Digital transformation in finance: What does the future hold

The world of finance is no longer an exclusive club for men in suits staring at spreadsheets. Thanks to the rise of fintech companies and mobile banking, financial products are now more accessible than ever. Customers can set up a bank account without leaving the comfort of their sofa. Even traditional providers have recognised the need to adapt, with 64% of consumers having used fintech applications or a financial technology solution in their lifetime according to EY. It's not just about technology either; customer experience is also improving, with artificial intelligence playing a vital role in marketing strategies, investment management and creating personalised products.

The use of technology in finance is nothing new, and it's certainly not limited to fintech companies. In fact, digital banking and ERP (Enterprise Resource Planning) systems have been used by banks to record and analyse information and support planning and decision-making for decades. What AI technology brings to the table is the ability to do these things more efficiently, with larger data sets and, crucially, in real-time. 

In the coming years, we'll see the adoption of cloud-based ERP, automation, and innovation expand and increase. Financial institutions will have the opportunity to streamline processes, freeing up both human resources and revenue. The integration of blockchain technology will further expedite this trend. As this transformation gains momentum, AI's potential to contribute value will be unleashed. Most consumers are looking for frictionless payments and financing, and in time blockchain will ensure almost every digital transaction is safe and simple.

Fintech companies will also benefit from these developments. While traditional banks undergoing digital transformation will benefit by reducing their operational costs, Fintech firms will be on the lookout for new opportunities to meet their customers' needs.

While we may see the finance sector become leaner due to a reduction in headcount associated with operational finance functions such as order-to-cash, procure-to-pay, and transactional accounting.

Meanwhile, the need for business finance support from business finance and specialised finance (tax, treasury, IR, etc.) will continue to grow.

Automation isn't new to banking. But with the advancement of mobile technology, machine learning and AI, that automation isn't just form-filling, and email marketing. It's the ability to open accounts within a few screen taps, customer onboarding, transactions and debt management. Clients don’t want managers to get back to them. They want service here and now — the simplicity to open an app, get things done and continue with their lives. 

Introducing automation has helped financial organisations to streamline their operations, reducing the amount of human input required for repetitive jobs such as invoicing, reporting or expense management. The benefits are obvious quicker processing times, fewer errors and improved compliance – but the main advantage is the ability to free up employees to deliver additional value. 

When people have more time, and the advanced technology to support them, they can move away from administrative tasks and begin to take a more strategic role. They can take time to innovate the customer journey and concentrate on value-adding products like savings and budgeting apps and peer-to-peer lending solutions.

When information is instantly available, traditional reporting cycles become less relevant. Month, quarter and year-end still exist, but forecasting and reporting is no longer restricted to those time periods. 

This means that rather than focusing on number crunching for monthly reports, banks can analyse data proactively and in greater depth, identifying trends, understanding customer behaviours and sentiment, and creating new products and services to meet the needs of their consumers. 

This knowledge is what will drive business decisions in the future. It’s what makes the difference between financial services companies and start-ups that prosper and those that fall behind the competition, and why FinTechs are leading the way when it comes to innovation and growth. Awareness of which products are well received, where gaps and inconsistencies lie, how customers perceive individual brands or services and most importantly, what they want from a financial services company, can, and should, inform business strategy.

AI also makes working with big data much easier. It allows complex information held on different systems and in different formats to be interrogated and presented in a much more consumable way, to identify trends and provide actionable insights.

Customer preferences are a key driver for financial digital transformation. By learning more about their customers’ wants and needs, financial service companies will be able to develop relevant products and adapt their customer experience in line with expectations. 

Understanding that today’s tech-savvy customers demand 24/7 access to money transfers, payments, information and advice has already led to self-service becoming the norm, and as digital in finance advances and systems develop greater capabilities, the range of self-service options will only increase. 

However, in focusing on self-service operations it’s vital that companies don’t let self-service turn into a lack of service. A positive user experience will remain a key differentiator for customers, who are used to having instantaneous access to information and as such have higher expectations than ever. They will continue to expect the high-quality, personalised and integrated experiences they are used to – regardless of how they are delivered.

It’s clear that digital transformation and data are inexorably linked. Both now and in the future, insights and analysis are what will help finance companies drive change, inform business decisions and innovate in order to thrive in this fast-changing market. 

Gone are the days when CFOs solely focused on financial and management reporting. Nowadays, they must navigate their way through vast amounts of data to uncover valuable insights that they previously didn't know about. Fortunately, advancements in technology such as artificial intelligence and robust computing have revolutionized the way CFOs operate by enabling them to work with that information in ways that were deemed impossible just a decade ago.

Equipped with sophisticated analysis tools, these experts can effortlessly extract critical information from a massive pool of data, empowering them to make informed decisions for the company's growth and development of customer services.

Using digital transformation, Finance professionals and CFOs can now merge standard reporting data with more unstructured data to show financial transactions and create a better financial forecast in real-time.

The financial industry is experiencing rapid changes in its talent models, with a greater emphasis on high EQ - people who possess strong social, analytical, communicative, and creative skills. Many fintech companies have made a significant departure from the traditional approach of finance organisations. To stay ahead of the curve, they are investing in talent that embodies the future they aspire to achieve - they offer flexibility, career development, training.

Apart from having the necessary technical skills for their respective roles, these candidates also possess qualities like customer service orientation, emotional maturity, and collaborative skills. Every employee should be capable of contributing to the finance industry by enhancing communication, impact, and influence. Remember, every new hire counts!

Digital transformation is important, but it's less likely to be successful if your internal team aren't in the right place to accept it. That's why addressing your talent model is crucial. Your talent and your technology are connected, but cultural and organisational shifts in workforce may be more challenging.