Finance transformation at the centre of finance
How to make a lighthouse project shine company-wide
Meet the client
As one of Germany’s leading banks, Commerzbank serves around 30,000 corporate customer networks and 11 million private and corporate customers in Germany. The bank offers a comprehensive portfolio of financial services in two business areas – Private and Corporate Customers and Corporate Customers. In 2020, Commerzbank generated gross revenues of around €8.2 billion.
How many birds can you actually kill with one stone?
The finance and controlling team of a major European bank usually has a whole pack of challenges breathing down its neck: Digitalisation is not only advancing in the specialist area, but everywhere – with sometimes massive effects on various business areas. At the same time, the legislator prescribes the fulfilment of various requirements and regulations: For example, banks above a certain size must be able to demonstrate that they are prepared for various scenarios. And then there is the matter of the generally rather unstable markets and the “VUCA world” …
From the point of view of controlling, the question naturally arises as to what constitutes the Jack of all trades. Or:
A flap big enough to swat at least a few flies at the same time.
And when you have found such a solution: How do you integrate them sensibly and profitably, and in such a way that no new isolated solutions are the result – but on the contrary, old silos are abolished?
Is there magic in every beginning?
That beginnings are always magical … can be seen that way. The beginning of the relationship between Commerzbank and Valsight, however, was rather marked by a healthy dose of scepticism.
Even if alliances between long-established large corporations and start-ups have arrived in the strategy mainstream for many reasons, initial reservations are still common: Would the banking colossus get involved in a PoC with a small scope instead of “getting down to business” straight away? And would the small Valsight team be able to map the highly complex banking models?
Even a flap for several flies doesn’t necessarily have to be big – but above all somehow smart.
We had looked at different planning solutions on the market and shortlisted some providers for software solutions, especially for agile simulation of scenarios. Valsight presented us with a solution with a lean and compact project. We were convinced by two aspects in particular:
First, we built our group planning model ourselves after a short joint workshop without much programming knowledge and without external resources and have been developing it steadily ever since. Secondly, unlike other providers, Valsight convinced us of the high flexibility of the software. We can make short-term model adjustments and extensions directly ourselves.
Both points give us a great deal of independence. In the meantime, the model has grown considerably and we have been able to develop many additional functionalities. In the next step, we will roll out and scale the Valsight solution in other areas within the company.
Prepared for all eventualities
Reaction: at the push of a button
Or is it rather: just in case? Both are correct. In order to meet the regulations of the supervisory authorities, Commerzbank’s controlling and finance team had to be enabled to calculate several alternative scenarios.
Well, to be honest: That was also the case before.
But it was exhausting – and time-consuming. The scenarios are based on significant fluctuations in key interest rates, inflation or exchange rate problems – scenarios that are not only conceivable, but then also affect all areas of banking business as well as the bank’s own capitalisation.
In particular now in the Corona crisis, the Commerzbank controllers had to react to a changed environment at short notice in the middle of the ongoing planning process: “In the past, this would have set us back weeks. Thanks to Valsight, we were able to simulate the impact of a significant drop in the DAX level on our result and our capital ratio, for example, within a few moments at the push of a button,” says Stefan Pohl.
"We're seeing things!"
100 % transparency, 0 % visions
Instead: An understanding of numbers and connections: This is of course a prerequisite for the job among colleagues in controlling anyway – and is generally present to a sufficient degree.
But even numbers people don’t always see them immediately: the stories that the numbers write. The visualisation functions in Valsight help to convey this. Deserts of numbers become pictures, which then become stories.
The result: a greater understanding of the numbers. The visualisation options make developments clearer more quickly.
We are not just 'agile on principle' - but because in many cases it simply makes sense. An MVP or pilot project serves to illustrate possibilities and potentials before committing to turning entire business unit processes upside down.
Our customers appreciate this approach. It keeps projects lean, especially in the early stages, and ownership lies with the client teams. The demonstration of what is feasible and of the potential is thus up to them - and they also demonstrate the much-publicised change in the role of the controller and CFO on a daily basis.
Choose your own adventure
Seeing the stories behind the numbers
At the same time, the efficiency of the entire department increases enormously: because every change, every measure added, impacts all relevant nodes in the entire planning model.
This means: for every alternative scenario, an alternative story that can be read out of the diagrams that build up in seconds and taken to the meeting. Simulate the impact of index fluctuations on your own portfolio values? Forecast the impact of fluctuating exchange rates on those or even private and business customer sales? No problem.
In addition to efficiency, this increases the maturity of the controllers – because they know what they are doing.
Winning employees for change and not just “convincing”
It is not always easy to get employees excited about a new (complex) solution for (complex) processes. Especially in traditional companies in historically grown industries, innovators often encounter reservations. And these are often neither completely unjustified nor to be dismissed out of hand. So how do you manage to convince employees to change?
Commerzbank controller Stefan Pohl went the millenial route: via influencer marketing!
The core corporate planning team around Ingo A. Mueller and Stefan Pohl did not need to be convinced: It took them only a few days to create a first prototype for the private customer business. But when they presented this prototype to the users, they were met in part with scepticism and reservations: The value driver approach was not particularly popular.
The solution came with Ines Emde: During her time as a finance trainee, she got to know the Valsight tool in the planning team and was immediately enthusiastic. In her current job as a controller in the corporate clients segment, she was able to use this enthusiasm to identify a wide variety of drivers for the business model and the value driver model could be built up in a short time, contrary to the reservations expressed at the beginning. The result of this – together with the aforementioned visualisation – was able to soften the reservations of the rest of the users.
Valsight and Commerzbank
Based on the ‘small’ pilot project, the proof-of-concept, a prototype in a clearly defined area, Valsight is being used in various value-added areas of Commerzbank:
After the controllers in the private customer business and the treasury area, the next step will be the HR controllers. The goal is to enable all areas to map planning, forecasting and simulations with Valsight. The existing IT landscape in Group Finance will thus be consolidated and streamlined. Up to 150 controllers are to have switched to Valsight by 2022.
The Commerzbank controllers are capable of calculating complex multivariate scenarios and can thus not only anticipate the ECB, EBA and BaFin requirements, but also improve group controlling in all areas, thus killing several birds with one stone.
Valsight is proud to be fuelling the finance transformation at such a prominent location with such a resounding effect. So well, in fact, that Commerzbank has joined Valsight through its main incubator R&D department.
Tighten your seatbelts!