Over-reliance on spreadsheets could cause major problems for insurers and other firms in the financial service sector that are struggling to get to grips with the Solvency II regime, which took effect across the European Union at the start of this year, claims Accountagility.
The UK-based financial software provider says that less than three months since Solvency II was introduced, “the cracks are beginning to show” among firms filing their solvency returns for the first time.
The company researched a range of UK companies in the financial services sector, including building societies, challenger banks, international banks (US firms based in the UK), property/casualty (P&C) insurers, life insurers, asset managers, private banks and wealth managers.
The survey, which had responses from 200 chief financial officers (CFOs) and financial directors (FDs), found that 73% of their CFOs are concerned about their reliance on spreadsheets. Responses also showed that four in five CFOs have reported a fault with their planning processes when using spreadsheets over the past year, which Accountagility says evidences that these cumbersome approaches are not working as efficiently as they should be.
It adds that the continuing transformation of the finance function has not been matched by progress in financial technology, which means that many departments are still heavily dependent on tools that are over three decades old.
Particular problems occur for firms grappling with Solvency II in terms of the large amount of data collection, manipulation, analysis and output required. When a tool such as Excel or another spreadsheet function is used for these processes, productivity is compromised and an element of risk is added.
“Relying on spreadsheets for Solvency II has two principal impacts – errors and process inefficiency,” said Robert Gothan, chief executive officer (CEO) and founder of Accountagility.
“Firms dealing with spreadsheets are spending too little time reviewing the data they have created, leaving errors potentially undiscovered for months to come. Given that the Solvency II framework does not contain allowances for either mechanical error or lack of efficiency, the review stage is the most important, particularly for firms required to file solvency returns across the EU.
“Our research shows that four in five CFOs cite problems with their spreadsheets, which is truly concerning. Businesses should be wary when relying on spreadsheet tools for their solvency returns, and should consider using automated solutions to streamline these processes in the future.”
A study of the leadership pipeline at the UK’s FTSE 100 corporates shows modest progress, but many top companies still have no ethnic minority presence.
The world’s second-biggest economy will grow faster than previously predicted over the next four years, but the rate is unsustainable unless China addresses the problem says the International Monetary Fund.
The insurance industry will also benefit as private businesses increasingly bypass the public internet and communicate with one another direct, predicts Equinix.
The information and communications technology sector is suffering a triple whammy from slower growth, thin profit margins and fierce competition, claims Atradius.