Much has been said in recent years about the supposedly uncertain future of the finance department.
Technologies such as automation and artificial intelligence (AI) will create massive job losses in financial services, the argument goes, as tasks ranging from data collection to analysis and accounting will be done by my machines rather than humans.
We believe the reports of the death from the Department of Finance have been greatly exaggerated.
Automation and workflow software automates menial and repetitive finance tasks, including processing invoices, collecting financial data from different company branches in a single ledger, and collecting data for compliance. accounting standards and corporate regulations.
Automating traditional financial tasks means that a much larger number of transactions can be processed in less time.
By 2020, robotic process automation (RPA) – robots and software that can be programmed to perform basic tasks previously performed by humans – will eliminate 20% of repetitive ‘no-value tasks’ within the department. financial, research company Gartner predicted.
This could help lower the costs of financial services, increase their efficiency and reduce errors, according to research by the accounting firm KPMG.
This is perhaps part of the biggest tech trend today: digitization.
According to a global study published by the Economist Intelligence Unit, 83% of large companies said they expected to spend more on digital technologies in 2019.
Financial services are often at the forefront of this trend, working closely with IT and risk management.
Finance staff spend more time understanding the large amount of financial data produced by their business. Technology is finally enabling finance staff to become business partners and analysts, analyzing financial data in much more detail and explaining how it can be used to improve a company’s performance.
Giving meaning to Big Data
Boards want faster analysis of financial data. They want better forecasts, such as cash flow and the pros and cons of launching new products or expanding into new markets.
Meanwhile, consumers, shareholders and regulators are demanding that companies disclose more information about non-financial measures, such as their environmental and social impact and how they are governed.
The tax system is also evolving, especially Making Tax Digital? a plan to bring the UK tax system online, including a digital tax account for each taxpayer.
Trends in corporate finance are also changing the expectations of finance departments.
For example, private equity firms typically require more financial data than business buyers. The provision of this data is the responsibility of the finance department.
The future financial direction
Are all of these trends good news for finance departments? more interesting work and more influence within companies – but only if they embrace technological changes and new business models.
As delegates heard at our recent conference in London (The future of finance in a digital world), finance departments are supposed to do more than ever – and faster.
The financial services of companies that do not adapt to new technologies will be left behind,
Shamus Rae, CEO of Engine B, a technology consultancy firm, told delegates.
Most finance departments are currently not fit for purpose. They focus on historical financial data – what has happened in a business in the past six months or years – rather than what is happening now and the likelihood of future risks and opportunities.
Many CFOs admit that there is a disconnect between what companies want financial services to do and what they can provide.
Almost half (47%) of the 769 CFOs and CFOs worldwide said their current job does not have the right mix of abilities to meet future priorities, according to a study conducted earlier this year by accounting firm EY.
Seven in ten (69%) said the role of a finance manager changes fundamentally as traditional finance tasks are automated or managed in shared service centers, the study also found.
Finance departments that take a “mindful” approach to technology risk being “at a serious disadvantage compared to the competition,” said Tony Klimas, EY Global Performance Improvement Finance Manager.
Most finance departments also lack key skills, especially in technology and digitization.
Future financial skills will include business optimization, a data manager
and providing advice on strategic decisions, according to Rae.
Digital skills plan
If they aren’t already, financial services should start training their staff in new technologies such as big data and AI.
They should also try to recruit a more diverse workforce (by gender, age, class and race), which has been shown to improve the performance of organizations.
Yet despite the digitalization of the tax system and much of modern finance and business, human skills, such as experience, empathy, and good communication are more important than ever.
Machines cannot do everything. And it will be some time yet before artificial intelligence technology can use its instincts to spot potential loopholes in accounts, loopholes in business models, or loopholes in the market.
As Steven Cox, IRIS Chief Evangelist, noted at our Future of Finance event, advancements in technology create risks as well as rewards for finance departments.
The risk of fraud is at an all-time high as criminals and hackers use increasingly sophisticated bots, phishing attacks and malware to target the data hole in financial services and accounts.
Technology is both part of the solution and part of the problem. The mission of CFOs and their employees is to adapt to digital challenges and new ways of working, while maintaining skills and timeless qualities of analysis, financial rigor and integrity.
Doing these things cannot guarantee that your finance department won’t face new cybersecurity risks or disruption from new technologies that could automate some financial work. But it will mean that your department is more likely to thrive, rather than sink in these exciting but difficult times.