AWS for Industries

How does Cloud enable the transformation of Bank finance functions?

Bank CFOs are transforming their finance functions from both an operations and technology perspective, innovating to simplify their organisational model, increase efficiency and deepen the insight they provide to stakeholders. Cloud technology is enabling these changes by providing a new set of tools to solve some of the enduring business challenges that they face. In this blog, we explore the new set of operational capabilities and benefits that are enabled by cloud technology to help transform finance, and provide guidance on how to modernise finance functions with the AWS.

Although a company’s financial management systems are critical to success, our customers have told us that they rely on a complex mix of legacy systems supported by manual spreadsheet-based processes and governance and control that is difficult to scale and typically results in high operating costs. A number of industry research reports, including from the Bank of England have highlighted the process inefficiencies faced. CFOs are increasingly looking for scalable solutions to automate repetitive tasks, help skilled employees spend less time preparing data and more time advising the business, and improving the governance and control and reporting of data in their organisations.

Finance teams also operate in a dynamic environment where the interpretation of data can evolve rapidly because of changing regulatory treatments and definitions (ESG reporting, for example), and different business planning and budgeting requirements (related to circumstances such as the pandemic, inflation or the impact of geopolitical uncertainty). In an operating environment where the volume and complexity of data are increasing, and the speed at which business is conducted gets faster, finance functions can leverage cloud technology to deliver better outcomes for users of finance data and analysis without needing to materially increase operation risk with large scale technology-led change programs.

A new set of capabilities to enable the finance functions

Cloud is qualitatively and quantitatively different from traditional technology in the way that it enables CFO teams to build agile, data driven processes, and develop the capability to simplify, innovate and reduce cost. It also provides access to the latest data and analytical tools to help finance teams create more insight and value for their organisations. All within a secure, compliant and well governed environment.

Figure 1 Finance Service Model

Figure 1: Finance Service Model

Finance service model

The concept of a finance service model, which many financial institutions have been moving towards, refers to the integration of finance processes, activities and tasks that are enabled by technology so that they are scalable and adaptable. Cloud technology helps finance teams to better serve the needs of the business by increasing the efficiency and agility of processes, and the accessibility of data within an appropriate governance and control framework, that results in improved ways of working and operational effectiveness.

A key cloud differentiator is how it enables finance functions to manage their data strategy differently. A number of AWS customers are implementing finance service models where their data strategies are moving away from a model where data is replicated each time a process requires it, into one where all processes consume a well governed version of the data, transforming it, augmenting it and deriving insight as business needs require. While a subtle difference, the ability to federate queries of a trusted data set can significantly reduce the amount of time spent collecting and preparing data for a variety of different uses.

Our customers tell us that critical operational and financial information is often scattered across multiple applications and databases, leading to unreliable data sources from ineffective controls. Multiple teams posting the same adjustments across multiple systems is a common occurrence. By storing and running large-scale distributed data, cloud-based finance service models, like that just described, allow for efficient operations that reduce duplication through standardization, enable monitoring of information from different sources, and reduce the cost of change as processes become more flexible and adaptable to evolving user needs. This in turn increases the ability for finance to define and manage security, governance and auditing policies to meet both internal and external standards, such as SOX and in risk- BCBS239.

Building cloud-enabled data pipelines, with automated controls supporting both ownership and use of data sets, can improve transparency and management of data driven processes. The ability to integrate these controls into the technology that drives data processes means organisations do not need to rely on the manual compliance and monitoring that is typically used when integrating on premise-based software. Cloud based tools, like AWS Glue make data cataloging easier to do at scale by simplifying ETL pipeline development, and the creation of metadata linked to usage helps finance teams to understand the use to which their data is put across finance and the business it serves. This can help finance teams reduce and more quickly remediate the risk of errors by creating the capability to interrogate data on a more granular and timely basis, trace root causes of data quality issues, and monitor data quality resolution trends. This transforms the value finance teams can deliver by helping to ensure that all data meets the needs of downstream users, and can reduce the time it takes to close books at the end of each period.

Integration between financial and non-financial data

One of the most common finance use cases that customers adopt cloud technology for is to enhance their ability to integrate financial and non-financial data to inform strategic decision-making. Non-financial information is now an essential part of risk management and disclosure as well as strategically important because it can provide a means to improve operations, identify strategic business opportunities and encourage innovation. In order to process both financial and non-financial information. big data solutions and petabyte-scale data processing technologies are required. Amazon EMR play key role as an industry-leading big data solution, enabling banks to extract data from different sources, process it at scale, and make it available to finance teams to enrich business analysis and, for example, the reporting of non-financial information like ESG (environmental, social and governance) factors.

Leverage comments and unstructured data

AWS Generative AI can help finance teams leverage text-based comments from reports and management information and unstructured data to provide further insights on data reporting. Business stakeholder-generated commentary can be used to capture additional context, such as transactional or business rationale from internal business reporting, that may not be captured in the financial system. This capability is helping CFOs and finance functions connect to the businesses they partner and improve both the explainability of reporting and the depth of insights they are able to provide back to the business in terms of their use of financial resources.

Self-serve advanced analytics

Data visualisation services like Amazon QuickSight make it easier for finance teams to produce insightful and scalable reporting tools to support decision making. The creation of interactive analytical dashboards leveraging well governed data from a variety of different sources; embedded/automated analytical tools that make sensitivity analysis and scenario planning quicker; and richer, more easily understood reports that use natural language query tools and Amazon Bedrock Generative AI capabilities can transform the relationships finance teams have with stakeholders.

AI tools such as Amazon Forecast and Amazon SageMaker can be used to create highly performant self-service portals so that the business can access and analyse financial data themselves and combine it with other data sources and documentation, and engage with finance on higher value-add activities such as funding, liquidity. and capital management. Similarly, solutions can be built to allow the business to price, structure and execute on new facilities prospects, with immediate or prior approval, by assessing impact on RWA, liquidity or leverage consumption, returns, and other financial measures.

AWS partners such as Anaplan and Aptitude Software leverage cloud technology to build and deliver specialist solutions to meet the needs of finance teams. Anaplan PlanIQ for example uses Amazon Forecast and a number of other AWS services to help planning teams to more effectively manage data, forecast multi-variable trends in business data and perform scenario analysis in real time to operationalise decision making. Aptitude Software is built using AWS cloud technology and as a consequence integrates easily with cloud solutions built by our customers. Their open finance data architecture and finance engines creates a single point of “Finance” truth for clients. This enables CFOs to automate their finance architectures to improve efficiency but also realize value through the real time data that is held.

Figure 2: Reference Architecture for a Finance Data Platform

Figure 2: Reference Architecture for a Finance Data Platform

This reference architecture depicts how you could build a data analytics and ML platform to transform your Finance function on AWS using native AWS services, and deliver the use case benefits highlighted above. Security, governance, and control can be embedded into the use of the services such that the finance function can better control access to data, its manipulation, and consequently its integrity.

How can we help?

Amazon Web Services is working with a wide range of financial service organisations and their finance functions to modernise infrastructure and deliver on the business use cases highlighted in this blog. Our AWS Professional Services organisation and our AWS Partner Network (APN), including both consulting and specialist software companies, can help your organisation build and execute comprehensive plans for your finance transformation. We can support by:

  1. Creating the technology foundations for the digital transformation of finance that returns ongoing measurable value to the organisation, connecting business goals and outcomes to enabling technologies, identifying key measures, and helping prioritise your initiatives.
  2. Accelerating digital transformation by delivering guidance to key SMEs on how to prescriptively architect, design, develop, and implement the AWS platform, while also transforming the organization/culture to a services-based model.
  3. Producing a tangible set of cloud capabilities that enable the Finance cloud strategy by collaborating with finance change and IT to demonstrate the art of the possible, the benefits of cloud and AI technologies, and gain buy-in from key stakeholders
  4. Training staff to build modern cloud-based architectures that are compliant, resilient and critically-explainable in terms of the benefits they deliver and how they are achieved

To learn more about how the cloud can help to enable the digital transformation of Financial Services finance functions, please contact us.

Related resource:
Cloud technology for banks

Richard Caven

Richard Caven

is a Worldwide Banking Specialist at AWS. He is responsible for the development and execution of strategic initiatives to help customers migrate to the cloud and drive their digital transformation journey. Richard joined AWS in 2018 from Barclays where he was a Managing Director and COO for the Global Treasury function.

Alessandro Mucciardi

Alessandro Mucciardi

Alessandro Mucciardi is a Client Partner leading the Financial Services Professional Services capability in the UK&I. He works with enterprise customers to accelerate their change and innovation journey and to provide leading-edge capabilities for the financial services world of tomorrow. Prior to AWS, Alessandro worked as Associate Partner for management consulting firms where he led the Finance and Risk Cloud and AI capability across EMEA.