Standardization of Business Review Presentations and Management Reporting for a $15B Global Investment Bank
Background
A $15 billion global investment bank, comprising eight sub-lines of business, faced significant challenges in its financial reporting processes. The bank’s Managing Director and global head of the Investment Bank struggled to understand the true financial performance due to inconsistent reporting formats and definitions across the sub-lines of business. The Financial Planning & Analysis (FP&A) directors supporting the eight business heads contributed to these inconsistencies by presenting data in ways that cast their respective units in the most favorable light.
Challenges & Considerations
- Inconsistent Reporting Formats: Each sub-line of business had its unique reporting format, making it difficult to aggregate and compare data.
- Varying Definitions: Key financial measures were defined differently across the business units.
- Subjectivity in Reporting: Business units aimed to present data positively, leading to biased representations.
- Resource Allocation: Ensuring sufficient resources were dedicated to developing and refining the new reporting process without disrupting ongoing operations.
Objectives
The primary goal was to develop a model that could:
- Standardize financial reporting across all sub-lines of business.
- Establish a consistent and clear set of financial measures.
- Improve the efficiency and effectiveness of business review presentations.
- Facilitate meaningful dialogue focused on strategic insights and performance variances.
Approach & Implementation
- Formation of a Working Group: A dedicated team was formed, consisting of key stakeholders from each sub-line of business and FP&A directors.
- Taxonomy Development: Conducted a detailed taxonomy of financial datapoints and established a unified construct for each measure.
- Definition of Reporting Parameters: Agreed upon critical periods, points of time, and the best ways to present results to drive efficient and meaningful dialogue.
- Prototype Development: Built and produced prototypes of the standardized reports, refining them through parallel runs with existing processes.
- Phased Implementation: Started with the balance sheet, followed by the income statement, and eventually the entire reporting package leading up to the budgeting season.
- Centralized Reporting Production: Transitioned to producing the standardized reports centrally, ensuring consistency and scalability.
Outcomes
The standardization initiative resulted in significant improvements:
- Cost Reduction: Meaningful reduction in the cost of producing reports due to centralized and standardized processes.
- Enhanced Clarity: Improved understanding of financial performance across the investment bank.
- Focused Discussions: Shifted the focus of business discussions from questioning the accuracy of reports to analyzing variances and strategizing future actions.
- Scalable Reporting: Established a scalable reporting process that could be consistently produced and repeated across all business units.
Conclusion
The standardization of business review presentations and management reporting transformed the financial oversight at the $15 billion global investment bank. By establishing consistent financial measures and reporting formats, the bank achieved greater clarity and efficiency in its financial reporting. This initiative not only reduced costs but also facilitated more strategic and meaningful business discussions, ultimately driving better-informed decision-making and enhanced financial performance.