The importance of experimentation in financial institution planning

For many, the art of planning feels counterintuitive, as its core is not accounting-based as much as it’s a sociological experiment. We use a planning model to simulate the environment and measure the ramifications of change on the balance sheet. However, the real test is anticipating the resulting business hinging upon your customers’ changing needs.

You hear over and over again that the one thing you can always count on is change. Change is what you hope for as a financial intuition. It’s what drives business and profits. Rate change, as we all know, can be one of the most volatile components of your business, and at the same time, the very heart of banking itself.

Interest rates and product pricing: Steer customers to support your business plan

You may be thinking that there’s no way to predict what your customers do; you can only react, right? Perhaps predict is too strong of a word. With the use of a planning model, you can experiment with various environments and quantify results for numerous situations. Experimentation gives you the ability to choose a course of action that best aligns with your business goals.

 

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