Unleashing the Power of Citizen-Led Innovation in Financial Model Back-Testing
In response to the pressing need to become more efficient, a global financial institution embarked on an “employee-led” transformation journey to automate and streamline its forecasting model back-testing processes. The goals were to reduce manual work, make fewer mistakes, and better follow regulations. They also wanted to create a culture of innovation and adaptability.
Organization Overview
This global financial institution faced a critical challenge in adapting its key processes to the rapidly evolving digital landscape in back-office operations. With more than 10,000 institutional clients, 100 million customers, and daily transactions exceeding USD 4 trillion, the firm’s legacy systems and manual processes were impeding progress.
Challenges & Opportunities
The institution works in a highly regulated industry. As such, much of the new technologies were historically targeted toward the front of the house on systems that impacted customer satisfaction. However, over the last fifteen years since the 2008 financial crisis and the recent system-wide shock due to COVID-19, regulators have gone beyond financial statement analysis work and become very sensitive to the variance between the output of forecasting models and actual financial performance. With a legacy of manual processes and disparate systems, the existing validation process took too much time and effort. Continuing to place minimal focus on the challenges of adapting key back-office processes was no longer an option.
The appointment of a new CEO underscored the urgency of modernization, prompting a strategic focus on adaptive infrastructure. As a going concern, a wholesale swap of a significant portion of any critical business process was out of the question. In addition, a years-old initiative was already focused on meeting requests from the Federal Reserve Board (FRB) and Office of the Comptroller of Currency (OCC).
In response, the firm looked for “employee-led” solutions for some of the more focused key business objectives. Since employees are always trying to find ways to automate their work, management decided to semi-formalize the most promising efforts that would enhance data-driven decision-making.
Why I was able to step in
My skills in methodical problem-solving, effective communication, leadership, and financial management, complemented by hands-on involvement in digital initiatives, made me an ideal person to help with this endeavor.
The Actions
The initiative unfolded through a structured methodology, leveraging Robotic Process Automation (RPA). This guided the transformation from defining the use case to deployment and closure.
The Results
The initiative created an automated solution that could be scaled. It significantly reduced manual work and increased accuracy. The project got rid of over 1,100 hours of work per year. This improved risk management and made the institution more efficient overall.
The project’s success did not go unnoticed. The Sector’s CFO publicly recognized the project’s value in his quarterly newsletter.