Transforming FP&A in Retail Banking with Oracle EPM and Generative AI: A Strategic Playbook.

In the fast-paced world of retail banking, the Financial Planning & Analysis (FP&A) function has evolved from a back-office operation focused on number-crunching to becoming a strategic cornerstone that drives decision-making across the organisation. As the banking industry grapples with challenges ranging from digital transformation and regulatory pressures to heightened competition and changing economic outlook and customer expectations, FP&A must evolve into a proactive, data-driven function capable of steering the organisation towards its strategic goals.

At Revvence, we understand these challenges intimately. Our team, which includes former senior leaders in FP&A at UK banks, brings deep expertise in transforming FP&A functions to meet the demands of modern banking. In this paper, we explore how Oracle Enterprise Performance Management (EPM), combined with the transformative potential of Generative AI (GenAI), can transform FP&A processes with an immediate impact on the bank's performance.

[Disclosure: This blog was written in collaboration with Revvy, a ChatGPT created by Revvence that is trained exclusively on finance systems transformation and related content.  You can try Revvy here.]

The Current Challenges Facing FP&A in Retail Banking

Despite the critical role that FP&A plays in shaping the strategic direction of retail banks, many organisations continue to struggle with outdated processes and tools that hinder their ability to make informed, timely decisions. Below, we outline some of the most pressing issues currently facing FP&A teams:

Disjointed and Iterative Planning: 

Many banks suffer from a planning process disconnected from their strategic goals. This lack of alignment and time-consuming processes hamper the ability to make informed decisions that drive long-term success, often resulting in reactive rather than proactive management.

Inconsistent Data Across Functions: 

The absence of granular, consistent data across products, risk, operations, and finance functions creates silos that prevent comprehensive analysis and strategic insight. This fragmentation undermines the ability to see the whole picture and make data-driven decisions.

Reliance on Manual Tools: 

A heavy reliance on manual tools such as Excel for data collection, collation, and modelling slows the process and introduces errors and inefficiencies. This manual approach limits the ability of FP&A teams to quickly respond to changes and adjust their plans accordingly.

Limited Capability for Scenario Planning: 

Banks cannot proactively influence their strategic direction in response to changing economic conditions without the ability to quickly run what-if scenarios. This limitation hampers their ability to anticipate risks and seize opportunities promptly.

Inefficient and Manual Reporting: 

Reporting to executive committees and boards is often manual and labour-intensive, delivering minimal actionable insights. This inefficiency delays critical decision-making and reduces the reporting function's strategic value.

Lack of Visibility for Product Teams and Functional Heads: 

Product and functional heads often lack clear visibility into their areas, making it challenging to take timely corrective action. This lack of transparency can lead to misaligned priorities and missed opportunities for optimisation.

These challenges slow the FP&A process and limit a bank’s ability to optimise its profitability and strategic growth. At Revvence, we believe addressing these issues is critical for any retail bank looking to enhance its strategic positioning and financial performance.

Strategic Innovation in FP&A: The Role of Oracle EPM

To overcome these challenges, retail banks must embrace strategic innovation in their FP&A processes. Oracle EPM stands out as a critical enabler of this transformation, offering a suite of tools designed to streamline and enhance every aspect of financial planning and analysis.

1. Integrated and Consistent Data Management 

Oracle EPM allows banks to unify their data across products, risk, and operations, creating a single source of truth. This consistency is crucial for providing the granular insights needed to drive strategic objectives. With integrated data management, banks can ensure that their FP&A processes are aligned with overall business strategies, facilitating more informed decision-making and better risk management.

2. Advanced Modelling Capabilities 

The ability to create detailed, product-level revenue models, combined with integrated risk and cost modelling—including operations and headcount—enables banks to achieve accurate product profitability. Oracle EPM’s advanced modelling tools allow banks to assess profitability at a granular level, factoring in allocations and operational costs, which is essential for optimising risk-adjusted returns.

3. Enhanced Scenario Planning with GenAI 

AI represents a paradigm shift in how FP&A teams can approach scenario planning. At Revvence, we view GenAI as not just a tool but a strategic ally in navigating the complexities of modern financial planning. Oracle EPM's integration with GenAI enables banks to run complex what-if scenarios quickly and efficiently, allowing them to anticipate and respond to changes in the economic environment with greater agility.

GenAI enhances scenario planning by generating predictive models that incorporate a wide range of variables, including market conditions, regulatory changes, and consumer behaviour trends. These models provide FP&A teams with deeper insights and more robust strategic options, enabling them to explore multiple future scenarios and their potential impacts on the bank's financial health.

For example, in the face of a potential economic downturn, a bank can use GenAI within Oracle EPM to model the impact on its loan portfolio, assess the potential increase in non-performing loans, and adjust its capital allocation strategies accordingly. This level of insight allows banks to mitigate risks and identify growth opportunities even in complex market conditions.

4. Streamlined Reporting and Strategic Insight 

Oracle EPM automates the reporting process, reducing the manual burden on FP&A teams and ensuring that reports to executive committees and boards are both timely and insightful. This automation, powered by AI and machine learning, transforms reporting from a backwards-looking task into a forward-looking tool for strategic navigation.

With Oracle EPM, banks can move from static, manual reports to dynamic dashboards that provide real-time insights into key performance indicators (KPIs). These dashboards allow senior management to monitor the bank's performance against its strategic objectives and make informed decisions that drive long-term success. Additionally, the integration of GenAI enables the automatic generation of narrative insights, providing context and recommendations beyond mere numbers.

The Strategic Gains from FP&A Process Innovation

Innovation in FP&A processes is not just about improving efficiency—it’s about driving strategic gains that directly impact a bank’s bottom line. By adopting Oracle EPM and leveraging GenAI, banks can transform their FP&A function into a strategic navigator that guides the organisation toward its long-term goals. Here’s how:

1. Enhancing Risk-Adjusted Profit Performance 

At the core of any bank’s strategy is enhancing risk-adjusted profit performance. FP&A innovation allows banks to optimise their RWAs by providing more precise insights into the profitability and risk profile of different products and business lines. Oracle EPM's advanced analytics capabilities enable banks to assess the risk-return trade-offs of various business decisions, ensuring that growth is pursued to maximise shareholder value while minimising risk.

For example, a bank looking to expand its mortgage portfolio can use Oracle EPM to model the impact of different interest rate scenarios on its RWAs. By integrating GenAI, the bank can also simulate the impact of macroeconomic factors on default rates, such as changes in unemployment rates or housing market trends. This level of analysis allows the bank to make more informed decisions about capital allocation and pricing strategies, ultimately improving its risk-adjusted returns.

2. Strategic Flexibility and Agility: 

The ability to run detailed what-if scenarios and integrate them into the strategic planning process enables banks to be more agile in responding to market changes. This flexibility is critical to maintaining a competitive edge in a rapidly evolving financial landscape. With Oracle EPM and GenAI, FP&A teams can model multiple scenarios in parallel, allowing them to explore various strategic options and identify the most optimal path forward.

For instance, a bank facing regulatory changes that impact its capital requirements can use Oracle EPM to model the impact of these changes on its capital structure and liquidity position. By integrating GenAI, the bank can also assess the potential impact on its competitive position, considering factors such as market share shifts and changes in customer behaviour. This holistic approach to scenario planning enables the bank to respond proactively to regulatory changes rather than reacting after the fact.

3. Improved Capital and Liquidity Planning 

With integrated modelling and data management, FP&A teams can ensure that capital and liquidity planning align with strategic objectives. This alignment is critical for managing regulatory requirements and optimising the bank’s capital structure. Oracle EPM’s ability to integrate data across functions allows banks to assess the impact of business decisions on capital and liquidity in real-time, ensuring that resources are allocated efficiently.

GenAI further enhances this capability by providing predictive insights into future liquidity needs based on historical data and market trends. For example, a bank can use GenAI to forecast its liquidity position under different stress scenarios, such as a sudden spike in withdrawals or a decline in market liquidity. By understanding these risks in advance, the bank can take preemptive actions, such as adjusting its funding strategy or increasing its liquidity buffer, to mitigate potential challenges.

4. Reinventing Business Partnering with GenAI 

GenAI is not just a tool for enhancing traditional FP&A processes—it has the potential to fundamentally reinvent how FP&A teams partner with other business units. By leveraging GenAI, FP&A can provide real-time insights into financial forecasts, scenario planning throughout the budget cycle, and faster, more comprehensive business intelligence. This enhanced capability allows FP&A to act as a true strategic partner, supporting other business units in making data-driven decisions that align with the bank's overall strategic goals.

For example, a product development team considering launching a new financial product can work with FP&A to model the potential financial impact of the product using Oracle EPM and GenAI. By simulating different market conditions and customer adoption rates, FP&A can provide insights into the product's expected profitability, capital requirements, and impact on RWAs. This collaborative approach ensures that new products are aligned with the bank's risk appetite and strategic objectives, reducing the likelihood of costly missteps.

Enabling Growth and Increased Profits Through Strategic FP&A in Retail Banking

In an era when financial institutions face increasing pressure to navigate economic uncertainty, regulatory changes, and evolving customer expectations, the FP&A function must be a critical enabler of growth and profitability. For retail banks, effective financial planning and analysis are crucial for maintaining day-to-day operations and driving strategic decisions that directly impact the bottom line. The strategic implementation of Oracle EPM and GenAI's transformative capabilities position FP&A as the cornerstone of sustainable growth.

1. Driving Revenue Growth Through Enhanced Customer Insights 

The ability to derive granular insights from customer data is pivotal for retail banks aiming to grow their revenue streams. By leveraging Oracle EPM's advanced analytics and modelling tools, FP&A teams can generate detailed customer segments and predictive models that anticipate customer behaviours. These insights enable banks to tailor products and services more effectively, leading to higher customer satisfaction, increased cross-sell opportunities, and, ultimately, more significant revenue growth.

For instance, FP&A can model the impact of introducing new financial products, such as tailored loan packages or savings accounts, on different customer segments. By analysing historical data and market trends, the bank can predict which segments are most likely to adopt these products in a risk-optimised way, allowing for more targeted marketing and sales efforts. This strategic alignment of product offerings with customer needs not only drives revenue but also enhances customer loyalty, creating a virtuous cycle of growth.

2. Optimising Cost Management and Enhancing Efficiency 

Cost management remains a critical focus for retail banks, especially in a competitive market environment. Oracle EPM provides FP&A teams with the tools to model and analyse organisational cost structures. This capability allows banks to identify inefficiencies, optimise resource allocation, and implement cost-saving initiatives without compromising service quality. The tools also allow for detailed cost allocations that lead to true product profitability decisions.

For example, using Oracle EPM's integrated cost modelling features, FP&A teams can assess the impact of different cost-saving measures, such as branch optimisation or technology investments, on overall profitability. Additionally, GenAI can simulate various economic scenarios, helping banks understand the long-term implications of these measures and make informed decisions that balance cost efficiency with growth objectives.

3. Enhancing Risk Management and Capital Efficiency 

Effective risk management is essential for any bank looking to grow its business while maintaining financial stability. FP&A is critical in this process by providing insights into the risk-adjusted profitability of different business lines and customer segments. Oracle EPM's risk management capabilities, when combined with the predictive power of GenAI, allow FP&A teams to model the potential impact of various risk factors on the bank's capital and liquidity positions.

This approach is particularly valuable for managing risk-weighted assets (RWAs), a vital determinant of a bank's capital requirements. By optimising the allocation of RWAs, FP&A can help the bank maximise its capital efficiency, ensuring that growth is pursued to enhance risk-adjusted returns. This strategic alignment of capital allocation with business growth objectives is crucial for maintaining a healthy balance sheet and supporting long-term profitability.

4. Supporting Strategic Decision-Making with Scenario Planning 

Anticipating and responding to external shocks is critical for sustaining growth in a rapidly changing economic environment. Oracle EPM enables FP&A teams to conduct advanced scenario planning, modelling the potential impact of various economic, regulatory, and competitive scenarios on the bank's financial performance. Incorporating GenAI can enrich these scenarios with insights from large data sets, providing a more comprehensive view of potential outcomes.

For example, FP&A can model the impact of different interest rate scenarios on the bank's mortgage portfolio, assessing how rate changes could affect customer demand, default rates, and overall profitability. This capability allows the bank to develop more robust strategies for managing interest rate risk and optimising its loan portfolio, ensuring sustainable and profitable growth.

5. Aligning Financial Strategies with Long-Term Growth Objectives 

Ultimately, the role of FP&A in retail banking is to ensure that financial strategies are aligned with the bank's long-term growth objectives. Oracle EPM, with its comprehensive suite of financial planning and performance management tools, enables FP&A teams to take a holistic view of the bank's financial health. By integrating data from across the organisation, FP&A can give senior management the insights to make strategic decisions that drive growth while managing risk.

At the same time, GenAI can identify emerging trends and opportunities, allowing the bank to stay ahead of the competition and capitalise on new market opportunities. Whether it's expanding into new customer segments, launching innovative products, or entering new markets, FP&A serves as the strategic engine that powers the bank's growth ambitions.

The Revvence Approach: Strategic Modelling for the Future

At Revvence, we believe a robust approach to strategic modelling is the key to unlocking these strategic gains. Our expertise in FP&A and deep knowledge of Oracle EPM and GenAI position us as leaders in transforming the FP&A function within retail banks. We focus on creating models that reflect current realities and anticipate future challenges, enabling banks to navigate modern finance's complexities confidently.

Our approach emphasises the importance of:

Granular, Integrated Data: 

Ensuring all relevant data is captured and integrated into the modelling process. This includes risk management, capital planning, and liquidity management data, providing a comprehensive view of the bank's financial health.

Advanced Scenario Planning: 

Leveraging GenAI to run multiple scenarios and generate insights that inform strategic decisions. This capability is particularly valuable in a rapidly changing environment, where adapting quickly is critical to maintaining a competitive edge.

Continuous Improvement: 

Regularly updating models to reflect new data and changing conditions, ensuring they remain relevant and accurate. This approach allows banks to stay ahead of emerging trends and respond proactively to new challenges.

Conclusion: Transforming FP&A to Drive Strategic Success

In the ever-evolving world of retail banking, the FP&A function must rise to the challenge of becoming a true strategic partner. By embracing Oracle EPM and the transformative power of GenAI, banks can revolutionise their FP&A processes, driving strategic gains that enhance risk-adjusted profit performance and support sustainable growth.

At Revvence, we are committed to leading this transformation. With our deep expertise and innovative approach to strategic modelling, we help banks navigate the complexities of modern finance, ensuring that they remain competitive in an increasingly challenging environment.

The time to act is now. By reimagining FP&A with Oracle EPM and GenAI, banks can unlock new performance levels, agility, and strategic success. Let Revvence guide you on this journey to financial excellence.

How can we help?

Revvence can help in several valuable ways:

• Review your existing FP&A systems and process challenges and create a roadmap for change.
• Create a proof-of-concept to show you the art of the possible and help you build your business case for change.
• The design and delivery of end-to-end Oracle FP&A solutions.
• Check out Revvy, our Narrow-GPT for Finance Transformation. Read all about Revvy here.