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What is Financial Management Information?

Accountable for financial management information and want some practical suggestions to reduce information management costs?

What is a financial institution?Financial Management Information

Financial institutions are in business to provide financial services to customers and include corporations involved with:
  • Banking and credit card services;
  • Insurance; and
  • Investments
What is common financial institution information?

Financial institutions, like most companies, need to manage information required to support common business functions such as:
  • Order management;
  • Billing management;
  • Work effort management;
  • Accounting management; and
  • Human resource management.
What additional information is required for credit applications?

Institutions, which make loans and mortgages, or provide credit cards, need to track customer information such as:
  • Credit rating, which may be obtained from credit bureaus;
  • Assets, which may be valued via techniques such as:
    • Appraisal services;
    • Property tax assessments; and
    • Stock quotation services for securities.
  • Liabilities, which may be verified from:
    • Credit bureaus; and 
    • Government services, which record liens and mortgages on real estate and other assets such as automobile loans.
  • Income, e.g. 
    • Employment income which may be verified via employment records; and 
    • Self employment income, which may be verified by income tax assessments; and
  • Credit history, e.g. does the person or company pay bills promptly.
This information is required to make loan decisions and help the financial institution manage credit risk.

Once loans and mortgages are approved, financial institutions need to continually monitor the status of assets pledged as security to ensure that asset valuation does not decrease substantially, or that liabilities do not increase substantial, thus impacting ability to repay the loan or mortgage.

What are deposit services information requirements?

Financial institutions need to track all transactions posted to a customer account e.g.
  • Deposits made at the customer account branch;
  • Deposits, withdrawals from any branch or worldwide automated teller machine;
  • Automatic transfers to other institutions e.g. for child support payment; and 
  • Payroll deposits.
In addition, credit card companies need to be attentive to potential fraudulent transactions and will track things like normal customer usage patterns to help identify potential fraud.

What additional information is required for insurance?

Insurance companies need to track:
  • Asset value, to ensure that the assets are valued correctly;
  • Replacement value, to help determine premiums;
  • Credit information, to ensure that any property mortgage holder is listed as a beneficiary; and
  • Customer claim history, to help manage risk.
What is correspondence tracking?

Most financial institutions need to track customer correspondence such as:
  • Account statements;
  • Financial notices, e.g. credit rate changes;
  • Requests for additional supporting information;
  • Requests to credit bureaus, for customer credit ratings; and
  • Requests to government agencies for asset valuation purposes.
What is regulatory reporting?

Financial institutions have to comply with regulatory reporting requirements such as the US patriot act anti-money laundering requirement and this requires a consolidated view of account transactions and client management contacts.

What are some financial management information challenges?

Financial institutions are large corporations with a significant investment in legacy systems.  There is a lot of data movement into, within, and out of the organization, and this information needs to be managed to ensure optimal return on investment.

Much of the information is in different formats and/or uses different means of identifying customers.

Data warehouse applications are frequently developed to help provide a consolidated customer profile and this involves information management projects, standards, best practices and specialized IT professionals.

Summary…

Financial management information involves significant data movement into, within, and out of the organization.

An information management strategy and framework, based on industry-wide best practices, is required to ensure optimal return on information management investment.

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