The financial sector is an extremely competitive market and large multinational financial institutions have to compete aggressively to maintain their client base and win new customers. Within the world’s major financial districts, such as London, New York, Tokyo, and Hong Kong, competing businesses are always in close proximity and customers can often move with relative ease. There is no other market quite like it.
Because of the highly competitive nature of banking and finance, combined with the huge amount of wealth that is managed and generated, the most highly skilled and experienced workers have been in great demand over the years. It is not uncommon for the best workers to be poached by competitors offering higher salaries and better incentives.
In recent years the market has changed dramatically, as technology starts to play a more important role in the world of finance. Information drives the financial sector and the best workers are capable of sourcing, analyzing and acting on the latest information quickly and with minimal mistakes; however, there is always a risk of human error and a seemingly small error can be extremely costly for a financial institution. The solution to human error is automation and ERP, or Enterprise Resource Planning.
Image credit: Wikimedia Commons
ERP in the financial sector provides a range of tools to enhance services. All areas of banking and finance have been automated or partially automated with trade matching and settlement systems, dividend processing, reconciliations, and cash accounting being aided by ERP systems. One of the biggest advancements in banking technology has been the development of Straight Through Processing (STP), which is the automatic matching, and settlement of transactions. These processes are essentially managed by ERP solutions.
Many banking operations use the SWIFT network, a global communications network that sets strict parameters for financial transactions. This uniform system reduces translation and transposition errors; however, in the absence of automation, messages still have to be reviewed by a human being. Many companies are still printing out SWIFT messages when they could be sending them direct into their accounting systems.
The use of ERP in the financial sector has allowed many SWIFT messages to be automatically processed, allowing deals to be automatically matched and settled. This greatly reduces the time required to process transactions and eliminates human errors.
The most important advancement in the last five years is the growth of online ERP services. These services allow financial institutions to outsource the ERP element of the process. For example, where SWIFTs are used the messages will be passed through a third party system for analysis and matching before being sent into the customer’s reporting systems.
The major advantages of using ERP in the financial sector are speed and accuracy along with a possible reduction in staffing costs. This can allow institutions to offer a more rapid service than their competitors, at a reduced cost. ERP systems can run 24-hours a day, seven days a week and there is the potential for cross-border trades to be matched in real time.
The future of the financial sector will see more developments in ERP and automation. In recent years, many banks have outsourced parts of their business to overseas back-office operations to reduce costs. With improvements in ERP many of the outsourced operations may eventually become redundant and all operations may return in-house, with the help of advanced computer support systems. Automation is already helping the financial sector to operate more efficiently and it has the potential to help boost the global economy.
Tags: ERP, ERP services, online ERP services
