The importance of Excel to the financial system

A LinkedIn post caught my eye recently. It was a picture of Atlas holding up the world. It had been annotated with the words “The entire global financial system” across the world and “Excel” across Atlas. The picture was posted by the Financial Modeling (sic) World Cup who commented:

“Recently we stumbled upon this picture floating around the internet. It is funny because it's true. But the thing is, this is the very reason why everybody should know how to use Excel, and preferably even master it.”

I remember the occasion when I first realised just how critically important Excel was to the whole financial system. It was about 15 years ago, and I had already been lecturing on Excel to rooms full of accountants for about 10 years. Obviously, I realised just how ubiquitous and vital Excel was within the world of accountancy and I knew lots of businesses used it for a wide variety of tasks, but I had believed that big banks, insurance companies and the like would be pretty much an Excel – free zone, using massive bespoke systems instead, with Excel possibly being used a bit around the margins for some ad-hoc calculations and experiments. The enormity of my error dawned on me when I attended my first Excel User Conference. A significant number of the attendees were from large financial organisations and it soon became apparent that, for them, Excel was indeed the Atlas that prevented the sky from falling down on their heads. Everything I have come across and learnt on the issue since has confirmed the accuracy of the annotations in the LinkedIn post.

I’m certainly not necessarily arguing that Excel should underpin the entire global financial system. It’s perfectly valid to hold the view that there could be significant advantages in reducing reliance on Excel. However, what isn’t valid is to pretend that Excel doesn’t play the crucial role that it does.

Why should you become proficient at Excel

Obviously, I’m realistic enough to appreciate that many see the ability to use Excel properly as being a significant intellectual step beyond the existing requirements of their professional qualifications. However, the opportunities to improve the productivity and reliability of so many business processes mean that it really is worth investing the intellectual effort in becoming proficient in the use of Excel.

The scope to improve the systems that involve Excel and other spreadsheets, and to increase productivity and quality, whilst also reducing the scope for catastrophic error and devastating inefficiency, is immense. Failing to recognise its value and potential is a disservice to our own careers and to our colleagues and clients. It’s also vital that we appreciate the importance of Excel in its own right rather than seeing it as a mere facilitator of some other disciplines.

If the recent PHE data crisis teaches us anything it is that we have every right to love Excel or to hate it, but we really can’t afford just to ignore it.

ICAEW resources

Fortunately, the ICAEW long ago realised the importance of Excel to its members, their clients and to the wider public interest and has invested considerable time and resources into the development and promotion of several projects designed to ensure the efficient use of spreadsheets. Underpinning the other projects is the original '20 Principles for Good Spreadsheet Practice'. This is designed to provide simple, practical guidance on how to avoid common spreadsheet pitfalls and how to produce reliable spreadsheets more quickly and efficiently. The follow-up project, the 'Spreadsheet Competency Framework', gives employers a way to judge the spreadsheet skills required for different roles and allows everyone to self-assess their own spreadsheet competence. Most recently, the 'Financial Modelling Code', sets out more detailed guidance on the production and use of financial models. Further projects are in the course of development. The publications associated with all of these projects can be accessed from:

icaew.com/exceltl