Necessity of ERP for banks stems from the banking industry growing constantly offering wider range of services and activities. This sector is actively adopting IT technologies to facilitate the working routine and implement the best solutions.

Data management is one of the biggest challenges that banks might encounter. There are diverse options and banking ERP ​is one of the most beneficial for smaller and bigger industry players. Before moving to the upsides and downfalls of ERP system for a bank, let’s get a better understanding of what an ERP system is.

What Is an ERP System?

Enterprise Resource Planning or simply ERP is a software that allows any organization or business to perform their daily activities faster and easier. These include accounting, risk management, project management activities, supply chain operations, human resource management functions and so much more. An ERP system also helps to get reports on company’s financial disposition. It integrates all the information, customers, vendors and processes to achieve better results and smoother, more productive workflow.

ERP software is widely used by many industries, but for banking sector it is crucial in order to attain the effective processes. Banking system is wide and complex, it deals with some operational challenges and issues, handles large volumes of information, has security concerns related to secrecy maintenance and should comply with certain industry regulations. ERP in banking is a great solution in this case to leverage all banking processes such as creating financial reports, account management, ​cash accounting, payment processing as well as security management.

Benefits of Using ERP System in Banking

A banking ERP system provides employees with a flexible yet less complex IT structure to cope with job-related activities faster.​​ Here are some more benefits of using such financial management software.​

Increased Efficiency

All banking processes are integrated into one platform, ensuring easy and fast access to all data needed across the bank and all the departments. All daily tasks, such as creating reports or filling in the data, are already automated with the banking ERP system. It’s possible to review the main KPIs on a dashboard so that managers can quickly flick through it. In addition, ERP for banks also eliminates repetitive working processes.

Smooth Collaboration

ERP in banking also enables effective and smooth collaboration between colleagues from different departments. Moreover, an ERP system facilitates collaboration with remote teams. An offshore or nearshore team will be available within a few clicks to ensure a productive workflow.

Increased Data Security

An ERP system offers firewalls to lower the risks of data breaches. You get one data warehouse and easily monitored access points to increase the security level. It will be possible to restrict terminated employees’ access faster and give them access to newly hired ones. An ERP system offers admins another level of transparency, helping them to detect unauthorized or suspicious activities.

Reduced Operational Costs

An ERP system can help you save on operational costs and cut the budget. Thanks to banking ERP software, all processes are streamlined and monitored, preventing or quickly eliminating eventual breakdowns or disruptions. Addressing any occurring issues easier and faster enforces reducing operational expenditures.

Strict Compliance with Regulations

The banking sector must comply with industry rules and regulations. An ERP solution incorporates regulatory standards and reports on compliance to help banks meet these strict requirements. This way, ERP for banks is not only about management efficiency, but also about security and gearing up for bureaucratic demands.

Limitations to ERP in Banking

It would be unfair if we’ve only sung praise to banking ERP without even mentioning challenges and limitations that can come your way should you decide to employ it.

Intricacies in calculating the final costs. Considering how complex these systems are, it is always a challenge to predict the exact cost of software, required adjustments, implementation, network updates, hardware, etc. Budgeting for ERP depends on too many factors, and, with a rather extended period of implementation needed, is also sensitive to inflation, local currency erratic jumps, etc.

Stretched implementation period. Implementing ERP for banks easily takes over a year, in some cases, significantly longer. A company should be at a certain level of maturity to plan implementation processes for over a year, possibly more. It won’t hurt to make sure, key agents involved in this process on your side, are not planning to change workplace in the nearest future.

Opposition to change within the company. Even the most professional and engaged specialists are used to doing their work a certain way. Implementing banking ERP software inevitably provokes certain tension within the organization, as it comes with too many changes and hours of training. To make this processes easier, include your key specialists i decision-making process as early as possible and make sure to plan training sessions for “low” season. This way, you will have supporters advocating for these changes at lower management levels and people ready to learn instead of people terrified of deadlines. Adjust training to peak seasons in different departments, as those are different for Sales and Accounting.

Ongoing security and compliance updates. While it may be less true in case of other industries, banking ERP is a commitment to constant updated related to new financial information security and other regulations. Some of the updates will become part of your system automatically, some will require extra work, training and costs.

It is our experience that despite all the challenges and intricacies, ERP for banks is necessary both in terms of efficiency and security. However, being prepared to face challenges, is always a good strategy, and we make it a priority to show two sides of the same coin to our clients. As you can see, an ERP system can be an asset for the banking industry. The advantages are immense. In order to take the overall productivity to the next level and facilitate daily activities, an ERP system is mandatory to be tried out.