—Md Latiful Islam—

In today’s fast-changing world, banks and companies need to make smart financial decisions to grow, stay competitive, and meet their goals. In the past, many financial decisions were based on previous reports or gut feelings. Now, with the rise of digital tools and large amounts of information, data has become a powerful tool in helping organisations to better plan, reduce risk, and improve the results.

The process begins with collecting data from various sources such as sales records, expenses, customer activities, market trends, and overall business operations. This raw data is then cleaned and organised using digital systems to ensure it is accurate, complete, and ready for use. Clean and reliable data is essential, because it forms the foundation of sound financial planning. Once the data is prepared, analytics tools are used to study it and uncover useful insights. For example, a company can track changes in sales over time, or a bank can analyse how customers manage their accounts and repay loans. These insights help leaders to understand what is working well, where the improvements are exactly needed, and how to set more realistic and informed goals.

Once there is a clear picture of the past and present, data can be used to look ahead. By finding patterns and trends, companies can predict what might happen in the future. For example, a company can forecast its future sales or cash flow. A bank can estimate how likely a customer is to repay a loan. This kind of prediction helps with planning and decision-making. It also helps reduce surprises and risks.

With this forward-looking information, finance teams can also get the advice on what actions to take. For example, a company may see that one product is not selling well and decide to invest more in a better-performing product. A bank may adjust its loan interest rates to match customers’ behaviour. These smart actions help improve performances and ensure that resources are used in the best way.

To stay on track with financial goals, banks and companies rely on key financial performance indicators, also known as KPIs. These are simple measures that show how well the organisation is doing financially. Common financial KPIs include revenue growth, net profit margin, return on investment (ROI), operating costs, cost-to-income ratio, cash flow, and EBITDA (earnings before interest, taxes, depreciation, and amortisation). Each of these KPIs gives insights into a different part of financial health.

For example, revenue growth shows if the income of a business is increasing over time. Net profit margin tells how much profit remains after covering all the expenses. ROI shows if money spent is bringing in good returns. Cost-to-income ratio is especially useful in banking, as it shows how efficiently the bank is running. Monitoring cash flow ensures that there is enough money available to run the business smoothly. These KPIs must be managed well to meet financial goals and remain competitive.

Data analytics help finance teams track these KPIs in real time. Instead of waiting for monthly or quarterly reports, leaders can see how these numbers change daily or weekly. This helps them act quickly if something goes wrong or if an opportunity appears. Analytics tools also help explain why a KPI is changing. For example, if profit margins are falling, the system can show whether it is due to rising costs, falling prices, or something else. This level of understanding helps teams make better and faster decisions.

A clear example of this is a mid-sized bank that wanted to make its loan approval process more effective. Previously, the bank mainly used credit scores to decide who qualified for a loan. By adding more data — like customers’ payment history and account activity — the bank built a more accurate way to assess risk. This allowed them to approve more loans for trustworthy customers and avoid lending to high-risk ones. As a result, loan defaults dropped, profits increased, and customers received faster service and better loan options. This shows how using data can help achieve business goals while also improving customer satisfaction.

At the end of each financial period, banks and companies review their results to understand what was successful and what needs to get improved. When supported by data, this review becomes more detailed and useful. It helps finance teams learn from past outcomes, make adjustments, and improve future decisions. Over time, this leads to better planning and builds a culture focused on continuous improvement.

Data analytics has changed the way financial strategies are made. Instead of waiting to react to problems, banks and businesses can now plan ahead and make smarter, faster decisions. By using data, they can set clear goals, track key performance indicators (KPIs), and stay focused even as things change around them. Today, data is not just helpful — it is a key part of reaching financial success.

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The writer is a former banker and senior fintech specialist