For most banks, budgeting and forecasting are about as welcome as a toothache, due to the time and labor involved, plus frequently poor results.
To ease the pain, Comerica has turned to SRC Software, Portland, Ore. The Detroit-based bank has installed SRC's Budget Advisor and Information Advisor software products, and expects them to be fully implemented by early next year.
"Budget Advisor is for planning and forecasting. Information Advisor is for consolidated reporting and ad hoc analysis," said Mary Kosinski, vice president of information services at $53 billion Comerica.
Comerica chose SRC products for several reasons, including functionality, price, SRC's success with other banks and the company's "ability to deliver a flexible system that will minimize IT development costs," Kosinski said.
The bank will use SRC's software for quarterly forecasting, planning, management and executive plan reporting.
The software interacts with other banking functions and departments, including human resources ( head counts and salaries); fixed assets (asset depreciation); management accounting (actuals by month); and asset/liability management (cost of funds), Kosinski said.
Previously, the bank's forecasts were created on Excel spreadsheets, and the annual plan was done on a 10-year-old system that was cumbersome and difficult to work with, requiring difficult maintenance, said Edwin Echelmeyer, first vice president of corporate planning at Comerica. "Functionally, we needed better analytic and reporting tools."
Budget Advisor and Information Advisor's ease-of use impressed Comerica. The software allows many employees in disparate locations to log in and enter financial data for projections, explained Peri Pierone, SRC's vice president of financial services. Plus, it can generate company-wide or local views.
Most banks use a mammoth Excel spreadsheet to prepare budgets and forecasts, and must distribute and collect data from many people throughout the organization, said Tom Malone, CEO of SRC Software. Instead, SRC's products allow remote and local users to access a common system, from desktop PCs or via the Internet. Managers can customize their views of the system, for example, by setting up multi-task spreadsheets to chart capital expenses, equipment orders or other categories, Pierone said.
SRC's software is a hybrid of several products, including Excel on the front end. But while Excel is familiar, it's not meant to handle data storage, said Phil Sandstrom, SRC co-founder, CFO and chief systems architect. So SRC doesn't rely on it for this. "Rather, we use industry standard relational database technologies, MS SQL Server and Oracle," he said.
Budget and Information Advisor also saves data-entry time. Previously, Comerica managers had to go to every planned line item for each month and manually enter a number. With SRC's software, however, they can pre-populate a plan using actual monthly growth figures from one year, then apply a growth factor and ask the system to generate the following year's plan based on that information. "It's an automated process, that simplifies and streamlines what we currently do. We don't have to enter as much data," Echelmeyer said.
Most importantly, the SRC forecasting system offers pinpoint accuracy. SRC's banking expertise plus the products' "true-Excel" user interface provide "visual calculation methodologies unmatched by any other software package," Sandstrom said. Its ability to calculate loan and deposit category run-off (contractual amortization and maturities) from item-level detail provides the proper basis for loan/deposit calculations.
Recently, SRC introduced Advisor Series FI, a budgeting, financial planning and reporting product specifically designed for banks, thrifts, and credit unions. The system promotes a best-practices approach to key industry-specific budgeting and planning issues such as cash flow forecasting, new branch modeling, rate/volume analysis reporting, credit risk reporting and analysis, what if scenario analysis, average daily balance calculations, funds transfer pricing, capital budgeting, staffing plans and more.
Advisor Series FI includes a Cash Flow Analyzer, which allows banks to warehouse and process their loan and deposit records for more precise and accurate planning.