Community banks have a lot to juggle when it comes to keeping their financial house in order. But many of the mundane, repetitive tasks related to daily, monthly, quarterly and annual reporting can be eliminated through automation.
Of course, automation has multiple benefits for community banks—not just creating efficiencies related to financial reporting. But financial reporting is such a big part of what community banks do that it can be a good starting point for those still coming up to speed on different technology options.
According to Louise Bonvechio, executive vice president and chief financial officer of $1.1 billion‑asset Community National Bank in Derby, Vt., “Rather than add people to shuffle papers along, we knew we could do more with the staff we have if we could automate.”
Where automation helps
At most community banks, about 30% of existing employee capacity is being wasted on mundane tasks that could easily be automated, such as day-end processing, month-end reporting, quarter-end reporting and year-end activities, according to Todd P. Michaud, president and chief executive officer of HuLoop Automation Inc., an AI-based automation platform. “Automation can essentially deliver the same capabilities with more speed and more accuracy,” he says.
Not having to rely on multiple spreadsheets, printing numerous documents and allowing for a better audit trail are among the many benefits of month-end close and reconciliation automation, according to a spokesperson for SkyStem, a New York City-based vendor that helps organizations automate. There’s also a benefit to being able to identify exceptions immediately, she says.
Reconciliation was a major challenge for Community National Bank, Bonvechio says. Staff members were bogged down with mundane tasks, and the community bank had to handle and store enormous amounts of paper, she says. Several years after making the switch, Bonvechio estimates the community bank has reaped about a 30% time savings from its financial automation efforts.
Quarter-end close for the win
Community National Bank has seen benefits when it comes to daily and monthly reconciliation, but the real benefit has been at quarter-end close, she says. That’s because employees aren’t shuffling papers around or sharing Excel spreadsheets with little ability to track next steps. The automation tools the bank now uses help it monitor progress and make sure everything is being done.
For example, at month-end, the team members receive their assigned portion of the closing checklist, along with instructions, templates, due dates and email alerts—which helps keep everyone on task. There’s also a recordkeeping benefit, since completed tasks can be signed off electronically with supporting documents attached. The system stores completed tasks with other relevant information, such as due dates, sign-off dates, comments and supporting documents.
“I can be confident that we’re going to be able to close in time,” Bonvechio says.
The other major benefit of automation is during an audit. Auditors can log in to a bank’s system with their own login credentials, eliminating the need to send documents multiple times to multiple people, Bonvechio says.
Matt Guth, first vice president and controller at $2.5 billion‑asset C&F Financial Corporation in Toano, Va., says the community bank has been able to streamline its reconciliation processes, allowing staff members and procedures to be more efficient. C&F was working with about 1,500 general ledger accounts that had to be reconciled monthly with account statements or other documentation.
In the past, the reconciliation was done using Excel spreadsheets, a process that involved significant time and paper. Because of the manual nature of the process, there was often a need for corrections and accounts could more easily fall through the cracks, albeit inadvertently.
According to Guth, C&F has been able to combine a sizable portion of its general ledger accounts for reconciliation purposes, whittling the number down to about 400. He notes about half of those accounts are now being auto-reconciled, which represents a big time savings.
Another benefit is having the ability to create rules that allow for auto‑reconciliation, such as if the account is below a certain dollar amount or if the account balance doesn’t change. There’s also the associated time savings with the reconciliation. Some accounts can take five minutes to reconcile by hand, but others can take a few hours. “If we’re able to auto-reconcile those, obviously that’s a good savings there,” Guth says.
Take advantage of automation
While cost is an obvious consideration, Guth says it hasn’t been a huge price tag compared with the time savings and other benefits the community bank has achieved. “There is a cost to automation, but in the long run, you’ll save time and money.”
Automation when it comes to finance is just the tip of the iceberg, which is something banks should consider as they are looking to drive efficiency overall.
“Intelligent automation can help with multiple areas across the bank, where there are mundane, repetitive tasks,” Michaud says. Many community banks don’t realize, he says, how much time and effort they are putting into mundane tasks. “Any task that has some degree of repetition to it is a good candidate, particularly if it’s a time-consuming thing.”
