The world of finance is changing. A new generation of employees, dynamic shifts in technology and the rise of big data is forcing organisations to rethink their competitive strategies. Among all this, the finance function is possibly facing the biggest era of transformation in its history.
Here’s a look at the biggest trends that finance is going to witness in the coming years. These predictions will enable you to know where you stand today and how you can prepare for the near future.
Trend 1 – Business operating models are changing rapidly
One of the biggest reasons causing shift in finance is the dynamic change in operating models of businesses. These operational changes are not just about the location choices for teams and shared services, but more pressing questions related to what services finance provides the business with, how the business is governed, what data and technology needs to be set up and what skills are needed to run the finance function effectively.
Finance teams have traditionally been in roles that are highly manual, taking up a lot of their time. Much of this time is getting replaced by robotics that are making a lot of the manual processes automatic. There are a lot of web-based tools for data analytics that have created solutions that can be installed quickly and be used to transform the way finance adds value. These changes are creating effective organisational designs that is simplifying work, and also creating new avenues for being able to focus on what truly matters.
The way finance teams work and collaborate is also changing. From a hierarchical arrangement, successful finance function now needs collaboration between cross functional departments. Finance is expected to take on a value added role in and become a business partner to drive organisational growth.
Trend 2 – Major technological advancements
Just like any other function, technology is critical to finance as well. As per a 2017 PwC survey called Digital IQ, global organisations see the Internet of Things, AI and robotics as the most disruptive technologies. With the emergence of a new generation of technology such as big data, cloud, artificial intelligence, cognitive computing, robotic process automation, the entire finance function now has a much wider scope to improve the way business takes place.
Big data and analytics is seeping into the finance function of organisations globally and are a key to gaining competitive advantage. Legacy systems based on spreadsheets are getting replaced by easy to use data management tools. The way data gets collected and analysed can define critical metrics such as customer engagement. Analytics already plays a huge role in marketing campaigns and it is making inroads into changing the finance functions altogether as well.
The transactional aspect of finance and accounting has seen a huge rate of automation. Tasks that don’t add value are either getting eliminated completely or getting automated. Companies are exploring automation to reduce or remove high margin processes and looking for software platforms that enable customisation and development to make various tasks easier to finish.
This way, finance functions are growing to be more efficient, and freeing up the time of the most operationally savvy professionals from routine drudgery of gathering and validating data. These professionals now have the opportunity to expand their operational experience and actually participate in making strategic decisions for business growth.
Trend 3 – Roles in finance are changing
The roles in finance are not limited to just accounts anymore. Technological advancements have changed the very demands of people in the finance function. It is now growing towards aspects of management, revenue and value creation.
The Chief Financial Officer (CFO)’s role has undergone a massive change in this regard and continues to evolve. The CFO today is a major driver of strategic change, working hand-in-hand with the CEO to build cross functional teams. The success of a business today largely depends on the ability and expertise of the CFO who can provide a pragmatic financial overview, while also being in full awareness of the management and operational needs of the business. CFOs are the bridge between the C-suite and the rest of the company. Everyone is looking up to them to communicate strategic advice that supports the business vision. They are the ones who can connect strategy with operation.
Along with the CFOs expanding role, diversified positions are also getting created within the finance function. While traditional expectations of reporting and providing analysis are still very much prevalent, there is also a growing need for expertise through data scientists, economists and statisticians.
As companies leap towards the digital era, the finance function is expected to actually lead the transition. At this juncture, the CFO is equipped with the knowledge and responsibility to harness the potential that the digital age promises to offer. With the ever-evolving world of business, these trends will shape the future world of finance and it is high time companies take note and prepare for the right actions.