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Financial services enterprises are under greater pressure to digitally transform. According to new Telehouse research, more than four out of ten (42%) financial service enterprises need to transform their IT infrastructure or risk becoming less competitive – a figure significantly higher than the 34% average across other sectors.

Pressure is being driven by a combination of factors, including customer demands for more connected, relevant and personalised experiences (46%), the need to simplify business and operating models to increase efficiency (46%), cyber security (44%) and the necessity to deliver new applications and services to customers (44%). The emergence of nimbler challenger banks and ambitious FinTechs has set the challenge for businesses across the sector to step up a gear and reshape their operations.

For many, a shift from a traditional on-premise infrastructure, to a more modern mix of colocation, cloud and ultimately, edge computing is the answer.

Scoping the challenge

Today, financial services firms need to react quickly to regulatory demands and take advantage of market opportunities. However, they often don’t have the right systems in place to manage, or effectively use data to respond as quickly as their ‘digitally native’ peers.

The problem is many are still reliant on inflexible, legacy, on-premise infrastructure. The research revealed that financial services organisations outsource the lowest proportion of IT infrastructure to colocation and the cloud of the enterprise sectors polled. So, it’s not surprising the sector also has the lowest confidence in IT maturity, with just 30% of IT decision-makers describing their organisation’s IT maturity as ‘very advanced’.

Transformation is clearly needed but it is not always an easy task. Historically, financial services firms have struggled to adopt new technologies and meet increasingly high customer expectations quickly, often limited by strict compliance and regulatory requirements, which ratcheted up after the global financial crisis of 2008. Even with the appetite to change, many have struggled to make meaningful progress, held back by legacy IT systems. But with time of the essence and providing personalised, connected and reliable experiences now business-critical, organisations can simply no longer afford to stand still.

Why connectivity is key

As customer demand and internet consumption grows, financial services organisations need to find ways to increase connectivity between offices and countries and improve the user interface on customer-focused technology like apps and websites.

5G will offer many benefits for financial services including reduced latency, which in turn will help decrease transaction and settlement times. It will also facilitate the adoption of AI to enable greater personalisation and improvements to customer experience.

However, as with any new wireless communications technology, the volume of data used will rise significantly, putting more stress on backbone networks. A fifth of financial service enterprises surveyed in the research already say that data volumes have become a serious problem. To succeed, organisations need the ability to quickly ingest and process data and this will be dependent on having a connected, secure, reliable, scalable, flexible, resilient and low latency IT infrastructure.

Ultimately, more connections mean more risks. So, the challenge is how to take advantage of increased connectivity without compromising security or compliance.

Despite lagging behind other sectors in most areas, financial services are leading the way when it comes to edge computing.

The role of colocation

 Many are turning to colocation as the answer; providing the extra capacity and bandwidth required, while also enabling fast, secure and direct connections to cloud service providers. According to the Telehouse research, financial services organisations are already outsourcing 38% of IT infrastructure in colocation with adoption set to increase further as the use of big data; 5G and the Internet of Things (IoT) rises.

By hosting their IT infrastructure in a colocation data centre, organisations can control the migration process, keep on top of regulatory demands and keep a lid on costs. The research found that the top drivers of investment in colocation are sustainability, faster data access and improved connectivity, likely driven by the need to improve customer experience and connect disparate hybrid IT structures.

More importantly, by deploying a combination of cloud and colocation strategies, organisations can create a resilient and secure foundation for growth. This will enable them to flex and scale operations when building new services and innovations to meet future demand, while also ensuring they provide their customers with a responsive and high-performing service. And by choosing a colocation facility in close proximity to financial markets and exchanges, organisations can benefit from reduced latency and faster data processing to enable real-time big data analysis.

Moving to the edge

Despite lagging behind other sectors in most areas, financial services are leading the way when it comes to edge computing. 72% of respondents have already implemented a strategy for edge computing, driven by a need to optimise data volumes (36%), digitally transform (34%) and match competitor capabilities (34%). However, over a third say they are challenged by a lack of understanding of edge networks and their purpose as well as uncertainty over which locations to gather and manage data in.

Given that it’s now more important than ever for financial services firms to store, access and analyse and access exponential levels of data at record speeds, it is not surprising that interest in edge computing is soaring. Gartner predicts that by 2025, 85% of infrastructure strategies will integrate on-premises, colocation, cloud and edge delivery options, compared with 20% in 2020.

Demand for edge is also likely to be driven by its convergence with other technologies such as cloud and colocation and is evidenced by the fact that many firms opt for a mix of technologies. Ultimately, the key for success for organisations will be building the right infrastructure foundations and connectivity, and the right data centre partner is critical to achieving this.

Embracing the connected future

Financial service providers have a huge opportunity to provide the seamless, secure and personalised services that today’s consumers crave. But doing so requires digital transformation.

As data volumes and connectivity increase, new developments such as predictive modelling to prepare for ‘what if’ scenarios, automation of front-end sales and customer-facing environments and the enhancement of customer care by self-service functionality will become commonplace. However, success depends on having the right IT infrastructure to enable fast, secure and seamless connections. It will be those that can build a connected, secure, reliable, scalable, flexible, resilient and low latency IT infrastructure that will be winners in the race to the connected future.

The pandemic has also pushed the sector further into the national spotlight. Financial services providers are under pressure to support businesses and individuals in distress, while facing increased scrutiny over customer experience – particularly when it comes to vulnerable customers. Finance Monthly hears from Craig Naylor-Smith, managing director of Parseq, on  how firms can keep up with these demands and overcome the new obstacles 2021 will bring.

In this climate, firms must continue to invest in their operations if they are to remain competitive, protect their reputation and meet the constantly evolving demands of customers. By transforming inefficient processes, firms can develop more productive operations and free-up funds to help drive new investment in the year ahead. Here, the support of an expert partner can be key.

Transformation plans

It is encouraging to see that financial services executives already have transformation firmly on their agendas. At Parseq, we recently surveyed more than 50 C-suite executives at some of the UK’s largest financial services firms for our inaugural Big Business Efficiency Report to understand their plans for the next 12 months when it comes to transformation and efficiency.

Four in five executives (84%) plan to transform their business operations over the coming year, and every executive we spoke to is planning to make their business more efficient.

When it comes to transformation, executives’ focus areas are diverse. In the front office, marketing (44%), sales (37%) and customer experience (19%) are priorities. In the back office, finance and administration (35%), IT (30%), compliance (26%) and HR (26%) top the list.

The use of AI and machine learning (41%), digital channels for internal and external communications (35%) and new workflow management software (33%) are the most popular steps executives will take to help increase business efficiency in 2021.

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When asked how they would use the capital unlocked through efficiency gains in the next twelve months, more than half of respondents said they will invest in new technology (57%), while almost two fifths said they would improve customer experience (37%) and expand into new markets (37%).

Overcoming obstacles

These findings highlight the broad range of efficiency and transformation strategies financial services executives are formulating. However, executives also highlighted several barriers when it comes to putting efficiency measures into action.

Our respondents cited cost (37%), complexity (35%), a lack of time (29%), a lack of knowledge (29%) and a reliance on legacy systems (29%) as their biggest hurdles.

And, while 71% of executives who said they were planning to use outsourcers over the next 12 months were more likely to do so after the UK’s first lockdown in March, a fifth (20%) said a lack of awareness of available third-party support was a factor currently holding them back.

From our 40 years of experience at Parseq, we know that outsourcing to a third-party can achieve permanent efficiency savings of at least 30%. However, while outsourcing partnerships can return impressive cost savings and help executives directly tackle issues such as complexity and time, its benefits can extend far beyond this. Through their expertise and experience, outsourcing partners can also play a key role in helping firms deliver long-term transformation in their operations.

Looking ahead, financial services firms that successfully enhance their efficiency and enact transformation will be well placed to overcome any obstacles that may arise this year. Through transformation, and by utilising third-party support, businesses will be able to unlock the capital that will be key to helping them thrive in a challenging and competitive environment.

Andy Campbell, global solution evangelist at FinancialForce, analyses current trends in the financial services industry and how firms can keep pace with customer demand.

In the digital age, the finance function of old is no longer sufficient. Whilst generating reports, budgets, and plans will still remain core to finance’s day-to-day activities, the modern business landscape moves quickly, and the finance team needs to be similarly agile to keep up.

Digital transformation across businesses and whole industries requires finance departments which can support new business models, plan for agility, create outcome-based versus product-based offerings, and identify new joint venture opportunities. In short, finance needs to move away from bean counting and work more closely with internal stakeholders and customers to provide innovative experiences and organisation-wide value.

This is a radical transformation of what has come before, and requires a similarly radical shift in long-established mindsets both within the finance department as well as the rest of the organisation. If this change in mindset can be achieved, finance teams can start to take advantage of the data analytics solutions now more widely available. With a new level of visibility offered through rich, timely data and advanced analytical tools, businesses are making changes to embrace new models. The finance function is having to increase its agility in order to deliver and support the overall business.

The COVID-19 pandemic has played a significant role in this transformation. It has shone a light on business inefficiencies, and as a result, has acted as a catalyst for digital transformation, speeding up digital initiatives. We have seen more change in the last six months than we have in the previous six years. Additionally, the focus on managing cash more effectively to ensure survival has meant that the transformation focus that was typically centred around the front office - the way we deal with our customers - has changed. We are now seeing a growing interest in transforming the back office.

The finance function is having to increase its agility in order to deliver and support the overall business.

This will not happen overnight, and there are five key shifts that a business needs to make to transition from the traditional finance department to a digital office of finance.

Shifting from financial-only proficiency to enterprise-wide know-how

Financial metrics will always be important, but the modern finance leader needs to broaden and develop an understanding of KPIs in other areas of the business too. They should have knowledge of both customer experience and satisfaction, in addition to conversion rate optimisation and employee retention to round out existing analysis. This presents a massive contrast to accounting teams from years gone by, with the modern finance leader having evolved into a major business stakeholder. The focus is no longer just on the finance element, but also on creating and continuously strengthening healthy customer relationships and customer lifetime value.

Shifting from monthly reporting, to real-time decision-making

Today, monthly closes or quarterly reviews are too slow. Decisions need to be made using real-time data every time. Accuracy and speed are paramount when it comes to making sure that a business is successful. Understanding what is involved in creating and delivering a new offering - and being able to course-correct to maximise profitability or customer satisfaction - can no longer wait until the end of the month or quarter. As such, a business must invest in business intelligence (BI) and artificial intelligence (AI) solutions, so as to quickly derive insights about how the business is performing, and to subsequently act on said insights.

Shifting from static forecasts to rolling forecasts

If finance departments are to switch to a weekly or even daily forecasting schedule they’ll need technology to support their endeavours. Modern forecasts must account for several different models, constantly shifting sets of variables and the use of new technology like AI. This requires organisations to build agility across a number of business risk scenarios, such as price wars, natural disasters, or the current COVID-19 pandemic.

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Shifting from financial analyst to business model strategist

For businesses to remain one step ahead of the competition, they need to be constantly searching for new revenue streams. This could be considering how to turn services into products (or vice versa), or creating new offers or bundles for customers and presenting them in a different and unique manner. Central to enabling these new approaches is real-time data, as it provides visibility into both what sells, and what deliveries the highest margin. From this, they can then pinpoint the top performers and double down on them.

Shifting focus from product to customer success

Many sectors of the economy have already transitioned to a services and subscription renewals model. With this change comes a renewed need for businesses to redouble their focus on customer experience. Finance leaders need full visibility over each and every account in order to enable smarter decision making. This means becoming more engaged with their customers, so as to ensure satisfaction and retention. Customer onboarding, service delivery, support, or other post-sales functions: finance leaders must get closer to all of them. Only then can those deep insights into customer behaviour, as well as service and product quality, be uncovered so as to make sure that the needs of the customer are fully met.

Chris Brooks, CFO at Modulr, offers Finance Monthly their perspective on how businesses can turn payments to their advantage in fraught times.

As the Chief Financial Officer at Modulr and someone with over 15 years’ experience in the finance industry, I’ve witnessed a great deal of change in the way businesses manage their payments. But to date, no period has been as transformative as the one we’re entering right now.

For decades, small businesses have been let down by their payment processes. That’s because the majority rely on outdated, manual and inefficient payment services from traditional banks with legacy IT systems. The problem is compounded by the inefficiency of banks when disbursing loans, which are often critical to getting small businesses off the ground. In fact, some small business owners claim to have been left on the verge of collapse after the amount of time taken to process their bounce-back loans.

Sometimes it takes a crisis to shake businesses out of apathy. COVID-19 has shone a light on payment inefficiencies and highlighted the urgency of digitalisation.

Fortunately, fintechs are flourishing across the UK and providing new technologies that could transform the payment space. Here are three areas where payments innovation could help businesses become more resilient, future-proof and competitive.

Sometimes it takes a crisis to shake businesses out of apathy.

1. Maintaining security and business continuity

When COVID-19 led to sudden and widespread remote working, it starkly exposed the hidden inefficiencies in existing processes. Companies that were stuck in the old, manual way of managing payments suffered major disruption. While those that were ahead of the digitalisation curve managed to maintain business continuity.

In the accountancy space, many practices had already embraced cloud computing and payments automation. They were able to make the transition to remote working seamlessly – accessing client workflows from home and managing payments through centralised portals like Sage Salary and Supplier Payments, just as they would in the office.

But we’ve also heard from accountants who, prior to the crisis, had still been in the habit of driving to their clients’ offices and picking up folders of paperwork. Many more were doing things digitally – thanks in part to Making Tax Digital - but not in a completely centralised way, which required the ad-hoc sharing of files across insecure methods like email or third-party file transfer systems.

These workarounds are highly problematic in a time of crisis. Fraudsters will actively seek to exploit new vulnerabilities. According to UK Finance, Authorised Push Payment (APP) fraud cost UK businesses £138.7m in 2019. Only £33.8m was reimbursed. And since COVID-19, we’ve seen the emergence of entirely new scams and techniques.

Fortunately, new payment technologies such as Confirmation of Payee (CoP) are being introduced to help businesses safeguard funds. With CoP, payment service providers (PSPs) will be able to check if the name of the individual or organisation entered by the payer matches the identifying information of the account paid. This can prevent consumers and businesses from being tricked into pushing funds to a fraudster’s account.

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2. Reducing operational costs

As businesses seek to recover from the impact of COVID-19 and navigate this tough economic environment, finding ways to maximise efficiency and reduce operational costs will be critical. This is especially true for businesses that have furloughed employees and are forced to work with leaner teams.

Manual payment processes are a heavy burden for finance teams in today’s fast-paced, challenging environment. They waste time, incur errors and result in significant administrative costs. That’s why fintechs are developing sophisticated solutions that allow businesses to automate all aspects of the payments workflow.

A good example is payment splitting. This is when a business receives an incoming payment, divides it based on a calculated percentage, and sends two payments out to end beneficiaries. When done manually, it’s a time-consuming process. But automation offers a powerful solution, allowing payments to be split automatically based on customisable rules.

Imagine a property management business that’s collecting rent from tenants. Rent collections are typically complex and unwieldy, as payments are sent to the estate agent’s bank account and then manually reconciled and split before sending funds to the landlord. But with automated payment splitting, rules are set to automate the amount collected and sent on – drastically cutting down admin time and reducing operational costs.

That’s just one example of the power of automation. It can have a significant impact on all aspects of payments – receivables, payables, collections and disbursement. Not only does this reduce operational costs, it can help businesses to maintain payments continuity when employees are forced to work away from the office.

3. Improving cashflow management

Cashflow is the lifeblood of any business, and right now it’s even more vital for survival.

Faster Payments is a relatively new scheme compared to traditional methods like Bacs, but it’s already having an immense impact on UK commerce and business uptake is likely to accelerate. Initially designed to speed up the payment process for retailers, Faster Payments are meant to clear in less than 2 hours, though this is often far lower; at Modulr we’ve reduced it to seconds. This is a major improvement on Bacs payments, which can take up to three days to clear, meaning funds are held in limbo for that time period.

Cashflow is the lifeblood of any business, and right now it’s even more vital for survival.

The impact of using Faster Payments can be far-reaching. By allowing just-in-time payments and the ability for a business to hold onto cash right down to the very second, Faster Payments enables greater control, visibility and forecasting of cashflow throughout the year. Finance teams can more accurately predict what cash they will have and when, and plan to pay invoices at strategic times. This will be increasingly critical as businesses strive to recover from the impact of COVID-19.

To summarise; technology is going to continue disrupting all areas of business. And the same goes for the payments industry. New solutions being developed by fintechs can help companies to improve cashflow management, significantly reduce operational costs and protect their money.

With such a challenging and uncertain economic environment in the months ahead, there’s never been a bigger incentive for change. Companies are faced with a critical choice – to keep relying on slow, outdated payment methods, or overhaul everything and find better ways of moving and accepting money. By choosing the latter, businesses can boost their resilience and weather future storms. And those that move first might that find payments become their competitive advantage.

Tim Wakeford, VP of Product Strategy at Workday, outlines the benefits of agile financial planning and the research backing it.

It’s hard to be certain how long the economic impact of the COVID-19 pandemic will last. Recent predictions estimate 2025 as the finish line for recovery, but this isn’t the first and won’t be the last forecast we see. However, as we adapt our strategies to recover, one thing remains clear: COVID-19 will have a lasting impact on how businesses make plans worldwide. I’ve been talking to many customers to understand what they’ve been doing to weather the storm and what they’ve valued the most is having the agility to respond quickly to changes.

Agility to gain business resilience

Being agile when faced with change has always been a defining characteristic of companies that respond well to competitive threats. A Workday study on organisational agility showed that top-performing companies were ten times more likely to react quickly to market shifts, proving that agility is often a synonym for performance. During the pandemic, agility has emerged as the defining attribute of organisations which are responding well to the current crisis. Moving forward, it will be the essential tool to draw a much needed resilient course for growth.

To build agility into an organisation, processes need to be transformed. Finance sits at the heart of this transformation, simply because it touches every aspect of a business. The finance department is responsible for the budgeting and forecasting of activities — all essential planning processes that will map recovery. Three out of four finance executives admit their planning processes have not prepared them for economic disruption, let alone a global pandemic. They have found the key to respond better to this and any future crises in adopting three agile processes: scenario planning, continuous planning and rolling forecasts.

To build agility into an organisation, processes need to be transformed.

Scenario planning to anticipate impacts

From the moment companies started to send employees home and supply chains were interrupted, the future became more uncertain and organisations were forced to ask themselves “what if?”. What if our workforce has to work from home for the rest of the year? What if our supply chain is interrupted for 60 days? With tools that provide the ability to build-out scenarios, businesses can ask these questions and understand what different versions of their future might look like. With roadmaps laid out, they’re able to not only identify future risk but also look for new opportunities. During the first months of the pandemic, we’ve seen organisations create up to 30 times more build-out scenarios than usual in our platform. The value of this strategy has been proven beyond financial planning: Oxford University, for instance, has an approach to scenario planning used by scientists and policymakers when facing situations of global impact.

As we move towards recovery, the future is just as unclear. A recent survey conducted by Deloitte showed that 89% of CFOs now feel there is a high or very high level of uncertainty facing their business. The more finance teams apply technology to model different future scenarios, the better prepared and more confident they will be to quickly adapt their strategy to these uncertain outcomes. Planning based on assumptions is better than not planning enough, and technology can make this process seamless without weighing on anyone’s time. One of our retail customers, for example, is planning their recovery by using multiple pictures of their budget based on different assumptions, all sitting in the cloud platform, to avoid any version control issues that offline spreadsheets can bring up.

Continuous planning to avoid obsolete budgets

A survey conducted by the Association for Financial Professionals in 2019 revealed that the average annual budget takes 77 days to be prepared. Think back to where the world was 77 days ago to understand that this is simply not a sustainable process. Forward-thinking businesses no longer approach financial planning as a one-time annual or quarterly event. Episodic planning quickly becomes obsolete and wastes valuable time.

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By deploying a continuous active approach to planning, leaders are able to quickly adjust budgets adapting to any shift in the marketplace or change in the organisation — something fundamental in the current scenario. We have found that companies that implement continuous planning are 1.5 times more likely to be able to reforecast within just one week, a level of agility that helps businesses avoid budget freezes.

Rolling forecasts to roll with the punches

Rolling forecasts are just as important in the toolkit of agile finance planning. They are a strategic way to approach forecasts because they are guided by key business drivers. We’ve found from our customers that they can help accurately predict changes from four to eight quarters in advance. By being able to visualise a consistent horizon, finance leaders gain the confidence to make critical decisions. In addition, the rolling aspect of the forecasts offers an invaluable way to course-correct quickly.

To survive a time of escalating uncertainty, agility is a safe harbour for any organisation. By deploying continuous planning based on build-out scenarios and rolling forecasts throughout the recovery, leaders will be better equipped to make forward-looking decisions, and not only recover but do it with a competitive advantage. Ultimately, the changes in planning processes implemented during this crisis will prepare businesses for any future storms they might face.

 

As John Murdock, CEO of business intelligence experts Centage, explains below for Finance Monthly, this has begun to shift over the past decade due to technology and automation.

Companies like Botkeeper and MindBridge.ai are fully automating tasks like entry and validation of transactions, line items, compliance and auditing corporate books. Other companies offer platforms that streamline budgeting, surface trends hidden in data, and a wide variety of classic financial team functions.

As these functions move into software, one of two things will happen: accountants will lose their jobs, or automation will prompt them to radically transform the office of finance. Even if  CEOs prefer people to AI, they may have trouble finding qualified accountants to staff their financial teams. According to Accounting Today: “Accounting, like many professions, is experiencing a shrinking talent pool as boomers retire and younger generations are opting for other careers.”

This evolution is going to kickstart some serious changes in the industry, which is why the AICPA, through its CPA Evolution project, is working to ensure CPAs continue have the skills needed to support the accounting profession. I see that there are five distinct transformations occurring in the office of finance that are a direct result of financial technology.

1. Finance teams are becoming business partners

Back office automation allows the financial team members to move in a more strategic, front-office role by offering their talents to the managers and department heads who run the day-to-day business. For instance, the financial team of a retailer can help the company optimize revenue per square foot, or understand the profitability of each product in order to tweak the brand’s merchandising strategy.

The financial team of a retailer can help the company optimize revenue per square foot, or understand the profitability of each product in order to tweak the brand’s merchandising strategy.

Personally, I see this as a positive development. I never saw the benefit of sequestering such an important role in the office of finance. The finance team is responsible for ensuring company priorities are funded. How can they do that if they don’t understand how or why those things become priorities to begin with?

2. Finance teams will recruit more graduates with business and operational knowledge, not just accounting degrees

The more the financial office moves to the front-office, the more executives will value people who have degrees and backgrounds in business strategy, market differentiation, and competitive positioning. These are the skills that inform strategic decision-making and can help the business chart long-term strategies.

This is a reversal of a trend that began after the 2008 financial crisis and the passage of Sarbanes-Oxley. According to the executive search firm Spencer Stuart, the number of CFOs with CPA certification rose from 29% to 45%. But now that compliance and auditing can be automated, I believe that CPA certification will be less of a priority for management teams.

The accounting industry itself is undergoing a similar shift. Non-accounting college graduates accounted for 31% of new hires across public accounting firms in the US in 2018. The Journal of Accountancy cites the need for tech skills as a primary driver of the shift: “Increased demand for technology skills is shifting the accounting firm hiring model,”  Barry Melancon, CPA, CGMA, AICPA President and CEO and the CEO of the Association of International Certified Professional Accountants, said in a news release. “This is leading to more non-accounting graduates being hired, particularly in the audit function.”

3. More CFOs will have a non-traditional path to leadership

The other day I listened to a podcast of the Boston Red Sox, Tim Zue, describing his rise to CFO. He didn’t come from a finance background (he studied mechanical engineering in college). But after working for the Red Sox organization for more than 18 years, he developed a keen understanding of the business, which more than made up for his lack of a finance degree. He knew the right questions to ask in order to make strategic business decisions. As a result, he now believes that the only way to gain such a deep understanding is to get into the front office and work with the people who are running it day-to-day.

The only way to gain such a deep understanding is to get into the front office and work with the people who are running it day-to-day.

I agree wholeheartedly with Zue, not the least because I experienced the same trajectory in my own career. I earned my bachelor's degree in engineering and worked in sales and marketing prior to becoming a chief revenue officer. My experiences as CRO positioned me to become a CEO.

4. Technology will increase the demand for strategic thinkers

This may seem counterintuitive, but as AI merges with business intelligence to alert the finance teams to trends inside the business as well as trends within their markets, companies will need CFOs who are highly strategic thinkers. After all, if everyone uses the same software to guide decisions, they’ll all make the same decisions. We see this phenomenon in our everyday lives all the time. For instance, Waze does a great job of informing drivers of traffic congestion and suggesting alternative routes. But if enough drivers take that alternate route, it just creates another traffic jam.

To complete the metaphor, successful companies will need CFOs who can see the out-of-box alternative route to long-term sustainability and growth.

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5. Finance and engineering will merge

Financial degrees are already becoming more data and tech centric. This past October, the Pratt School of Engineering at Duke University announced it will offer a masters degree in financial technology. There is compelling reason why these disciplines are merging: both center around data. Fintech is still in its infancy, and it offers significant opportunities for engineers to build out automation around financial rules. It makes sense for engineering schools like Pratt to train their students in the ins and outs of finance. I can’t emphasize enough how radically the coupling of these disciplines will transform accounting and finance over the next decade.

Accountants and finance teams shouldn’t fear technology. It will certainly change the way they think about their roles, but that’s a positive, not a negative development, especially for ambitious people who are eager to play a more strategic role in their corporations.

Triangle model

 Governments around the globe are undergoing a form of digital transformation, mandating real-time tax enforcement and new forms of digital reporting as they look to capture billions in lost tax revenue. Advances in technology mean they are able to insert themselves into every one of a business’s transactions and change taxation requirements whenever the opportunity arises to claw back some extra revenue. Probably the best-known example of this, the use of electronic invoicing with real-time administration controls, has been mandatory in Latin America for almost two decades now.

The most tightly-controlled regimes in the region, such as Brazil’s tax authorities, operate in a “triangle model”. Here, the transaction data and corresponding invoices must first be sent by the supplier to the country’s tax administrators for approval. Only once it’s been approved can an invoice be sent from the supplier to the purchaser without intervention from the administration. Finally, the transaction must often be validated between the purchaser and the tax authorities.

In certain parts of Asia, though, these controls may not be seen as tight enough. There is a move in some countries on the continent to play a bigger role in the exchange of data between suppliers and buyers.

 The European model – continuous reporting

 Many countries in the European Union are inspired by the Latin American approach but express this not by imposing electronic invoicing, but by making traditional VAT returns, reporting and auditing concepts more granular and more frequent. This approach is controversial, for several reasons.

To start with, reporting and auditing of indirect tax are activities that EU Member States can freely decide on without much mingling from Brussels. This is leading to a multiplicity of continuous and other technology-based enhanced VAT reporting schemes that contradict the very spirit of the EU internal market.

Secondly, most companies deal with VAT returns and similar periodic reports using manual approaches and often relying on local subsidiaries to deal with local idiosyncrasies and the submission to authorities. Gradually making these processes faster, and requiring the inclusion of actual transaction data rather than aggregate amounts creates confusion as to when these current VAT compliance processes need to be replaced by automated processes.

Some Asian tax administrations are going all the way by seeking to control or even own the entire technological stack for the transference of transactional data.

 Continuous transaction controls go East: including supply chains?

 Some Asian tax administrations are going all the way by seeking to control or even own the entire technological stack for the transference of transactional data. The entire communication flow - including the approval process - is run through a government network, thereby ensuing some of the highest levels of control on invoices and tax ever seen.

Take India, by way of illustration. The Indian Government established a committee to examine the viability of e-invoicing as a way of reducing tax evasion under its Goods and Services Tax (GST) programme. This committee has proposed to set up an extensive real-time control system which uniquely identifies suppliers’ invoices and, in many cases, transmits registered invoices to buyers.

The aim of this initiative is certainly laudable; it was designed to provide greater transparency into the country’s taxation system, helping to close its tax gap, reduce fraud and promote automation in both the private and public sectors. Such a stringent process could have an impact on global supply chains, however. India is a global manufacturing powerhouse. Should any corporation with a footprint in the country fail to understand the new process, it could not just result in non-compliance and associated financial sanctions, it could impact just-in-time delivery of critical components for the assembly or distribution of finished goods to businesses and consumers worldwide.

Given the wider implications of such tight controls, a lighter touch may, therefore, be more effective. Recent initiatives in Singapore also correspond to the trend for Asian authorities to pay more attention to the exchange of business data between suppliers and buyers but suggest a lighter-touch approach.

Recent initiatives in Singapore also correspond to the trend for Asian authorities to pay more attention to the exchange of business data between suppliers and buyers but suggest a lighter-touch approach.

Interoperable systems

In May 2018, Singapore’s Government announced the introduction of a nationwide e-invoicing framework largely based on a system that was originally designed to make public procurement more effective and equitable in Europe. The primary function of this framework is to raise productivity and efficiency within Singapore’s business ecosystem, but there are clear indications that certified transaction management cloud vendors acting as ‘access points’ on this network may also be required to perform transaction reporting to the Singaporean authorities for tax control purposes.

Companies can send and receive e-invoices based on the Pan-European Public Procurement Online (PEPPOL) standard, a set of technical specifications that can be implemented to enable interoperability among disparate public procurement and private sector e-invoicing systems. Doing so means that not only is Singapore able to adopt e-invoicing on a large scale, but its companies are able to carry out relatively friction-free international transactions with businesses from other countries that use the PEPPOL standards.

Latin America, the European Union, and now Asia. Each of these regions has embraced the advantages technology can offer when it comes to generating additional tax revenue, and closing existing gaps in their respective systems. The concept of real-time or near-real-time harvesting of live transaction data is central to most of these ‘continuous transaction control’ systems; however regional differences are emerging that take into account not just lessons learned from early adopter countries, but also cultural and economic differences.

While there are clear tax and economic benefits for governments to leverage modern technology to grab transactions between suppliers and their customers as they happen rather than requiring complex reporting and auditing after the fact, the business challenges of diversity within regions with similar philosophies (for example, the major differences among e-invoicing approaches in Latin America) are increasingly compounded by more structural differences among regions. Perhaps only time and experience will tell if their new state-driven model will be a success, or whether a compromise is required after all.

It’s estimated that 81% of finance teams are currently undergoing finance transformation, yet research by Gartner reveals that seven out of 10 finance transformations fail.

This article, authored by Laura Timms, Product Strategy Manager at MHR Analytics, based on the new finance analytics guide from MHR Analytics, will reveal the benefits of adopting analytics to supercharge your efforts and help ensure that your finance transformation is a successful one.

Finance strategy that’s aligned with future business needs

Transformation is more than simply hitting a financial goal. It’s about being able to respond to the current and future needs of the organisation – something that can only be achieved when finance is connected to the wider business.

Unfortunately, with all of the demand that finance teams receive, it can be easy to fail to recognise how financial activity translates into everyday business.

This can lead teams working introspectively, which can quickly translate into silos, with poor communication of information, lower levels productivity and consequently a less valuable finance team.

To prevent this from happening, the financial strategy needs to be aligned with activity across the business, and analytics provides the platform to do exactly that.

Using a data warehouse, data from across the organisation can be synced to give finance teams real-time insights into how changes in one area of the business will impact the course of action they take.

This means that finance teams are able to steer away from getting caught up in metrics like historical spend and industry benchmarks, and are instead grounded in how the finance strategy relates to the unique needs of their business.

Using a data warehouse, data from across the organisation can be synced to give finance teams real-time insights into how changes in one area of the business will impact the course of action they take.

  1. Focus on high-value tasks

According to Gartner, 56% of companies are in the evaluation phase of adopting AI to automate accounting & finance processes. By 2020 it’s estimated that 31% of companies will have actually implemented this into their business and 26% in “operating” mode, where AI is actively used in accounting & finance processes.

But what does this mean for finance transformation?

Well, AI technology is providing a platform that is changing the role of finance teams at a rapid pace. Through automating tedious financial processes, finance teams no longer have to spend their time buried in spreadsheets.

Everything from cash disbursement, revenue management and general accounting could be automated through leveraging analytics – in fact, it’s estimated that up to 40% of financial activity could be automated, and another 17% mostly automated.

Research goes on to reveal that for an accounting team with 40 full-time employees, with an average salary of £60,000 would save around 25,000 hours and nearly £72,000 that would have otherwise been wasted on team members carrying out repetitive tasks.

This time saved can instead be spent on higher-value tasks that facilitate business transformation and allow finance to act as a trusted strategic partner to the business.

  1. Understand where to allocate resources

Sometimes it can feel like finance are caught in the middle, with demands left, right and centre of the business. And with eloquent justifications from each department explaining why their project should be prioritised, it can leave finance teams stretched under the pressure to please everyone.

Analytics works to hand back the power to finance teams.

Through interactive dashboards that display performance across the business, finance teams are able to easily identify the key value drivers of financial growth.

This means that they’re able to present stakeholders with “the facts” and justify financial activity, only spending resources on activities that generate the most financial value, whilst cutting unnecessary costs.

On top of this, finance teams can look internally to see what they’re spending their own time and resources on. This can help them to define their list of roles and responsibilities as a department to ensure that they don’t get caught up in low-value tasks.

[ymal]

  1. Make faster, more reliable decisions

At the core of any finance transformation is the need to adapt finance practices to meet increasing business demand.

Despite this, many finance teams are still relying on outdated methods to carry out financial processes.

Relying on spreadsheets to communicate and understand what’s going on in the wider business is a common theme amongst finance, but using manual methods alone leaves room for human error.  In fact, research shows that nearly 90% of spreadsheets contain errors, and this can make it tricky to make decisions with confidence.

This approach also means that teams are often forced to spend hours analysing data and pulling reports. This can lead to lags in getting all-important insights, which delays decision making and can result in “in hindsight” discussions with stakeholders.

Analytics works to streamline financial processes to provide teams with fast and accurate insights at the touch of a button. Through real-time data and automation of once tedious processes, teams can see bumps in the road way in advance and have greater confidence in their decisions.

Sources:

https://emtemp.gcom.cloud/ngw/globalassets/en/finance/documents/trends/cfo-journal-new-digital-workforce.pdf

https://www.gartner.com/en/confirmation/finance/trends/new-digital-workforce

https://emtemp.gcom.cloud/ngw/globalassets/en/finance/documents/insights/hallmarks-of-winning-finance-transformations.pdf

https://www.gartner.com/en/confirmation/finance/insights/finance-transformation

https://emtemp.gcom.cloud/ngw/globalassets/en/finance/documents/insights/defining-the-scope-of-fpa-analytic-support.pdf

https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Deloitte-Analytics/dttl-analytics-us-da-3minFinanceAnalytics.pdf

[2] https://www.mckinsey.com/business-functions/operations/our-insights/new-technology-new-rules-reimagining-the-modern-finance-workforce

https://www.blackline.com/blog/account-reconciliations/3-audit-benefits/?ite=1192&ito=1771&itq=b820f4c8-2db4-44be-bdbf-1230cc9fa177&itx%5Bidio%5D=522393

[1] https://emtemp.gcom.cloud/ngw/globalassets/en/finance/documents/trends/cfo-journal-new-digital-workforce.pdf

[3] https://www2.deloitte.com/gr/en/pages/finance-transformation/topics/finance-transformation.html

https://openviewpartners.com/blog/finance-transformation-the-art-of-getting-more-from-your-finance-team/#.XSxsDuhKiUk

https://www.gartner.com/en/finance/insights/finance-transformation

Below Finance Monthly hears from Adam Rice, VP Product Development, Centage Corporation, who touches on the need to expand budgets and care3fully account for said upgrades.

For many businesses, the third quarter is budget season. It’s a busy time for the finance team, as they meet with department heads and general managers to predict what the coming 18 months will look like for the business. As preoccupied as they are, I think they would be wise to take the time to upgrade to a cloud-based planning platform sooner rather than later. Why? Because in the end they will save themselves time, work more efficiently and achieve better results. Specifically, a cloud-based platform will enable the organization to move to a solid financial plan with a rolling forecast, updated on a monthly basis. And when you think about it, a rolling forecast is far more accurate than a budget created in July 2019 that attempts to paint a picture of what December 2020 will look like.

If changing horses in the middle of the race sounds daunting to you, consider all of the circumstances small to midsize companies face in today’s business environment.

SMBs Need to Step-Up to Global Challenges

SMBs have long been the backbone of the American economy and we count on them for job growth. According to the U.S. Small Business Administration, small businesses employ 58.9 million people, accounting for 47.5% of the country’s total employee workforce.

Technology has fostered competition from all over the globe. Manufacturers are competing with countries where labor costs are low, as are retailers that are now competing head-to-head with ecommerce sites that offer international delivery. For example, the Alibaba Group, which owns AliExpress, earned over $30 billion in sales in a single day in 2018.

This kind of competition means that SMB leadership teams need to make better decisions faster. What is the impact of opening a new sales office in the Northeast, or applying for a loan to expand manufacturing capabilities on the P&L? What happens if we assume 20% sales growth but we only realize 17.5%? Business managers need to see the cause and effects of their decisions on the company’s financial statements - a feat that’s nearly impossible using a spreadsheet.

On the other hand, a cloud-based system allows financial teams to do what-if scenario planning quickly and easily. As with all things cloud-based that include intelligent APIs, it’s simple to connect multiple data sources together and then overlay analytics and data visualization to make smarter decisions.

Streamlined Implementation and Upgrades

SMBs have limited IT resources and they need to be extremely selective as to which platforms to purchase as a result. Investing in a project that ultimately fails can have devastating consequences, potentially threatening a company’s viability.

Cloud-based solutions tackle these challenges in multiple ways. For instance, many offer out-of-the-box workflows for financial reporting, forecasting, scenario validation and so on, which means implementation is streamlined. Upgrades happen automatically, which means IT resources are spared and end users get to automatically take advantage of new features and functionality. This is a critical consideration as many platforms are beginning to add artificial intelligence and machine learning to key tasks, such as compliance.

Scaling is also much easier, as native cloud-based platforms can scale up and down as a business grows or as seasonality affects demand.

Inherent Agility

Cloud-based systems often act like data warehouses, centralizing multiple data sources and tracking a wide variety of KPIs and metrics. This is critical functionality for business managers seeking to connect the dots and assess the cause and effect of their business decisions. And if the data is always on, meaning it’s pushed to the platform automatically, managers have up-to-the-minute insight into the health of the business.

Many platforms come with data visualization tools or dashboards that allow users to slice and dice information in myriad ways. The benefit here is that it allows all managers to view the data in ways that are meaningful to them. For example, the head of sales can monitor the key metrics that they care about with a higher degree of accuracy, and most importantly, drill down into the data to uncover the source of anomalies.

In fact, the data visualization tools allow the financial team to provide data-driven answers to the tough questions that CEOs, boards and leadership teams ask daily.

SMBs are on growth paths; increasing the size of their market share is always a top priority. As the business grows, and as planning becomes more complex, well designed cloud-based platforms can handle the complexity. These platforms let financial teams see into the future, test the impact of multiple scenarios and ultimately make faster decisions with confidence. They’re also far more likely to adapt to evolving business needs and goals. So while it may take a bit of work to transition this budget season, it will be time well spent.

Here Finance Monthly hears from Andrew Hayden, Senior Product Marketing Manager at Winshuttle, who discusses the key accounting processes behind a successful digital transformation.

According to analyst group IDC, worldwide spend on the hardware, software and services that enable business process automation will surpass $2.1 trillion in the next four years.

Financial accounting is one business function notorious for manual and error-prone processes within Accounts Payable (AP), Accounts Receivable (AR) and General Ledger (GL). These functions are often targeted ‘low hanging fruit’ for companies to start their automation journey and prove the benefits of automation to other parts of the business.

1. Speeding up journal entries

Manually entering data through the SAP Graphical User Interface (GUI) is not only tedious and time consuming,  but it can also often lead to errors – and that means costly rework. SAP-enabled workbooks eliminate the need for manual data entry into SAP. This enables them to get their work done faster and with fewer errors and frees up more time to understand and describe anomalies or work on other high-value tasks.

2. Reduce invoicing traffic jams

At month end, AP and AR teams can usually be found with stacks of invoices on their desks, or furiously entering never-ending quantities of data into the ERP system. Creating and paying invoices is the kind of repetitive, high-volume, and time-sensitive activity that is ripe for automation.

Instead of manually entering supplier invoices or creating customer invoices via the SAP GUI, AP and AR clerks can use SAP-enabled Excel workbooks powered by Robotic Process Automation (RPA) to clear their invoicing backlogs and stay on top of incoming work. This will enable them to deal with PO and non-PO invoices more efficiently, leading to more on-time payments, fewer invoicing errors and supplier enquiries, and ultimately improved supplier relationships.

3. Improve master data accuracy

The timeliness and accuracy of financial accounting operations depend on the master data being correct. Errors or omissions in customer or supplier master records can delay invoicing or payments and lead to problems that are costly and time consuming to fix.

Automating this process enables the finance team to quickly create or update master data using SAP-enabled Excel workbooks or web forms.

4. Improve compliance across key business processes

The data entry process can be complicated if multiple people in an organisation need to supply or approve data, which can often be necessary to comply with strict business procedures. Automation can help here too. For example, it’s possible to build a capital expense request solution that routes a web form to the right approver based on the amount of the request and company code.

5. Spend less time preparing for audits

External and internal audits are a fact of life for any accounting team and preparing for them doesn’t have to be stressful or time-consuming.  An Excel-based solution can be created that can quickly extract any data from SAP that auditors may want to see—for example, invoices over £250,000. This type of automation not only reduces audit preparation time but can also reduce the time external auditors spend on site and consequently audit costs.

In addition to greater productivity and efficiency, organisations can expect greater data accuracy and improved compliance with internal and external procedures and regulations through automation.  And when staff no longer need to perform mundane, repetitive tasks and can instead focus on more strategic projects, morale improves, and more value is delivered to the business.

Improving access to financial services is on the agenda of central banks and development-focused organisations around the world. Yet, in many cases, efforts to reach unbanked individuals – around two billion – collide with outdated regulations and policies. Antonio Separovic, Founder and CEO at Oradian, believes regulators must embrace innovation to solve financial inclusion challenges.

In light of new technology, the financial services sector is undergoing rapid transformation and it’s time for regulations and policies to adapt as well. Regulators must embrace innovation and enable the sector to correct flaws in our current financial system that leave certain communities disconnected from the economy.

The case for digital financial services

Financial institutions are looking to digital financial services (DFS) as a way to serve individuals, many of whom live on less than $2 per day, in rural hard-to-reach communities. With DFS, essential banking services, most notably loans for small business, secure ways to save, convenient money transfers and bill pay become more accessible and more affordable.

Financial institutions that provide DFS also benefit. Unlike with cash and pen-and-paper accounting processes, financial institutions and their decision-makers gain accurate, digitised data that can be used to make data-driven, informed decisions. With digital financial services, leaders of financial institutions can know and control their portfolios.

Macro or micro?

Innovation in banking is occurring much faster than regulations are evolving. Central banks that regulate emerging markets are criticised for their preference to cater to the needs of Tier 1 banks over individuals who are excluded from the financial services industry.

More often than not, traditional banks do not meet the specific the needs of unbanked people, and leave these communities isolated from the global economic system. A study from Elixirr in 2015 revealed swathes of micro, small and medium enterprises (MSME) owners in Uganda held strong levels of distrust conventional banks. The focus group interview revealed that they were wary to use ATMs or online banking platforms, afraid that money would never reach the recipient. MSME owners in these regions can rarely afford introductory fees to open an account with a bank, and are often located only in large cities, far from isolated, rural communities.

Advances in payment technologies and cloud platforms have the potential to render these barriers to entry obsolete. In fact, cloud-based banking is now enabling an entirely new way of banking in many frontier markets. Because of cloud-based solutions for financial institutions like cooperatives, rural bank and microfinance institutions, the potential to reach rural areas with limited network bandwidth and low barriers to entry has never been higher. With new technology, non-bank financial institutions are enabled to become more efficient, grow and serve more individuals in their communities.

And given the lack of trust in commercial banks, out-of-reach pricing and inconvenient locations, non-bank financial institutions are often the most viable option for individuals seeking loans, savings accounts and microinsurance. Commercial banks often require collateral to secure loans, require government issued IDs, require a credit score and have high minimum loan sizes that aren’t suitable for microenterprises. Their requirements can block individuals from accessing their services. Because of the strict requirements from commercial banks, many individuals rely on non-bank financial institutions that cater to sectors that are excluded.

There is a remarkable opportunity for central banks to realign their focus on what microfinance institutions (MFIs) can do for unbanked communities by supporting digitisation through cloud-based technology. Yet regulatory hurdles persist in many instances.

Stringent regulations

Know Your Customer (KYC) requirements are a prime example of where regulations are poorly targeted to the needs of the unserved. While comprehensive KYC regulations have been effective for anti-money laundering campaigns, they present a stark problem on a micro-level: many individuals remain undocumented.

For instance, of 338 million citizens in the Southern African Development Community, 138 million lack authentic identification from national governments. Stringent KYC regulations in Africa can block unserved individuals from financial services by requiring credentials and documents that many don’t have.

What is clear is that central banks need an overhaul of regulations to meet the needs of the excluded. By reassessing regulations that restrict these communities’ access to financial services and encouraging further deployment of cloud-based banking platforms to users, financial institutions will finally be in place to help bank the unbanked and give them a chance of a better life.

A case study to model

In the last two years, regulators in Southeast Asia have pioneered new opportunities to reach unbanked individuals. Take the case of the Philippines, the Asian Development Bank and Cantilan Bank, one of the largest rural banks in the Philippines. Cantilan Bank, as announced in July 2017, will become the first regulated bank in the Philippines to move their core banking to a cloud-based system. To do so, Cantilan Bank collaborated with the Bangko Sentral ng Pilipinas (BSP), the body regulating rural banks, to get the necessary approvals on their innovative move. Cantilan Bank also successfully gained support for the project from the Asian Development Bank – a grant to finance the financial inclusion focused pilot project.

The process included the BSP, in collaboration with Cantilan and Oradian, to operate in a sandbox environment, as to explore and review policies that regulate technology within rural banks in the Philippines. The Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr. said: “The pioneering introduction of cloud banking in the Philippines is a key moment in solving the challenges of financial inclusion. Cloud technology can upgrade the competitiveness of rural banks and enable them to provide affordable, high quality financial services.”

The project aims to make Cantilan Bank the first rural bank in the Philippines to use cloud-based core banking technology in its operations and can set the tone for the future use of the model in other parts of the Philippines and the greater region in the future.

Advice to regulators and financial institutions

Financial institutions that are working in underserved communities know their business needs and which technologies will enable their operations to reach more individuals. Financial institutions know how to boost financial inclusion. For this, regulators should be receptive to innovations that financial institutions are leading.

Regulators are in the unique position to support their efforts to implement new technology – either by refreshing policies to allow new technologies to be implemented or with additional resources like grants for change management and technical assistance. Non-bank financial institutions must push for attention, support and change.

For almost three quarters (73%) of financials services leaders, customers are the main driving force behind their company’s digital transformation, however fear of failure is holding back the implementation of digital projects, with almost three quarters of financials services leaders put off by the costs of failed projects. This comes as no surprise, as seven-in-10 admit to cancelled projects in the last two years, according to Fujitsu’s Digital Transformation PACT Report.

“Financial services firms are under pressure from their customers to deliver greater speed, convenience and personalisation, as well as better customer services,” said Ian Bradbury, CTO Financial Services at Fujitsu UK & Ireland. “Digital transformation is certainly a key strategy in helping banks and insurers achieve this, however, despite the sector going from strength to strength, financial sector firms have undertaken unsuccessful projects and lost money. This has made them nervous about deploying new projects. But we feel that success can be born out of previous unsuccessful projects, as previous failures allow organisations to learn. In an ever-changing market, there is no such thing as permanent success. Organisations must continuously improve, learning from their mistakes along the way.”

Even though over four-in-five (87%) have a clearly defined digital strategy, almost three quarters (73%) admit that their digital transformation projects often aren’t linked to the overarching business strategy. But is this the sole reason UK financial services leaders can’t get to grips with their digital projects?

Realising a digital vision is not just about having the right technology. In order to successfully digitally transform, this research highlights four strategic elements businesses must focus on: People, Actions, Collaboration and Technology – the Digital PACT.

  1. People

While admitting to a problematic skills gap – especially as 80% believe the lack of skills within the business is the biggest hindrance to addressing cybersecurity – it is encouraging to see that over nine-in-10 believe they have a culture of innovation within their organisation. Despite this believe, 87% believe that fear of failure is a hindrance to digital transformation projects. There is therefore a long way to go for financial services companies to truly transform their culture to thrive on innovation. As UK financial services firms are taking measures to increase their access to digital skills and expertise (93%), four-in-five believe attracting ‘digitally native’ staff will be vital to their firms’ success in the next three years, as well as turning towards targeted recruitment (72%) and apprenticeships (50%) to support digital transformation.

  1. Actions

Although having the right processes, attitudes and behaviours within the organisation to ensure digital projects are successful are seen as the least important of the four key elements of digital transformation, 87% are taking specific measures to support collaboration on digital innovation and over two-in-five (43%) are creating networks for employees to share expertise across the business.

  1. Collaboration

Over a quarter (28%) of UK financial services leaders believe collaboration is an important element in realising the company’s digital strategy. While almost four-in-five (78%) turn to technology experts for co-creation, 67% go as far as seeking consultancy and training from start ups and organisations outside their industry.

  1. Technology

Many organisations are already leveraging new technology that will radically change the way they do business. A fifth of financial services leaders believe implementing technology will be the most important factor to realising their digital strategy, with cloud computing and big data and analytics playing a key role in helping drive the financial success of their organisations over the next 10 years.

Bradbury continues: “Historically, financial services firms have been cautious when it comes to innovation. They are working under strict regulations and the very nature of what they do, means that a radical digital transformation project could have a detrimental impact on people’s lives – for example, negatively impacting access to bank accounts or making insurance claims. But this shouldn’t hinder innovation across the sector. Quite the opposite – with the help of external expertise and willingness to implement digital transformation, we can be soon pleasantly surprised at a revamp of the industry. Change doesn’t always come naturally, but the financial sector understands what’s at stake, with 86% admitting that the ability to change will be crucial for the business’ survival in the next five years.”

(Source: Fujitsu)

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