The Impact of ERP Systems on the Financial Industry (Banking)

This report examines the crucial relationship between Enterprise Resource Planning (ERP) systems and the financial industry, with a specific focus on the banking sector. It highlights how ERP systems facilitate data integration, ensuring accuracy and real-time access to information, which is essential for financial institutions dealing with investments and customer benefits. The report details the advantages of ERP systems, including streamlined accounting, improved decision-making through dynamic budgeting and forecasting, and reduced operational costs. Furthermore, it explores how ERP systems aid in strategic and tactical planning, and improve the efficiency of information sharing across various banking divisions. The report also acknowledges the potential drawbacks of ERP systems, such as significant investment requirements and the complexity of implementation. Ultimately, the analysis underscores the transformative impact of ERP systems in enhancing the banking sector's operational efficiency and strategic capabilities.

Relationship between ERP and Financial Industry (especially Banking Sector): Financial
Institutions mainly deal with equity, stocks investments, mutual funds and other similar matters.
The foremost reason for any financial institution is to increase the benefits of the organization
and customers, with a goal to create a commonly beneficial relationship (Sreshti and Rao 2017).
But for increasing benefits, it does not necessarily involve increased number of deals and
customers. In addition, it is implied that benefits will lead to consistent operation and work
process that will reduce the expenses and increment the turnaround time. When regular tasks and
processes are performed in a manual way or through software platforms, that lacks integration, in
financial institutions, hundreds of hours of staff time is consumed, which can even lead to data
duplicity. This can result in the restoration and correction of the mistakes in the large amount of
data, generated on a daily basis in the labor intensive processes (Huang and Handfield 2015).
However, in financial industries, ERP systems offer full data integration and ensures accuracy,
access and reports on real time basis.
Fig:
ERP systems help companies to formulate and understand the overall business scenario in a
better way. Due to its access to multifunctional areas in a single system and ability to generate
necessary reports, the ERP systems have a numerous number of benefits. Due to the readily
available data within the system, executives and management are being able to formulate better
business decisions and strategies. Moreover, with help of the ERP system, companies can take
advantage as it provides dynamic budgeting, forecasting and planning, which reduces the overall
financial costs (Troshani and Rao 2015). In addition, the financial ERP system offer companies
with the ability to perform streamline accounting, consolidation, process scheduling and
collaboration and workflow. With the integration of cost, budget and performance, companies

can become enabled to capitalize on opportunities to reallocate programs with proven impact,
realigning resources in the most useful way for maximizing the value to the organization.
Significantly, ERP systems have the ability to manage the potential internal growth of the
company, along with the future e-supply chain and e-commerce. The implementation of the ERP
systems can also reduce the IT costs significantly.
Fig:
For the purpose of operational planning, strategic planning and tactical planning, the ERP
systems are very helpful in the banking industry. In banking industries, the use of ERP systems
may also cover important number of responsibilities like analyzing and monitoring the managing
of accounting systems, preparing financial statements and reports and financial condition of an
enterprise.

Fig:
ERP systems, in the banking sector, allow the sharing of information among various banking
divisions in a faster and more efficient manner, and thus, the banking sector has achieved not
only better coordination, but also an efficient and faster adjustment to the potential risks and
various business opportunities (Aburub 2015). On the other hand, as to the negative aspect of the
ERP system, significant investment is required for the ERP systems, for their development and
maintenance and the process of implementing the ERP system can be far more complex than any
organization can perceive.

References:
Sreshti, D.L.S. and Rao, G.N., 2017. Real Estate Industry-Current Scenario Overview, Financial
Modelling, ERP Enabled Cost Information. The MA Journal, 52(4), pp.44-47.
Huang, Y.Y. and Handfield, R.B., 2015. Measuring the benefits of ERP on supply management
maturity model: a “big data” method. International Journal of Operations & Production
Management, 35(1), pp.2-25.
Troshani, I. and Rao, S., 2015. Enabling e-business competitive advantage: Perspectives from the
Australian financial services industry. International Journal of business and Information, 2(1).
Aburub, F., 2015. Impact of ERP systems usage on organizational agility: An empirical
investigation in the banking sector. Information Technology & People, 28(3), pp.570-588.