Organizational agility was critical in 2020, as financial institutions faced an unprecedented crisis from the COVID-19 pandemic. Nearly a decade’s worth of innovation and technical upheaval occurred within a year, forcing companies to deviate from plans and adapt quickly. As a result, many institutional leaders view COVID-19 as proof-positive that planning can only take you so far. However, one of the main lessons from the pandemic is that planning and agility go hand in hand.


How the Pandemic Impacted Financial Institutions

It’s crucial that institutions set goals to reach for and measure against, and it’s strategically sound to select a destination and understand each step along the journey. The COVID-19 pandemic now serves as a significant case study in the inherent challenge of unforeseeable economic curveballs.

The Syntellis 2021 Financial Institutions Finance and Technology Trends report found more than half of finance professionals at banks, credit unions, and other financial institutions said they would miss their 2020 profitability goals due to COVID-19. Looking ahead, 51% of respondents expect profitability to decline or remain flat this year.

During a time of uncertainty, it may seem counterintuitive to say that planning ahead will ensure financial institutions’ ability to remain agile. To understand, however, you must have a firm understanding of what good financial planning actually entails.


Explore New Approaches to Planning

While annual plans and even five-year plans have their merits, operating on shorter cycles has become imperative to institutional success. When a crisis hits, institutions that are agile and able to adjust budgets quickly and accurately find the best path to peak performance, often relying on daily data imports to inform timely reporting.

It’s concerning, then, that only 43% of surveyed finance professionals indicated they had adequate technology for profitability analysis and reporting to accurately understand value drivers and plan for COVID-19 impacts. Further, 70% of institutions have a budgeting cycle of three months or longer, citing resource constraints, lack of personnel skills, outdated budgeting processes, and insufficient tools as major contributors to delays.

From this data, we can infer that financial planning technology has fallen into a blind spot, limiting the ability of finance professionals to make quick changes to budgets and strategic plans.


Inefficiencies Hinder Agile Financial Planning

Examining the current state of financial planning within institutions, it’s easy to see why inefficiency persists. The largest percentages of institutions reported using spreadsheets for crucial tasks such as budgeting, forecasting, reporting, and scenario analysis. When facing a crisis like COVID-19 and the pressure to completely alter existing understandings of cash flow and profitability, many institutions had to manually assess and update countless spreadsheets before charting a reliable course forward.

Despite dealing with the uncertainty that the pandemic delivered, only 38% of finance professionals planned to use scenario analysis in their plans for 2021.

Identifying a problem is always the first step in solving it, and it’s evident that a lack of modern financial planning tools is hampering the agility of many institutions.


What Efficient Planning Looks Like

Manual processes are no longer sufficient. Automated tools that can quickly compile, aggregate, and parse data drastically increase financial planning speed and agility. Financial plans should incorporate scenario analysis technologies so contingencies can be rapidly created and implemented, as needed.

These simple steps can help institutions achieve true agility, as it will enable them to quickly adapt financial planning to whatever realities they face. COVID-19 accelerated years of digital transformation virtually overnight, and the need for agility will remain — even as the industry begins to move on from its effects.


A version of this post first appeared in PaymentsJournal.

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