The real implications for Finance in Nigeria ?
The challenges outlined in the previous section result in significant adverse impacts for Finance departments: Increase in cost base – increase in Finance, operational and support headcount costs, which has the potential to alter the competitive advantage of the bank Trading volume caps – volume limits are imposed for some new or exotic products because Finance need to manually support the downstream processing
Limited value add – Finance teams spend increased time on data cleansing and manual adjustments, rather than provision of value add P&L commentary and analysis for the traders they support
Timeliness of data for trading decision – reduced reliability and timeliness of data for the Front Office impedes trading decisions and can lead to sub-optimal balance sheet utilisation and hedging. These challenges are very likely to:
Hinder effective and efficient close processes – delays to finalising the month end numbers, mean delays to insightful management information, which impacts successful delivery of strategy and timely visibility to the shareholders.
Cause external body requests, which tie up CFO and first line reports – increasing amounts of time is spent responding to regulatory bodies for supplementary information requests. This prevents Finance individuals from performing more value add activities. Result in a labour intensive Finance community – from pre-banking crisis with very few requests, to post-crisis where requests seem to come in with very little notice and strict deadlines, there is pressure on CFOs to reprioritise resources to ensure compliance. Significant headcount numbers are required to resolve financial reporting issues before high value analysis can commence.
to change – quick fixes are often applied as a result of cost limitations and time requirements, rather than a more appropriate longer term strategic solution.
Lead the bank to lose out on potential profit-making opportunities: Poorly integrated systems and inconsistent information can result in protracted decision making. The additional time spent reconciling data and ensuring it is consistent results in time taken away from evaluating possible profit opportunities.