corrupted, manipulated, misrepresented, or hacked. Imagine if a global investment firm used a single million-row spreadsheet to manage their daily position. Incredible. Consideration Two: GDPR will require banks to ensure they understand all the data they hold about customers. Not most data – all data. And if some of it is in spreadsheets it will be extremely difficult to identify, quantify, and qualify that data – and that’s before it’s accessed under GDPR and made available. Good luck with that.
If you still aren’t convinced, take a look at this article published in June 2016: https://www.globalbankingandfinance.com/financial-institutions-ignore-end-user-computing-risk-at-their-peril/. This article summarises how Microsoft Excel is of course one of the most pervasive examples of EUC applications, ranging from spreadsheets to databases and financial modelling tools. It states that a single inconsistency or discrepancy in a spreadsheet related to a key trade that proliferates across the EUC application landscape in an organisation has the potential to generate potential losses or misstatements in the billions of dollars – notwithstanding the secondary effects such as regulatory fines, the loss of customers and reputational damage for years to come.
There are solutions out there. FinTechs can help here. They have innovative solutions to these very specific problems that address and remedy the issues. If you can’t find them just ask.
Andrew Taylor is Global Practice Lead at Limehouse Consulting.
This publication contains general information only and is based on the experiences and research gathered by Limehouse Consulting and Strategy Limited (hereinafter “Limehouse”) practitioners. Limehouse, is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.
Limehouse, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. Please see www.limehouseconsulting.com for a detailed description of the legal structure of Limehouse and the organization’s offerings.
Copyright © 2017 Limehouse Consulting and Strategy Limited