Account analysis in banking and financial technologies defines the process of analyzing the detailed economic structure of banks and financial institutions. Cybersecurity is the most critical concept that needs to be included in the banking domain to analyze and examine the financial transactions and bank statements of users. The account analysis assists banks and financial institutions to determine the performance of a particular account and helps the users to understand the changing trends of banking and economic sectors. Cybersecurity in the banking sectors allows banks and other financial institutions to work more efficiently. Traditionally, a well-trained auditor or accountant is responsible for carrying out account analysis.
The organization’s complete financial statements are analyzed to know the overall health of the financial organization and this analysis assists in various decision-making purposes. The economic data recorded by the financial statements evaluated through account analysis are more useful for shareholders, managers, investors, and other interested parties. Cost accounting helps banks and financial institutions to measure and analyze the spending pattern of any financial institution. The cost accounting process examines and calcifies the cost drivers into fixed and variable cost drivers.
Account analysis helps banks and financial institutions to identify unusual and irregular financial transactions and also assists in the identification of ongoing cybersecurity attacks. Lenders, creditors, and potential investors, along with banks and financial institutions, are interested in account analysis. They require the assurance that the business can repay a credit line or a loan. Potential investors analyze such financial data of an enterprise, to learn about its ability to generate income and to meet the required growth projection.
Technologies used in account analysis
Cloud-based Systems: the banks and financial institutions have introduced the cloud-based systems to the account analyzing process. Such systems help banks and financial institutions to streamline all their data at any given time. The cloud-based systems allow users to access their accounts with the help of their user credentials. This enables the users to access the data in real-time and provides them with an option to collect an e-format of any required document online.
The cloud-based systems provide unlimited storage for account analysis services. The synchronization of the files from various platforms is more effortless in the cloud-based system, and are even more secure. The cloud-based deployment also assists in easy back up through the supported cloud backup systems automatically. The distribution of accounting details to several different branches of the organization and its customers has become more seamless and quicker when compared to the traditional account analysis.
Efficient client transactions: the data and the operations are in the process of going paperless. The account analysis services are now fully digitised, for both the client and the service providers, granting clients easier access to their data. The on-site consultations now transformed into digital service subscriptions with the necessary data obtained in real-time and at the convenience of the clients. Some of the financial technologies and banks, even provide a web-hosted video conference.
Mobile accounting: Mobile account analysis services provided by the banks and financial technologies allow their users to create and send the invoices, capture receipts and gather signatures through portable handheld devices, allowing the users to store their data directly to the cloud Customer management applications aids in improved customer support offered via the said mobile devices. The various security applications are available and present in the mobile devices or the stores, aiding users to protect their sensitive data.
Specialized accounting software: the accounting software used for the account analysis virtually eliminates the various errors leading to tax penalties, board disciplinary actions, and threats to the professional reputations. The specialized software protects client’s information from multiple cybercriminals and cyber-attacks through the inbuilt, surrounding and other compensating security controls.
Types of account analysis in banking
Horizontal analysis compares financial statements between two given audit periods. This is also called as the trend analysis as it helps in analysing the trend involving financial transactions (expenditure, generated income and liabilities, etc) and asset accumulation. This assists in identifying the trends if it is positive or negative and provides insight into what has been changed that led to a specific negative trend, in order to come up with mitigating controls and investigations. The applications and auditing methods used for trend analysis usually remain the same for a given duration. By looking at the income statement, balance sheet, and cash flow statement over time, one can create a complete picture of operational results, and see what has been driving a company’s performance and whether it is operating efficiently and profitably…
The vertical analysis method refers to the technique where each line item is listed percentage of a base figure. The line items present in the income statement are related to percentage portion gross sales. And the line item on the balance sheet can be stated as a percentage of total liabilities or assets. The vertical analysis of the cash flow statement defines the cash inflow and outflow as a percentage of total cash inflows.
The vertical account analysis makes it easier to compare the financial statements of multiple companies with each other due to the transparency of account balance. The vertical report also makes it easier to compare the various time series analysis. The quarterly and annual figures are compared over several years, to gain a more exceptional picture of performance metrics improvement. It shows the analysis results in a separate column. The financial statements provided through the vertical analysis help the companies by giving more essential details about the company’s financial positions.
Limitations of the account analysis
With the use of account analysis, the companies can know their market value quickly, the current status and the standard of the banks are updated regularly with the help of account analysis. With the industrial hype, cybersecurity has become the primary- concern of banks and financial institutions. Banking employees need to understand industry-specific risks.
The common problem with the account analysis is that it might cause the variances when comparing account balances from the various period, due to the shift of liabilities, assets, expenses, and revenues between the different accounts. Analyzing the report manually might take up a considerable amount of user time to provide the results.