The Data Age - A Time to Model, Muse and Manage

Proshare

Wednesday, May 19, 2021 / 06:42 PM / by Proshare Research / Header Image Credit: Twitter; @dbctraining


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Being Insights Shared at the Virtual Product Launch and Demo of Financial Reporting Made Easy, a Financial Reporting Tool by dbrownconsulting held today May 19th, 2021


"In God, we trust all others must bring data"

  • W. Edwards Deming

 

Data modeling and data analytics have moved the pendulum of corporate finance and financial statement analysis from the old hit-and-miss Excel Spreadsheet framework to a more precise review of corporate financial data with a clever visual presentation that pivots away from the non-interactive tables and charts of the last few decades to a more intuitive and more interactive data presentation style that makes itself more amenable to a scenario and sensitivity analysis.

 

The new enhanced Excel-based analytical tools enable analysts to tell more compelling stories than in the past. Gone are the dreary two-dimensional charts of yesteryears and in come the new three-dimensional power BI charts of the present and maybe future.

 

The problems analysts and consultants have had to face over time include but have not been limited to the following:

 

The Problems

  • Non-availability or the existence of incomplete data
  • 'Dirty' data challenge and the need for data scrubbing
  • Proshare in the early days had a hard time accessing real-time market data
  • A dearth of financial market models that could be used in analysis and forecasting
  • Visualization has in the past been an area of concern for Proshare, for example, the company understood the power of excel as an analytical tool but as a visualization tool, plain-vanilla excel came short of the requirements.
  • Sensitivity Analysis can be done quite competent by regular excel functions such as IF, MATCH, VLOOKUP, XLOOKUP, DATATABLE, and INDEX either singly or in combinations (nested functions) but Excel Power BI ramps up the potential for deeper and faster sensitivity reports
  • Technology enablers have been weak in the past with executives finding themselves at sea when it comes to using spreadsheets for detailed analysis of potential corporate strategy based on the available data. It has been a long walk through an analytical minefield and those that escape being blown up were either lucky, divinely spared, or computational skills well advanced than that of the average spreadsheet user. This situation limited the democratization of data and analysis amongst professionals and made executive decision-making slower and less thorough.
  • Querying Data with the cut and dry Excel tools over time has proved to be inadequate and analysts have come to require sharper tools of data analysis in addition to macros to tweak excel to carry out specific customized tasks.


The Solutions

With the increasingly more flexible, detailed, and visually appealing requirements of users of Excel, it was inevitable that the spreadsheet had to make a transition and improve its user experience and user interface ( UX/UI). The consumer or user increasingly became king or queen and Excel has made the relatively short journey of being a more engaging and appealing tool for socioeconomic and business analysis. Excel gurus are going wild.


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Supporting the new enthusiasm for Excel's contemporary remakes a few solutions to old challenges could be identified and are captured in dBrown Consulting's financial modeling tools with upscaled visual presentation modules. What is required in a world of informatics include but are not limited to the following:

  • Standardized financial models that are plug and play. These models cut the work needed to produce detailed, incisive, and logical reports with visualizations that are either interactive or are both interactive and predictive.
  • Financial modeling frameworks that allow users the flexibility to tweak basic assumptions to fit industry or corporate peculiarities. The standardized tools allow the analyst or user to create alternative scenarios on the fly without having to use complex nested functions or conditional formating as would be the case with bare-knuckle Excel applications commonly used today.
  • To help analysts work faster a useful modification of financial modeling tools would be to include built-in tabs that enable trend analysis to be performed by simply entering in or setting new parameters in drop-down boxes or some other format to enable quick data comparison based on shifts in primary assumptions. This would improve the user experience and interface thereby improving work routines.
  • Financial statement analysis and corporate valuations lie somewhere between art and science. Art comes from the skill of telling a compelling story while science comes from the understanding and use of numbers. Good corporate analysis ties numbers to stories enabling readers of the report to gain deeper insight into the meaning of both time series and cross-sectional data. In a fast-paced world, analysts and regular users of data in financial markets require tools that enable them to filter data and arrange it in such a way as to provide additional insight on corporate performance and by extension enterprise value.
  • What cannot be measured cannot be managed. A good financial modeling tool enables the analyst or any other user of the tool to manage data and alternative outcomes of filtering and interpreting data in a way that provides easily recallable scenarios that could be used in corporate or investor's decision-making process.

 

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Making a Mole Hill out of a Mountain

The goal of a good financial tool developer is simplicity. The easier it is for users of models to navigate the tool and use it for precision analysis based on both complete and incomplete data demolishes the mountain of data challenges faced by users into molehills of easily usable analytical tools for strategic corporate and analytical decision-making. With business at the pace of thought, analytical tools must be easy to use and intuitively attractive to allow analysts and corporate executives to use the tools quickly to explain the financial state of corporations and the likely outcomes of policies designed to improve forward-facing performance.

 

Power BI appears to be an upgraded Excel tool that analysts are finding increasingly useful in dissecting financial data. What has become an important feature of data presentation is the removal of the sterile visualization format of the earlier excel presentation tools and pivoting towards more illustrative and interactive presentation and visualization modes that enable users to dig deeper into the data.

 

The future is becoming about the story, the data, and the visualization. These three aspects of financial modeling are central to the analyst's world of decrypting value in an environment of dynamic change.


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Excel Evolution: Views from the Omole Upper Room 

With Proshare making a transition to deep financial analytics and data informatics the upscaling of financial modeling into a tool of competitive advantage and user service  satisfaction has required a major reworking of the friendliness of spreadsheet applications.

 

The Proshare Example

As a data driven organization the company analyzes data from multiple sources. The firm needs to do a number of things which include but is not limited to:

  • Creating individual datasets based on these sources.
  • Transforming results into easy-to-make visualizations.
  • Making comments on charts/ graphs that are outcomes of data analysis.
  • Including visualizations and analysis in reports for easier user comprehension. 

 

What does Proshare Need?

  • Data connectivity with different sources i.e. easy consolidation of data
  • Building relationships between different data sets to understand patterns and trends.
  • Data modeling to enable sensitivity analysis and context for alternative scenario analysis
  • Dashboards for visualizations that provide context and deeper understanding of financial and economic interrelationships.
  • Interactive charts, graphs, and data maps.
  • Quick insight and interpretation of data.


Proshare Nigeria Pvt. Ltd. 


The Proshare Way, So far

Proshare uses and understands the importance of data and has commenced the development of an artificial intelligence and machine learning (AI/ML) enabled platform built with enhanced user personalization, content recommendation features, dynamic and streamlined access to data, built-in investment intelligence with fundamental and technical analytics, intuitive search feature, natural language reporting and seamless integration tools. The new platform which is set to be launched later in 2021 is designed to enhance the user data interaction experience with timely access to market-sensitive business, economy and finance information that help platform visitors make intelligent decisions.

 

An area Proshare has felt a need to drill down data for analysis in recent years has been analysis of Nigeria's banking sector and one of the metrics of interest has been Nigeria's banking sector's non-performing loans (NPLs) over the last ten years.

 

The Nigerian Banking Sector and its NPLs

Nigerian banks have become strong business accelerators in recent times but a growing number of bank loans have gone bad and led to situations of rising impairment charges and poor loan asset quality. This has depressed earnings and dividends but equally importantly it has reflected a growing culture of bad borrowing character that could hurt the broader economy.

 

Proshare in partnership as Debtors Africa in 2019 produced a report on delinquent loans in Nigeria and advocated for a new loan paradigm which depends more heavily on borrower analytics and data filteration and visualization. This is an area in which Proshare believes that the Excel-based Power BI tool could supply meaningful stratefied levels of data analysis for the purpose of bank and non-bank analytics to gain deeper understanding of the debt profiles of banks.

 

With opportunities for better debtor profiling before loans are granted, the loan process can be de-risked by improved borrower knowledge and monitoring using souped up power BI templates .


Proshare Nigeria Pvt. Ltd. 


A searchable database like Debtors Africa could do the following:

  • Provide a loan marker which enables new lenders insight into the character of borrower.
  • Embed a customer's borrowing journey into a digital framework that could be reviewed by lending institutions.
  • Serve as a dynamic record of strictly delinquent and hardcore borrowers.
  • Replace the old perishable "name" and "shame" approach tried by AMCON and recommended by the CBN, and help overcome the psychological impact of "saliency" and "recency".
  • Serve as a pre-emptive tool at the point of loan appraisal, a digital monitor at the point of loan administration, and a loan recovery tool at the point of loan repayment

 

Power BI and Corporate Power Moves

In the world of fast data, speedy thinking and blistering tactics, using advanced analytical tools is not a choice but a requirement for success. No company will cross the river of sustainability by staring at the water. Analytics will be a standard menu on the plate of corporate decision-makers.


Proshare Nigeria Pvt. Ltd.


Related News

  1. dbrownconsulting Announces International Launch of Financial Reporting Solution
  2. Common Reporting Standard and Compliance Obligations for Nigerian Financial Institutions
  3. FIRS Publishes Regulations on Common Reporting Standard
  4. FIRS Launches Reporting Portal for Financial Institutions
  5. The Importance of Quality Financial Reporting to Nigeria- Tinuade Awe
  6. FIRS Launches Reporting Portal for Financial Institutions
  7. NIRC To Create Awareness On Integrated Thinking And Reporting
  8. ARAACAM 2019 Explores Public Trust In Corporate Finance Reporting
  9. NSE Launches Facts Behind the Sustainability Report to Promote ESG Reporting
  10. Nigeria Signs Off On Common Reporting Standard With OECD


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