ERP solutions for banking and financial services are becoming a necessity as the industry’s challenges are no longer small. Customers want answers right away, and the regulations are stricter than ever. Banks have to keep up. If they don’t, they’ll fall behind their competitors, and that’s not an option today.
A report says that around 50% of finance teams still spend over a week finalizing their books. Microsoft Dynamics 365 for Financial Services can help you with this and more. It’s smarter, faster, and way more secure than traditional systems. These solutions let you handle tons of data, keep up with government regulations, and serve your customers better. It’s an operational backbone for finance, procurement, controls, and reporting, complementing but not replacing core banking or trading systems.
In this blog, we will learn some of the common challenges faced by banks and non-banking financial institutions (NBFIs) today, and the capabilities of Dynamics 365 banking industry ERP that can help you solve these challenges.
Why is there a Need for an ERP Solution for Banking and Financial Services?
The finance sector is in the middle of a major transformation. Hence, ERP solutions for banking and financial services are becoming more popular as it’s capable of solving various challenges that you face, such as;
1. Expensive Manual Operations
Despite heavy digital investments, many institutions still rely on manual processes to handle accounts payable, receivable, reconciliations, and month-end closes. For example, loan servicing or investment portfolio accounting often involves spreadsheets and hand-entered data, increasing staffing costs and errors.
2. Lack of System Integration
Banks and NBFIs often operate across multiple branches, countries, and business lines, like retail, corporate, lending, and wealth management. Each division runs its own ledger or legacy software. This makes consolidating statements or running reconciliations slow and error-prone, especially for multi-currency and cross-border transactions.
3. Regulatory and Compliance Pressure
Financial institutions must comply with global standards like IFRS 9 for financial instruments, Basel III capital adequacy rules, and strict anti-money laundering (AML) and KYC requirements. For NBFIs, additional oversight comes from local regulators who demand frequent reporting.
4. Lack of Real-Time Insights
Without real-time financial reporting across entities and regions, you can’t make quick decisions. A bank with hundreds of branches may need weeks to compile performance data, delaying credit decisions, investment moves, or compliance reporting. For NBFIs, delays in tracking loan performance or asset quality can directly impact profitability.
5. Operational Risks
Errors in transaction recording, missing audit trails, and exposure to fraud are constant threats. NBFIs that depend on manual reconciliations risk misstated loan portfolios. Banks handling large transaction volumes are especially vulnerable to payment errors and fraud.
6. Cybersecurity and Data Privacy
Banks and NBFIs handle sensitive customer data and large payment flows, making them prime targets for cyberattacks. Ransomware, phishing, and data breaches cause financial losses, damage customer trust, and trigger penalties under privacy laws like GDPR.
7. Rising Customer Expectations
Customers now expect easy and quick digital services. Instant payments, mobile account access, and quick loan approvals, to name a few. Delays caused by outdated back-office systems lead to poor client experience. For wealth managers, slow reporting or errors in portfolio statements directly hurt customer confidence.
Key Features of Microsoft Dynamics 365 ERP for Banking and Financial Services
Microsoft Dynamics 365 for Financial Services addresses these pain points with powerful capabilities designed to streamline operations and improve decision-making. The key features that solve these challenges are as follows;
Centralized Loan and Investment Data Management
Dynamics 365 banking industry ERP consolidates loan and investment data into a single platform, including loan memoranda, collateral details, investment journals, and portfolio numbering. This eliminates disconnected ledger systems and provides a consistent, auditable data source. It reduces duplication of entries and minimizes reconciliation delays. You gain real-time visibility into cash positions, investment performance, exposures, and liquidity.
Process Automation
Manual reconciliations, settlements, and portfolio tracking often lead to errors and delays. With Dynamics 365, these processes are automated, significantly reducing human intervention. This speeds up operations, ensures accuracy, and strengthens compliance and audit readiness.
Configurable Approval Workflows
With multi-level, configurable approval workflows, ERP solutions for banking and financial services ensure that loan disbursements, portfolio allocations, and investment actions follow proper authorization.
Compliance and Regulatory Reporting
Regulatory requirements such as IFRS, Basel III, or AML reporting can be complex when handled manually. Microsoft Dynamics 365 for financial services automates compliance workflows, maintains audit trails, and generates standard regulatory reports with minimal effort.
Advanced Risk and Fraud Management
Dynamics 365 banking industry ERP enforces strict role-based access, automates risk and compliance checks, and continuously monitors transactions, cash positions, and deal flows for anomalies. With detailed audit trails and multi-level approval workflows built in, every action is traceable and authorized.
Automated Cash Flow Forecasting
The platform automates cash flow projections and portfolio valuations, using scheduled updates, market price feeds, and valuation controls. Automating these calculations reduces manual data entry and ensures accurate, real-time insights.
Deal Lifecycle and Settlement Automation
Loan origination, disbursement to interest accruals, repayments, settlements, and final redemption, the solution automates every stage of the lending cycle. It simplifies trade lifecycle management, including deal capture, validation, confirmation, settlements, and compliance checks.
Interest and Valuation Date Controls
Dynamics 365 banking industry ERP supports precise interest and yield calculations.
- It enables user-defined valuation dates, assessment periods, and amortization schedules for different investment instruments.
- It allows financial teams to apply mark-to-market valuations, handle accruals, and track revaluations with accuracy.
These built-in controls ensure that accounting entries are aligned with compliance standards, helping banks and NBFIs close books on time and maintain transparency.
Collateral and Credit Facility Tracking
Banks and NBFIs can easily connect collateral to loan facilities, so that every loan is properly secured and tracked. ERP solutions for banking and financial services clearly distinguish between secured and unsecured deals, as well as revolving loans and term loans. It closely monitors collateral coverage, updates values when repayments or revaluations occur, and sends alerts if coverage falls below the required level.
Real-Time Dashboard and KPI Reporting
With Dynamics 365, banks and NBFIs get a single view of critical insights through intuitive dashboards and reports.
- Track investment performance with real-time dashboards.
- Monitor cash positions across accounts instantly.
- Review treasury KPIs through automated reports.
- Gain clear visibility for quick and informed decisions.
Integrated Financial Posting
All transactions, such as loan disbursements, interest accruals, redemptions, or portfolio trades, are stored directly into Dynamics 365 Finance. Hence, accounting entries, financial reporting, and treasury positions are always aligned without requiring separate reconciliations. Both operational and financial records are synchronized in the right way, giving your finance teams confidence in the accuracy of their books.
To help you understand better, we’ve prepared a table that maps key challenges to the software features that solve them, along with the benefits your financial institutions can gain.
| Challenge | Software Feature | Benefit |
|---|---|---|
| High manual effort | Process automation (treasury, cash flow, reconciliations, settlements) | Cuts costs, saves time, reduces errors |
| Disconnected systems | Centralized loan & investment data | Improved visibility, eliminates duplicates, real-time access |
| Compliance pressure | Automated reporting & audit trails | Simplifies IFRS, Basel III, AML compliance |
| No real-time insights | Dashboards & KPI reporting | Faster, data-driven decisions |
| Operational risks | Approval workflows and risk controls | Strong governance, reduced fraud |
| Data security needs | Role-based access and monitoring | Protects sensitive data, ensures privacy |
| Rising client expectations | Deal lifecycle & settlement automation | Quicker approvals, transparent service |
| Complex loan structures | Collateral & facility tracking | Accurate coverage, lower credit risk |
| Errors in interest/valuation | Date & interest controls | Precise calculations, accurate books |
In today’s highly competitive financial market, failing to maintain efficiency and trust can put your reputation at serious risk. That’s why choosing the right ERP solutions for banking and financial services is critical. If your organization is struggling with complex investment or treasury challenges, Dynamic Netsoft’s Dynamics 365 investment portfolio management software and Dynamics 365 treasury management software are proven options to consider. Backed by our strong reputation and deep industry expertise, we’ve helped leading banks and NBFIs streamline operations and build lasting customer satisfaction. So, what are you waiting for? Reach out to our experts or request your free demo TODAY!