Below, Rune Sørensen, at Nets, explores with Finance Monthly the impact that sophisticated card infrastructure can have on mobile-led banking.

All this innovation is pushing and pulling card infrastructures in ways no-one could have predicted a decade ago. Mobile banking, ecommerce integration, loyalty and rewards schemes and even IoT payments all link to cards. That’s a lot to ask of a back-end system.

So the question is: how can issuers balance a need to be perceived as innovative with providing a reliable, compliant and fit-for-purpose payment infrastructure?

Payment revenue is falling, so issuer’s profit margins are being squeezed. Technological change is advancing faster than internal systems can be updated, and the demand for developers with the skills to design and implement back-end solutions is growing faster than supply. As a result, the most forward-thinking banks are taking a critical look at their go-to-market strategies, and questioning if a business model where they design, implement and maintain their own systems is still feasible.

Technological change is advancing faster than internal systems can be updated, and the demand for developers with the skills to design and implement back-end solutions is growing faster than supply.

Take payment gateways as an example. Banks need a payment gateway to the card schemes as they are the backbone of broad e-commerce payment acceptance for their customers, thereby enabling banks to benefit from the international e-commerce market - set to grow to $4.5 trillion by 2021[1]. To avoid locking themselves in with a single scheme, these gateways must also be card scheme agnostic. Issuers now have the choice of whether to develop and maintain these gateways themselves, or to prioritise reliability and time to market by working in collaboration with a trusted partner.

The debate around outsourcing infrastructure has been simmering under the surface for the last few years, and was brought into focus by the Second Payment Services Directive (PSD2). Open banking is bringing huge opportunities to banks because the importance of national borders in the provision of financial services is diminishing. This opens up the market and benefits consumers, and enables banks to target whole new countries of potential customers. However, these opportunities come hand in hand with two significant challenges.

Open banking is bringing huge opportunities to banks because the importance of national borders in the provision of financial services is diminishing.

First, banks must ensure that their payments infrastructure is compliant not only with EU and their own national regulations, but the domestic regulations of any other international markets they intend to enter, as well as the complex and constantly evolving requirements of the card schemes. Card scheme compliance alone is a great responsibility, demanding increasingly more resources as the service portfolio diversifies and becomes more complex, predominantly driven by mobile payment enablement. This is an enormous undertaking – and one difficult to justify when there are dedicated providers of back-end systems offering full compliance for less than it would cost a bank to create and maintain it themselves.

Second, scalability is key. In the increasingly globalised world of financial services, exciting new products must be made available to all customers at the same time, without any of the downtime associated with launching new products and systems. Stability and security are fundamental to banks; innovation alone means nothing.

It’s clear that, in an era where banking and financial services are evolving faster than ever before, banks need to put their money where it counts. A flexible and reliable card infrastructure will be crucial to a successful transition as more and more financial services move to being predominantly mobile – and in the future, maybe even mobile-only.

Although most consumer-facing financial institutions now offer mobile applications, that doesn’t mean that they are ready for a world where smartphones are the primary point of contact with their customers. This is a new reality, and as the industry changes issuers must evolve too. Those that survive and thrive will be the banks that focus on their delivered customer journey and value-adding core business areas – and it’s time to ask if this really includes developing and maintaining back-end systems.

So, put your cards on the table. Is your infrastructure up to the challenge?

[1] https://www.shopify.com/enterprise/global-ecommerce-statistics

New entrants to the banking market — including challenger banks, non-bank payments institutions, and big tech companies — are amassing up to one-third of new revenue, which is challenging the competitiveness of traditional banks, according to new research from Accenture (NYSE: ACN).

Accenture analysed more than 20,000 banking and payments institutions across seven markets to quantify the level of change and disruption in the global banking industry. The study found that the number of banking and payments institutions decreased by nearly 20% over a 12-year period – from 24,000 in 2005 to less than 19,300 in 2017. However, nearly one in six (17%) of current participants are what Accenture considers new entrants — i.e., they entered the market after 2005. While few of these new players have raised alarm bells among traditional banks, the threat of reduced future revenue growth opportunities is real and growing.

In the UK, where open banking regulation is aimed at increasing competition in financial services, 63% of banking and payments players are new entrants – eclipsing other markets and the global average. However these new entrants have only captured 14% of total banking revenues (at £24bn), with the majority going to non-bank payments institutions. The report suggests incumbent banks will likely start to see a significant impact on revenues as leading challenger banks are surpassing the 1 million customer threshold and 15 fintechs have been granted full banking licenses.

“Ten years after the financial crisis, the banking industry is experiencing a level of competitive intensity and disruption that’s much greater than what’s been seen before,” said Julian Skan, senior managing director for Banking and Capital Markets, Accenture Strategy. “With challenger banks and platform players reducing traditional banks’ competitiveness and the threat of a power shift looming, incumbent players can no longer rest on their laurels. Banks are mobilizing to take advantage of industry changes, leveraging digital technologies and ecosystem business models to cement their relevance with customers and regain revenue growth.”

In Europe (including the UK), 20% of the banking and payments institutions are new entrants and have captured nearly 7% of total banking revenue — and one-third (33%) of all new revenue since 2005 at €54B. In the US, 19% of financial institutions are new entrants and they have captured 3.5% of total banking and payments revenues.

Over the past dozen years, the number of financial institutions in the US has decreased by nearly one-quarter, largely due to the financial crisis and subsequent regulatory hurdles imposed to obtain a banking license. These factors have made the US a difficult market for new entrants and a stable environment for incumbents. More than half of new current accounts opened in the US have been captured by three large banks that are making material investments in digital, while regional banks focus on cost reduction and struggle to grow their balance sheets.

The research appears in two new reports: “Beyond North Star Gazing,” which discusses how industry change is shaping the strategic priorities for banks, and “Star Shifting: Rapid Evolution Required,” which shares what banks can do to take advantage of changes.

The reports found that many incumbent banks continue to dismiss the threat of new entrants, with the incumbents claiming that (1) new entrants are not creating new innovations, but rather dressing up traditional banking products; (2) significant revenue is not moving to new entrants; and (3) new entrants are not generating profits. To the contrary, the reports analyze where revenue is shifting to new entrants and identifies examples of true innovation happening around the world that can no longer be dismissed. Accenture predicts that the shift in revenue to new entrants will continue and will start to have a material impact on incumbent banks’ profits.

“Most banks are struggling to find the right mix of investments in traditional and digital capabilities as they balance meeting the needs of digital customers with maintaining legacy systems that protect customer data,” said Alan McIntyre, head of Accenture’s global Banking practice. “Banks can’t simply digitally enable their business as usual and expect to be successful. So far, the conservative approach to digital investment has hindered banks’ ability to build new sources of growth, which is crucial to escaping the tightening squeeze of competition from digital attackers and deteriorating returns.”

“As the banking industry experiences radical change, driven by regulation, new entrants and demanding consumers, banks will need to reassess their assets, strengths and capabilities to determine if they are taking their business in the right direction,” McIntyre said. “The future belongs to banks that can build new sources of growth, including finding opportunities beyond traditional financial services. They can’t afford to blindly follow the path they originally set out at the beginning of their digital journey. However, as the report clearly shows, there is no single answer and each bank needs to truly understand the market it is operating in before charting a path forward.”

Over its 10-year life Bitcoin has been the standard bearer of the new financial revolution. As the baby of the 2008 global financial crash, Bitcoin was launched as a direct challenge to banks and other financial intermediaries – a middle-finger to fiat currency markets. Below Kerim Derhalli from Invstr, provides expert detail on the rise and impact of the prized digital currency.

Enormously popular with those who grew up during that very crash, Bitcoin became an outlet for their anger and rejection of the traditional currency systems. These were people who felt excluded from the club of the global financial elite, an elite who had driven asset prices – stocks, bonds and property – far out of the reach of the ordinary saver. At last here was an asset that they could claim for their own. The early returns were spectacular. A new class of financial investor was born. A digital divide was created.

Bitcoin’s impact has been as much a cultural one as it has been a financial one. The Bitcoin revolution has been defined by self-empowerment and self-direction. Such is the extent of its impact on Internet culture, that there are now entire lexicons dedicated to Bitcoin investing – from ‘HODLing’ (hold on for dear life) and ‘SODLing’ (sell off for dear life) to Bitcoin ‘mining’.

Like many revolutions, Bitcoin’s emergence has resembled a rollercoaster ride. Since its first transaction on 12^th January 2009, it has enjoyed enormous growth and now sits at a current value of nearly £5000. With this growth however has come seismic price crashes. Back in November 2013, a single day saw 50% of Bitcoin’s value wiped out – the biggest single-day crash experienced by the cryptocurrency. Similarly catastrophic crashes and corrections have become near-commonplace on the Bitcoin market. Across only three days of trading in April 2013 Bitcoin’s value dropped a staggering 83%.

Bitcoin’s revelatory impact on both the global fiat currency system and internet culture might never have come to be were it not for the very technology which underpins it. In following the bumpy ride of bitcoin over the past ten years, we’ve also come to learn more about its elusive public ledger - blockchain.

The blockchain may have risen to notoriety on Bitcoin’s coattails, but now we find that the financial and tech sectors are waking up to it more generally. We’re seeing more banks, and industries, recognise its potential as a payments system and we’ve even see the world’s first blockchain-drive smartphone from HTC.

Some people have compared blockchain to the infancy of the Internet in 1996. The major difference however being that in 1996 anyone with a browser had access to an infinite source of information. The Internet’s potential as an encyclopaedic resource gave it a driving purpose. Today that mass use case for blockchain is still missing.

This isn’t the only hurdle which blockchain needs to overcome to forge an identity of its own. To truly divorce itself from the price volatility of Bitcoin and the speculative nature of crypto trading we need to see that it can resolve scalability issues as well as help us to overcome security issues more broadly.

For all is pitfalls though, Bitcoin, and by association blockchain, still represent the next phase of the digital revolution. As people continue to reject the traditional top-down approach to information dissemination and finance, Bitcoin, other cryptocurrencies and their associated technologies will take human civilisation towards a more self-empowered future.

Gold has long been known as a store of value to help investors weather turbulent financial markets. Below, Shaun Djie, Co-Founder and COO of Digix, explains why digital gold is a forward moving solution for everyone.

In recent years, it has also become far easier for the average individual to buy and sell gold. There are online bullion dealers and high-street shops selling gold, as well as exchange-traded funds for gold, which are effectively investment funds that track the price of gold.

However, while it’s now easier to purchase, the spread between what individuals pay for this asset and what dealers sell it for can be very big. This is especially true for small denominations of gold. Exchange traded funds overcome many of the associated complications of investing in gold but they tend to be more expensive than physical gold because of the inclusion of brokerage and management fees.

But for those interested in investing in gold and getting a better deal for it, the good news is an alternative to owning physical gold and relying on ETFs is emerging – thanks to blockchain technology.

Understanding blockchain’s potential

Blockchains are shared digital ledgers that record every transaction ever made on them. So physical assets like gold can be divided and represented by tokens, and blockchain technology can keep track of the ownership of those tokens.

Gold has become one of the first real-world assets to be tokenised and freely traded on the blockchain. With this comes a level of divisibility that hasn’t been seen before. Emerging gold ownership and trading protocols can ensure that tokens are minted on a proportional basis – so, for example, one token is equivalent to one gram of a physical gold held in a secure vault.

In some systems, the delivered gold is subject to verifications at the point of deposit into the vault, as well as at quarterly reviews by independent auditors. Hence, there should never be more tokens created than the total weight of physical gold bullion backing them.

Simplicity and liquidity

In this way, gold-backed tokens not only bring divisibility but also an easy, reliable and secure way to own and trade gold. Liquidity would increase, which would be good news for current gold investors and any prospective investors who may have been put off by an inability to access small denominations or by the fees that ETFs charge.

For existing investors, more profits from gold can end up in their pocket too. Buying a gram of gold through leading smart asset companies on the Ethereum blockchain costs under US$40, where as the retail price for a 1g bar hovers around the US$77 mark.

That’s because, by removing the physical and administrative costs of creating 1g gold bars, tokenised gold can get as close to the the spot price of gold than any method – regardless of the size of purchase.

Stability that investors can rely on

While these benefits will sound appealing to many investors, some may point to the historical volatility of cryptocurrencies as a sign that they won’t appeal to gold investors’ needs. It’s certainly true that the huge speculative bubble in virtual currencies has led to immense volatility.

However, gold-backed tokens are totally different to existing cryptocurrencies because of the bridge they have to the real world asset. To build confidence in crypto markets, gold-backed tokens are needed. They can also diversify portfolios and be used as collateral for lending and other financial products.

For existing investors, gold forming a central part of the crypto economy would be beneficial, pushing up the demand for the metal even further. These investors have always been able to see the value of their investment in this asset. However, through the tokenisation of physical gold, they can benefit from the liquidity, divisibility and security of these digital assets just as much as entirely new investors can.

More than a third of financial institutions (37%) find that legacy data platforms are the biggest obstacles to improving their data management and analytics capabilities, according to research from Asset Control. Whereas, for 31%, the cost of change is seen as the biggest hindrance to progress.

The poll of finance professionals, conducted through Adox Research Ltd., also revealed that for more than half of financial institutions (56%), the integration of legacy systems is the biggest consideration as they plan investment in future data management and analytics capabilities.

“What we’re seeing is financial institutions being held back by legacy data management platforms which they have acquired or developed over the years. These systems can slow down organisations as they are costly to maintain, miss audit or lineage information, often cannot scale to new volume requirements, and do not quickly and easily provide business users the data they require. While businesses recognise there is a need to update their data management systems they are sometimes reluctant to do so due to cost of change and perceived difficulties of integrating their systems with new solutions. Although I understand where these concerns come from, businesses also see the risks posed by inertia,” says Mark Hepsworth, CEO, Asset Control.

However, when it comes to considering new data management and analytics capabilities, firms remain focused on the fundamentals. More than a third (36%) of respondents cited ease of use and flexible deployment as their top business consideration, while 41% deemed ROI to be the biggest determiner.

“It is clear that while firms are currently being held back by the cost of change and legacy systems, they can see that both these challenges can be overcome with the right solution. While ROI is, of course, important in any business, these organisations must also consider how much their current data management systems are holding them back by delaying processes, lowering productivity and causing data discrepancies because they lack a clear and comprehensive view on their sourcing and validation process,” adds Hepsworth.

(Source: Asset Control)

Headlines have raised fears in recent months that robots threaten many of our livelihoods. However, Jan Hoffmeister from Drooms says that those in the private equity (PE) industry should instead be encouraged by how Artificial Intelligence (AI) technology can give them an edge in a competitive marketplace.

AI technology cannot replace human thinking in relation to strategy and business planning, which are fundamental to PE. But it is an impressive tool when it is correctly incorporated into the more process-driven functions of PE firms, increasing the power to collect, process and distribute information to the right parties with much greater speed and accuracy.

The need to stand out is imperative in the highly competitive PE market. Analysis by EY¹ shows that while the industry has made a strong recovery after the crash of 2008, there is also a lot of ‘dry powder’ sitting in the wings because of intense competition for deals.

Total PE commitments globally stood at US$530.7 billion in 2016, which was close to the US$616.7 billion pledged in 2007. However, in 2017, only US$440 billion of transactions took place versus US$748.4 billion in 2007. In terms of dry powder, there was US$525 billion sitting without investments in 2016.

The key issue is that the right investment targets with appropriate valuations are hard to find. Offering a solution to managing the deal-making process helps a PE firm stand out amid intense competition. Using a virtual data room (VDR), which leverages AI technology, makes a firm best in class, whether it is used for a one-off transaction or to create value in assets over their entire life cycles.

Successful PE firms are thorough in their due diligence, nimble and open-minded to pinpoint the right opportunities and disciplined about formulating the right investment philosophies.

There are two key areas in which a VDR is useful for PE firms, particularly if it is used during the ‘hold’ phase of an asset. The first is consistency, in that documents can be updated regularly, giving the vendor full control over data, sourcing investment targets and achieving correct valuations. The second is responsiveness – documents are always ready, so assets can be bought or sold whenever required.

Given that the intention of PE firms is always to sell an asset, it is especially relevant for them to establish a ‘life cycle’ VDR that can be used to manage a company throughout the period of ownership, from purchase, through management and on to divestment.

A VDR connects authorised users, including those inside a company and their external stakeholders, digitally and in a secure environment with real-time access to all relevant documentation.

A VDR always makes documents relevant to a transaction available to authorised parties and helps ensure that they are up-to-date. All data is stored securely online on a server platform and is always accessible to both internal and external parties, depending on their individual permission levels.

Creating a database in which documents can be updated consistently gives asset owners full control and the ability to react to the latest market conditions, bringing assets to market quickly when the conditions are right, sometimes at short notice.

One of the strengths of the Drooms NXG VDR is its Findings Manager function. This improves the vendor due diligence both prior and during the sales process. It allows for the automatic pre-selection of documents and helps in the assessment of potential risks and opportunities within a transaction. This yields greater control, instills confidence in potential buyers and cuts disruption to existing business.

Those PE firms involved in cross-border deals will find the Drooms transactional room particularly useful. It includes a tool that translates documents in real-time, ensuring risk assessments are maintained in a timely fashion throughout the process.

Essential elements

The integrity of documentation is paramount for PE firms. When deals are going through, unclear, incomplete or erroneous documents can cause all manner of problems, including sales falling through. Documentation must provide an accurate assessment of the value of an asset.

For clarity and transparency, a VDR must also have a stringent and standardised index structure for all assets within a portfolio. All an asset’s documentation should be organised in the same manner, allowing quick access to relevant content for the purposes of comparison. Long-term value can be created in assets if they are encapsulated by standardised and sustainable data – and life cycle data rooms are the optimum tool for this purpose.

The practicalities

In practice, careful planning is essential to manage a life cycle VDR successfully. This starts with getting an accurate snapshot of a project’s current progress using key metrics such as available (and missing) documents.

The time frames, processes and the responsibilities of all relevant parties should be defined, and their commitment secured to the proposed solutions, including any changes to management processes.

All the relevant documents must then be collated and, if necessary, digitised before being uploaded to the VDR. Finally, the VDR must be regularly monitored and maintained, updating and adding documents as required.

Most powerful tool in the box

PE firms that wish to manage a market currently characterised by dry powder, high valuation and enhanced competition need to adopt beneficial technologies. A VDR adds value at all the stages of an asset’s lifecycle, including buying, holding and selling, making the whole process much smoother. The value added in terms of making better deals, improving operational efficiency and enhancing the transparency increasingly demanded by stakeholders makes a VDR one of the most powerful tools at a PE firm’s disposal.

¹Source: EY, Global PE Watch, 2017

In today’s digital world, data is a vital asset that gives organisations the ability to uncover valuable insights about customer behaviour, which ultimately provides businesses with a competitive edge. However, new research commissioned by managed services provider Claranet has revealed that UK financial services organisations are struggling to capitalise on the vast amounts of customer data they collect.

The research, which was conducted by Vanson Bourne and surveyed 750 IT and Digital decision-makers from a range of organisations across Europe, is summarised in Claranet’s Beyond Digital Transformation report. The findings reveal that despite the increasingly large quantities of data that the financial services sector is now collecting, over half of UK companies (54%) struggle to use and understand their customer data to help them make important business decisions.

According to the survey responses, 43% of UK organisations in the financial sector cite centralising customer data as being a key challenge encountered when trying to improve the digital user experience, and 41% reported that they were unable to provide a consistent experience across channels as a result.

For John Hayes-Warren, Head of Vertical Markets at Claranet UK, the findings highlight how the often-siloed and legacy approaches to data management are preventing businesses in the financial sector from exploiting the potential of the information at their fingertips.

Hayes-Warren commented: “Data has quickly become an incredibly valuable asset in the financial sector and the source of important intelligence that can be applied to respond to changing customer demands. Most businesses are sitting on vast amounts of data and those that can harness it effectively can gain a much deeper understanding of their customers, better predict, improve and personalise the customer experience and, ultimately, create stronger brand loyalty and repeat business. It’s therefore troubling that over half of UK financial services organisations are reporting challenges in this area, so addressing data management shortcomings needs to be a priority for any business that is passionate about delivering a positive customer experience.

“To realise the benefits of data you’ve got to be able to combine and mine different repositories of data and make it actionable in real time. However, that’s something that is often frustrated by legacy systems and batch processing. These unconnected and incompatible IT systems create data siloes and prevent data and insights from being discovered and actioned within organisations,” he continued.

“Cloud technologies can help a great deal, providing the tooling and infrastructure needed to collect, process, and analyse vast sets of data from across the organisation and make it actionable in real time. By creating a platform that can capture and analyse data from across an organisation, leaders can discover unique insights, issues and opportunities that will ultimately help them achieve the competitive advantage they seek,” Hayes-Warren concluded.

(Source: Claranet)

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.

2. 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.

3. 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.

4. 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)

A traditional industry like finance and accounting doesn’t often go through many changes. However, with the rise of artificial intelligence (AI), machine learning and automation, technology is having – and will continue to have – a huge impact on every business; changing the way people work within an organisation. And, finance departments are not exempt from this change. Below Andy Bottrill, Regional VP at BlackLine, discusses the future of finance and accounting with Finance Monthly.

Whether finance departments like it or not, technology is going to become part of the accounting process. And despite 71% of workers admitting to still using spreadsheets to manually carry out month-end tasks, 80% of businesses are expected to be ready to adopt AI by 2020.

So why should today’s accountants look forward to, and not fear, the future and technology?

Automating Admin

Companies have already reported that 75% of intercompany transactions are automated, and this is only set to increase over the next 10 years; with 45% of individuals predicting invoicing will cease to exist by 2030.

Although the prospect of investing in automation may seem negative to many accountants at face value, they need to consider the long term benefits it can bring.

Workers must realise that technology will actually positively impact them. For example, removing mundane tasks such as admin data entry – automation can do this far quicker than a human, with a much higher accuracy rate. Using this technology, accountants are seeing manual admin tasks disappear, giving them time back to do tasks of greater value, such as financial analysis.

Augmenting the Accountant

A large concern around the future of finance and accounting is that robots will result in redundancies. But many fail to realise technology won’t wipe out jobs, but instead augment existing roles.

In 10 years’ time, the accountant we know today will no longer exist and instead, an accountant with a completely new skillset will have evolved. Technology is transforming employees’ roles, allowing them to transition from accountants who report last month’s numbers to reporters and analysts who deliver real-time data and predictive analytics.

Removing mundane tasks from day-to-day activities frees up time for more rewarding tasks in the finance department and others that require help – augmenting accountancy roles. Having the opportunity to work in other departments or take on other areas of expertise augments the skillset that accountants have.

Augmenting the accountant role in this way not only boosts job prospects within the workplace, but makes employees much more employable in the future.  Making it an opportunity accountants should embrace.

Removing bad habits

Many organisations pride themselves on “best practices”, and don’t stray away from what they have always known. Sometimes, however, adhering to outdated traditional processes can do more harm than good and that is seen within the finance department.

Financial departments are known more than any to practice the phrase “if it ain’t broke, don’t fix it”. However, technology is changing this and removing these somewhat bad habits from day-to-day tasks and instead replacing them with new “best practices” through the use of technology.

Efficient Processing

Amid the personal benefits technology can bring to businesses, the practical savings are just as important – especially for C-suite level executives.

Imagine it’s the year 2028. The CEO questions the finance department on the likelihood of being able to acquire a desirable start up. In response, the CFO brings up real-time figures on her iPad and analyses them with her team to evaluate the potential options. She then emails the CEO their forecast: the business can afford to put in a competitive offer.

And while this evaluation is happening, the machine learning programme installed in the finance department has spotted and flagged a suspicious transaction that looks like possible fraud. The team are able to investigate this straight away, instead of waiting for auditors to discover it. Through this continuous accounting, businesses gain better insights and minimise mistakes.

Increased Sector Reputation

Whilst it’s important to look forward to the internal benefits technology will bring, it is equally important to understand the external impact.

When it comes to quarterly reporting, many finance departments have been scrutinised for incorrect data. But the technology available to finance departments today is helping reduce, if not eliminate, this from happening.

By using real-time data analysis, automation and machine learning businesses can reduce the number of reconciliations required and decrease the margin of error. As a result, more accurate financial results and closing data is produced.

This not only increases the reputation for individual businesses, but for the sector as a whole. Instead, accountants can promote their profession in a positive light. As businesses look to be the best in their industry, enhancing reputation is critical – and technology can certainly help do that.

Accounting departments in UK businesses have continued to shift towards digital practices, but more than four in 10 (41%) continue to rely on paper-based processes, according to new independent research.

The 'Changing trends in the purchasing processes of UK businesses' report, commissioned Invu, revealed a slight reduction in the number of businesses relying on paper-based accounting in the last few years.

The 41% in this latest report is a slight fall from the 45% of business finance decision makers who admitted to relying on paper-based accounting in 2016.

But despite the trend towards digital, the report revealed a significant number of finance bosses who admitted that their company was struggling to move fully to a digital based model.

More than half, 56%, said that a paper process was still used at some point within the purchasing process in their business.

Within accounts payable departments in these UK businesses, 16% of finance bosses said their company had not introduced any digital processes at all - relying on totally paper - while nearly a quarter 24% relied on manual scanning and storing of documents.

Ian Smith, General Manager and Finance Director at Invu, said the findings showed a welcome trend of redundancy of paper-based accounting, but said some businesses were still putting themselves at risk by continuing to rely solely on paper.

"Businesses are often dealing with dozens, if not hundreds of invoices and payment enquiries on a daily basis and trying to manage and juggle these requests and demands using paper and filing cabinets can easily lead to finance departments being overwhelmed.

"Delays commonly arising from manual processing of supplier invoices can result in a business being unaware of its future payment commitments - and then it is only a short step further before they end up in severe financial difficulties.

"Given the current focus in the UK on productivity it is frankly staggering that so many companies won't let go of their legacy paper-based systems and free their accounting teams up to add value to the business rather than drown in paper work.

"In a rapidly changing world this report shows a welcome shift towards the use of technology. I’m concerned for the future of the 41% of businesses that appear to be lagging behind”

(Source: Invu)

Banking apps are set to have the biggest impact on commercial banking within the next five years according to more than two thirds (68%) of commercial bankers, a study has revealed.

Banking apps are also predicted to become one of the most disruptive technologies during the same time period. Only cryptocurrencies (56%) and virtual assistants (48%) are expected to be greater disrupters, according to a study by Fraedom that polled 1000 decision-makers in commercial banks including senior managers, middle managers and shareholders.

The research also found that just under half (45%) of respondents listed digital wallets to have a substantial impact on the industry while nearly one third (32%) noted machine learning as having a future influence.

Kyle Ferguson, CEO, Fraedom, said: “The research highlights that the commercial banking world is beginning to shift towards a more consumer focused approach. Business executives are increasingly wanting a real-time view for their payments, just like they can in their personal lives. This trend is also mirrored by commercial banks who are planning to invest in the key technology areas to make consumerisation possible.”

The study revealed that data analytics (55%) and enhanced mobility (41%) are two of the most likely areas of a commercial bank to receive investment within the next five years. Unsurprisingly updating security systems was most likely area to receive an investment boost, as cited by 65% of respondents.

The research also uncovered that almost half (45%) of financial services organisations believe that increased regulation will drive the adoption of new technologies, with 32% predicting it will lead to better customer engagement. In addition to this, nearly two thirds (60%) of commercial bankers believe that a more ‘consumer focused’ approach to engagement is the most important factor when strengthening relationships with SME customers.

“Regulations have transformed the commercial banking sector over the past few years, and while this appears to be restrictive approach, this research proves that banks are seeing regulation as an opportunity to adopt new technologies and improve customer engagement,” said Ferguson.

(Source: Fraedom)

Chief Financial Officers (CFO) are playing a critical role in driving digital disruption across the organization, according to new research from Accenture. Today’s CFOs oversee more than just the finance function and are now integral players in directing enterprise-wide digital investments and managing their economic outcomes and impacts.

The research report, The CFO Reimagined: From Driving Value to Building the Digital Enterprise, finds that CFOs have expanded beyond their traditional finance roles into areas that have broader consequences for the whole organization. In the UK, eight in 10 CFOs see identifying and targeting areas of new value across the business as one of their main responsibilities. More than three quarters (78%) believe it is within their purview to drive business-wide operational transformation.

"CFOs are increasingly stepping out from the confines of their role to act as strategic advisors as well as innovators across the entire enterprise," said David Axson, Senior Strategy Executive Principal at Accenture. "In an era of unprecedented disruption, this repositioning of the role will continue as CFOs take the role of digital stewards, using data to drive value and improve efficiency while mapping out the digital investments required for their organisations to remain competitive."

CFO as the Digital Investment Sherpa

UK CFOs are emerging as drivers of the digital agenda, with 80 percent heading up efforts to improve performance through adoption of digital technology, and 73 percent also exploring how disruptive technologies could benefit the entire organization and the business eco-system. Not only are CFOs carrying out their own tasks faster and better through automation, they’re also increasingly ushering in the “digitalization” of other functions and finding new ways to use technology to change business models and open new revenue streams.

CFOs: Get Your Data House in Order

The standard CFO to-do list is shifting towards strategic planning, advisory and analytics roles as CFOs continue to automate routine accounting, control and compliance tasks. Automation of these finance duties is enabling the finance function to focus on newer and more challenging tasks and bring the C-suite together to act on insights gleaned from data analysis. Today, 34% of finance tasks are carried out by technology; by 2021, almost half (44%) of these duties will be taken over by automation.

“CFOs’ use of data is expanding to other parts of the business. As a result, they will need to be more entrenched in transformational technologies such as AI and analytics to usher in digitization of the broader organization, create new business models and unlock new revenue streams,” said Dr. Christian Campagna, senior managing director, Accenture Strategy, CFO & Enterprise Value. “The CFOs who step up to manage these opportunities will be the true guardians of the enterprise.”

As the role of the CFO continues to evolve, so do the skillsets required to become a finance executive. Today’s finance function must include employees with a wide range of capabilities, from data visualization to flexible thinking. Most CFOs recognize that finance skills will continue to move away from core finance to advanced digital, statistics, operational and collaborative skills (79 percent). And more than three-quarters (76%) say the change must be rapid and drastic, as traditional finance roles may soon become obsolete.

Future Finance Talent Is Calling

The biggest challenge for CFOs will be recruiting or training the talent to understand how to collect data and gain insight from data. Almost 9 in ten (87%) UK CFOs agree that data storytelling is an essential skill for today’s finance professional. They must be more open-minded and collaborative to work effectively with and serve as strategic advisors to leaders in other business functions.

“It feels like there are two camps for what people look for in a CFO: the control or accounting background versus a more strategic finance role who partners with the CEO,” explains Chris Weber, CFO and executive vice president, Halliburton Company. “Over time, I think the shift has been towards this second role, even if that means the candidate isn't an accountant by training.”

(Source: Accenture)