February 8, 2021

Finance Digital Transformation: Expert Guide

Finance Leadership
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Businesses are evolving because of emerging trends in financial services. Finance digital transformation has ushered in an era where finance professionals are serving as strategic partners, as well as fulfilling back-office data and financial management tasks. 

As an executive or leader in this realm, you’re likely looking for the most optimal ways to implement automation solutions, stay ahead of the competition and provide the utmost value to you customers. 

Here, we will share some of the most important things to know about digital transformation in finance, including the CFO’s integral role. 

Finance Challenges with Digital Transformation 

Any professional in finance has been privy to disparate spreadsheets, massive amounts of data and the stress of manual, human errors. The challenges facing a financial team, especially those in different locations, can run the gambit of: data overload and waste, missing information, lack of transparency, delayed decision-making, costly mistakes and compliance risk, to name a few. 

With an automation solution, finance teams are able to collect, store and transform data within a centralised software location either running on-premise or in the cloud. This means that there is greater transparency at any given time, and any respective stakeholder who needs a real-time view of the company’s financial health can easily access the insights they need. 

But, financial digital transformation goes beyond just this. 

Real-Time Visibility for Finance 

Automation solutions and data-driven tools have made it possible to customise products, offerings and communication with specific segments of any customer base. Besides maximising value for customers, automation tools make it easy for management to have a clear view of their organisation’s inner workings. 

No one has time to micromanage their team, and with automated reports and real-time dashboards, it’s very easy to see what’s going on at every level of the organisation. With a powerful system by your side, financial professionals are able to advise decision-makers on the best path to success. 

For example, if you were to ask someone on your team right now whether or not a new product would be successful in generating a new revenue stream, they may ask for some time to dig into the data. An automation tool makes it easy to forecast and model projections and have answers so that your business can remain agile and adaptive, making imperative decisions that are backed by data in no time. 

Smart Automation for Digital Transformation 

It may seem like automation is the answer to every problem. While it’s certainly true automation tools will help you achieve finance digital transformation, the tool is only as good as those who choose to use it. To explain, if you automate everything without a plan, you could be met with less than optimal results. 

To leverage the capabilities of automation technology, it’s paramount to begin by outlining your business goals and addressing specific use cases. We’ve touched on the types of processes that are best to automate before. With the right digital partner and application of the tool, you can undoubtedly take your finance team’s abilities to new heights. 

Digital Transformation Examples

Examples of digital transformation can be found across industries. While many of the examples directly relate to financial activities, the truth is that digital finance transformation goes beyond what’s expected from the finance department. 
To exemplify, think about how Airbnb and Uber incorporated an online payment structure like that of ecommerce to service its customers. Then, by incorporating customer data into their approach, the companies are able to better meet the needs of specific individuals. 

Furthermore, on a broader scale, you can imagine a mid-tier finance organisation looking to grow revenue. Rather than focusing on quarterly budgets and allocation, the perspective could be shifted instead to measure cost-effectiveness of business processes. With automation tools, it’s possible to pinpoint areas for improvement, maximise efficiency and monitor results as processes are optimised. In turn, revenue is increased by focusing on the current processes, rather than taking on less than necessary new risks. 

Stronger Compliance for Finance Transformation 

With a clear finance transformation roadmap, the signs all point to increased compliance and internal control. As data expands, governments and regulatory bodies update laws and regulations to protect customers. 

Automation software inherently helps to minimise compliance risk in several ways. For starters, all data is securely collected and stored. Various users within an organisation are assigned their roles and responsibilities in the system through access controls. Every action that is taken is monitored and recorded to be sealed into an easy-to-pull audit trail. The automation of processes reduces the risk of human, manual errors, too. 

All in all, the human-robotic symbiosis of finance transformation translates into greater control and reduced compliance risk. 

Predictions for the Future of Finance 

As is the case with technology, change and innovation is the only certainty. The future of finance will continue to evolve by way of digital transformation. But, our current standing isn’t the end point. In fact, there will be shifts and trends moving ahead that will require buy-in, an open-mind and a willingness to be adaptive. 

Here’s a look at some of the trends we can expect to witness within the industry of finance and beyond:

  • IoT and AI continue to grow: The proven ROI of artificial intelligence and automation will continue to drive forward its adoption. Combined with automation and advanced analytics, finance professionals agree they’ll incorporate Internet of Things (IoT) devices to improve their services and customise user experiences. 

For example, insurance providers may leverage biometric data to enhance the underwriting process. Or, smart sensors may be utilised to gauge the working habits and wellness of workforces, in turn, providing ways to achieve operational efficiency and cut costs. 

  • A renewed focus on employees: Piggybacking on the technological advantages from the previous point, there will be a growing focus on employees’ well being and job satisfaction. It’s all too common that organisations speak of the customer experience, but the growing focus will include a focus on employee culture. This is because of how digital transformation helps to alleviate the stress of a workforce. 

For example, automation tools can remove the need for humans to conduct low-level, tedious, repetitive and sometimes even “soul-sucking” tasks. In effect, employees can allocate their time to high-level tasks that create value and boost their sense of satisfaction and accomplishment. 

  • Continuous reporting vs. periodic: The traditional monthly, quarterly and annual actuals and forecasts of finance will find new life in cyclical information. This will service and benefit internal managers and executives, as well as investors and external stakeholders. 

The ability to utilise data in real-time aids in better decision-making. Traditional cycles will fall by the wayside as the ease of pulling insights from data happens immediately.  

  • Microservices over big-name ERP: Vendors and providers of specialised data and automation services will grow their market share. This is because these tools can integrate with existing tool stacks via APIs. Therefore, cloud services are becoming the norm and these services will continue to expand across the industry. 

4 Technologies for the Future of Finance Transformation

As time progresses, both the necessity and ease of incorporating digital solutions into your organisation grows. Ultimately, it’s up to a CFO to gain buy-in from stakeholders and business owners to showcase the power of digital finance transformation. 

The following four technologies serve as clear markers of how finance transformation is able to benefit organisations dramatically: 

  1. Automation: Robotic process automation (RPA) sits at the heart of automation software. It allows for a human to conduct a task, train a model and run processes automatically, with little to no human intervention thereafter. Furthermore, automation has entered the time of intelligent automation, whereby RPA is enhanced with machine learning. 

Thus, the computer can ingest structured and unstructured data, spot patterns and make its own decisions based on historical data. This technology empowers finance teams by managing many key tasks with greater speed, accuracy and transparency. 

  1. Data visualisation: Finance teams used to compile reports in timed increments and provide them to the organisation’s executives for review. But, customer needs, markets and changes don’t have time to wait on data and its outcomes for decisions to be made. 

Transforming raw data into useful insights was once a time-consuming procedure. Now, data automation tools can visually represent data in whatever way one pleases to have real-time and continuous access and answers. 

  1. Advanced analytics for finance: Finance departments can leverage advanced analytics to offer data-driven insights and decision support for the organisation. 
  1. Advanced analytics for operations: Business financials are impacted by internal and external factors. To better control the internal variables, teams can utilise automation tools and advanced analytics to achieve operational effectiveness and perform continuous process improvement. 

CFO’s Role In Digital Transformation

CFO’s are trendsetters and go-getters within organisations. They must propel forward the adoption of cost-saving technology and implement processes that benefit the organisation, even outside of the financial department. From overseeing back-office necessities to aiding executives in making the right decisions for the overall business, a CFO leads the charge forward for digital transformation. 

While it can be overwhelming to know where to begin, it’s advisable to collaborate with your CEO and address business issues and opportunities together. Then, you can spend time finding the right tools to overcome hurdles and take hold of what’s yet to come. 

Wrap Up 

Digital transformation in financial services can’t be narrowed down into one definition or adoption of a single tool. Instead, it’s a framework by which financial departments can expand their roles by incorporating technological solutions, like automation software, to do so efficiently. It’s a mindset that comes to fruition through actions and breeds clear results. 

Given the ability to securely collect and store data in a centralised location, access real-time data analytics, continuously monitor results and highlight areas ripe for improvement, digital finance transformation is creating a whole new world of opportunity for organisations. Keep in mind that it’s not all up to technology to do the work - it requires human choice to take the first step in the right direction. 

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