Forget trick-or-treating. Forget costumes. Forget decorating your house. If you are in financial services, the place to really celebrate Halloween is the Spreadsheet Cemetery. Unfortunately, there are far too many plots available here, meaning that far too many spreadsheets are haunting traders, operations teams and compliance experts in the land of the living.
A few scary facts:
- 176 fines were levied on financial institutions for operational and compliance violations last year, many of which can be tracked back to processes managed via spreadsheet. In 2020, a ghastly 760 of these fines were handed down.
- Spreadsheet value at risk is estimated at over $12 billion for the largest financial firms (Chartis).
- Spreadsheets are a top 10 operational risk for most organizations; 70% of companies admit to having had a serious error (PRMIA).
- 47% of risk professionals said their companies used more than 1,000 spreadsheets for day-to-day functioning, and 30% admitted that more than 25% of the spreadsheets used were critical to core operations (Brickendon).
If you really want your skin to crawl, here’s an excerpt from a recent notice from the Bank of England’s Prudential Regulatory Authority (PRA) explaining the spreadsheet horror at the center of a compliance breach:
[the bank’s analysis of Risk Weighted Assets (RWA) was] “largely manual… [and] created key-person dependencies on a small number of individuals familiar with spreadsheets that were not scalable” and that the bank’s “front-end data capture and systems did not allow it to capture all relevant information that the firm needed.”
In just two phrases, the PRA sends shudders down the spine of the financial industry because most firms are host to similar evil spirits. Indeed, the PRA’s summary is an eerie epitaph for the spreadsheet headstone, lamenting some of the malevolent characteristics of a spreadsheet:
Lack of control, data governance, auditability
The unknown unknows in the scope of spreadsheet use and the way data flow across multiple spreadsheets threaten the integrity of many business-critical financial, operational and regulatory processes. A single error in a spreadsheet can open a dangerous gateway to an underworld of financial, reputational and operational risks.
Studies show that about 90% of spreadsheets contain errors of some kind. Beyond the typical fat-finger (severed) mistake, cutting and pasting and other manual data entry can change or damage formulas and macros, leading to ghostly, hard-to-detect inaccuracies.
Key man risk and scalability
Understanding of how a spreadsheet (or spreadsheet ecosystem) operates is often concentrated in a few people. When they leave the firm or take on new roles, zombie spreadsheets can run amok without their true masters watching them. The ever-present specter of version control illustrates just one aspect of how spreadsheets are not designed to scale and how constant manual remediation of spreadsheet driven processes entomb opportunities for growth and innovation.
How do we begin to bury spreadsheets and ensure they don’t rise from the dead and walk among us again? Low-code is the silver stake in the spreadsheet vampire slayer’s arsenal.
Purpose built for financial institutions, the Genesis low-code application development platform offers firms the ability to exorcise their spreadsheet demons efficiently. The platform provides a unified developer environment for creating front-end and back-end aspects of applications. Functional, technical and financial business components within the platform enable fast delivery of solutions requiring high-performance transaction processing, event-driven workflows, real-time data integrations and rich, interactive user experiences.
We have proven that we help clients get from white board to market ten times faster than traditional software development. For example, a simple trade blotter that would normally require 400 lines of code, only needs around 40 lines with Genesis. With speed like that, you can see how large numbers of spreadsheets can be put six feet under.
Genesis works with software developers at banks, asset managers, clearing houses, exchanges and other financial organizations to build new applications, enhance legacy systems and eradicate spreadsheet plagues. Here are examples of Genesis applications that have laid spreadsheets to rest:
Credit insurance: Combines data and reporting tools for lending portfolio management to reduce operational cost and risk.
Primary bond issuance: Automates workflow and data entry to improve efficiency, reduce errors, improve decision making and position the business for growth.
Trade allocations: A flexible middle-office solution to administer multiple asset classes, fee calculations and allocation models.
Fund finance: A multifunctional dashboard helps the bank monitor investor exposure and mitigate risk in fund borrowing facilities.