Digital banking transformation at Banca d'Alba

With the highest number of members and the second-highest volume of assets under management, Banca d’Alba is one of Italy’s leading Cooperative Credit institutes.

Banca d’Alba operates with a tradition formed centuries ago. Today, their assets reach 9.4 billion in total, with a supervisory capital of €319 million, 156,000 customers, 460 employees, more than 56,000 shareholders, and more than 10,000 young people under 30 forming part of the company cooperative.

Banca d’Alba operates with 73 branches that serve 290 municipalities across 7 provinces of Piedmont and Liguria.

Its crowning achievement in the non-banking area is its social healthcare activity aimed towards their shareholders and where it operates. Over the past 20 years Banca d’Alba has provided 1.5 million physiotherapy treatments in its 5 medical centres free of charge.

The challenge: Creating an effective framework for management control, business intelligence, and risk management

Ten years ago, Banca d’Alba needed to improve and optimise their planning and control process, from the distribution of management reporting to the branches (for detailed analysis) up to the development of a Key Performance Indicator (KPI) system for tracking and monitoring strategic information. With these requirements, the challenges that arose were around reorganizing workflows to integrate the planning, management control, and budget process into a single platform – with the top-down interactions typical of general management, and the bottom-up approach of branch managers – and  speeding up the flow of reports available to branch managers and controllers.

Over the years, Banca d’Alba was aware of the need to build an efficient risk management framework in response to the  increasingly strict changes imposed by regulators and the market. In 2011, Banca d’Alba looked towards advanced digital tools to run advanced analytics and performance management, moving towards improved decision-making processes of their managers and senior executives. With these innovative technologies, Banca d’Alba could support their decision-makers with Business Intelligence (BI), Corporate Performance Management (CPM), and predictive analytics tools capable of responding to the risks and rapid changes in the financial world, keeping in line with international best practices while maintaining full control of the operational costs involved in implementing risk management methodologies.

Another important aspect for Banca d’Alba was  the progressive ability to develop an increasingly close collaboration between the strategic and financial areas, and the operational departments, who wereadopting Board as a shared platform, to obtain the maximum advantages presented by digital transformation.

The high-level customization of processes, and an integrated risk management application, represents a very important tool for assessing risks and making the best decisions, leveraging the large amount of data available.

An end-to-end solution for strategy, control, assessment, and forecasting

The applications implemented together with BIOS Management, a Board partner, have been transformed into the development of a planning environment on the Board Intelligent platform: an information analysis solution that supports the decision-making process, guaranteeing speed, ease of use, quick application development, and interactive business modelling. The initial project focused on a Financial Planning & Analysis (FP&A) solution, which included a budgeting process for assets, liabilities, and services, as well as forecasting at the end of each year. Perfectly integrated within the solution, Banca d’Alba uses Board for management reporting and BI, with KPI and dashboards created for executive roles.

Thanks to the Board platform, we are generating a three-year strategic plan” – affirms the Analysis and Research Manager of Banca d’Alba – which is transformed into an annual operational budgeting process for each department, including Sales & Marketing, and for each function dedicated to the management of interest income, financing, interest originating from own securities, bank transfers, credit/debit cards, POS, etc.

On a management control level, analyses have been perfected on the Board platform to measure the profitability of customers, branches, and products. A cost allocation process has been developed also.

Board makes it possible for Banca d’Alba to analyze and share company data, from the final figures and budgets, for each individual branch, down to the products and customers, in order to best obtain a complete and accurate view of the situation.

Some of the main processing operations that have been developed include:

• strategic planning and budgeting workflow for the balance sheet (deposits and loans) and the income statement (interest margins, revenues from services and costs), which can then  detail provisional data for each organizational unit on a monthly basis and by customer cluster;
• specific forecast functions, estimating the year closure based on final data, provisional data, and possible adjustments;
• management reporting, with monthly, weekly, and daily monitoring through specific operative reports, with gap analysis vs budget.

 By perfectly combining management control with the intelligent functionalities of Board – continues the manager – Banca d’Alba was able to integrate: analysis of customer behavior, consumption type and habits (for example, use of on-line services or at a brick and mortar bank), customer profiling (by demography, profession, geography, etc.); competitive market positioning, evaluating and comparing internal information with external information (population, number of residents, etc.) to understand how our bank is positioned in the market.

Furthermore, BI within Board has been enhanced with the Board BEAM module, which is dedicated to advanced and predictive analytics. With BEAM, Banca d’Alba is starting their first processes of customer  clusterization, simulation, and scenario management, to evaluate credit deterioration and customer churn rate. From this, Banca d’Alba are hoping to best capitalize on the value of their customer base by better managing their marketing through strategic insight and pushing offers to the right customer clusters.

Among the most important solutions created and implemented on the Board platform, the Analysis and Research manager pointed out the risk management application that manages, controls, and analyzes bad debt - integrating a workflow and providing stakeholders with a decision-making dashboard that delivers a complete and accurate overview:

One of the most innovative projects was the introduction of the Risk Management solution integrated with Management Control. This solution created on Board was specifically studied by the University of Bergamo, which published it as a concrete case study in the Management Control scientific journal

The large wealth of information managed by a bank - if equipped with suitable technology, such as Board’s decision-making software – enables users to not only identify and make productive use of information that would otherwise remain 'in the shadows'; but to also improve decisions by considering risks and monitoring the quality of credit portfolios, making it possible to make swift changes, as needed, to avoid losses and take advantage of opportunities in a proactive manner.

For the banking and financial services sector, Board is a truly powerful tool: at Banca d’Alba we have been able to combine strategic planning, operative budgeting, risk management and strategic marketing on a single platform - concludes the manager