Today’s digital transformation initiatives come at the end of a difficult two decades for banking CFOs and their teams. With benefits as wide ranging and significant as these, it is no wonder why CFOs worldwide are adopting finance process transformations. Since digital finance transformation is an end-to-end augmentation of processes, methodologies, and business practices as a whole, it is a substantially challenging venture. Even though the scale of work required to execute finance transformation effectively can be a deterrent, not taking the next step may cause your company to lose valuable ground — a risk you cannot afford in today’s competitive and unforgiving markets. Archaic practices conducted with the aid of legacy systems can no longer support businesses in the current real-time ecosystem.

Definition of Digital Finance Transformation

It builds resilience into systems and processes and assimilates applications and data from acquisitions or mergers. Adding AI and automation serve customers better and do higher-value work. They create intelligent workflows that simplify operating models, increase productivity and enable employees to make better decisions faster. The survey results show that 83% respondents suggested that day-to-day transaction processing, monthly management reporting or financial statement closing process are among their 3 topmost priorities to automate and optimise.

How to pronounce Digital Transformation?

Algorithm-based platforms are becoming more popular, as they offer investors a more hands-off approach. These platforms also tend to be more affordable than traditional investment companies. Building a strong digital culture calls for an understanding of its elements, assessment of current gaps and enhancements to each element.

Start simple by choosing a few key metrics that are most important to your specific industry and organization . Figure out where you are today on those criteria, set realistic target goals, and measure again at fixed points in time. Of course, this varies from business to business, but for most companies a modern, AI-powered cloud ERP with an in-memory database is at the center of any digital enterprise. Within the ERP system are the brains that analyze, direct, and process all the data and information from across the business. In a challenging business climate, companies need to seize every competitive advantage – and increasingly, those advantages are digital. By 2018,over 89% of executiveshad adopted a digital-first business policy.

Faster, better and stronger finance functions significantly contribute to organisation-wide agility, results and effectiveness. Finance has been in the midst of a digital revolution coupled with new-age operating models and capabilities. These value levers have increasingly led to bigger and more sustained outcomes from finance transformation.

A professional action plan will help a business increase profits, expand its customer base, and outperform competitors. Therefore, to maintain a position in the market, it is important to act deliberately and take into account the needs of the target audience and business. Since there are many fintech companies today, customers often make payments directly without involving banks. However, the banking system is more reliable and regulated by the relevant authorities.

Finance Transformation

The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. Digital transformation might be a little behind when it comes to finance back-office operations, but expect more businesses to start to shift their efforts. This move might be accelerated in light of the current pandemic – as uncertainty looms, implementing digital processes can enable teams to work from home with the tools they need. Within the finance function, digital transformation has prevailed through customer-facing technologies.

To realize its promise, finance leaders will need to rethink their talent management strategy and establish the right people management approach. The automotive industry was an early adopter of manufacturing robotics and digital automation. But as one of the world’s most competitive industries, many of its latest digital innovations relate to customer service and retention. Personalization and driver interface applications provide safety and enjoyment to the driver and give the business valuable data to help with more accurate product development, marketing, and customer experience provision. In order to process and make sense of Big Data, it’s necessary to have the power of AI and machine learning.

  • This is especially important as technical tasks become automated and workers have time to tackle more strategic and analytical tasks.
  • Together with Agile or DevOps methodologies, microservices are an engine for creating or countering digital disruption.
  • They must think beyond immediate digital needs and define finance’s digital value proposition to make sure they attract and retain top talent for a digital enterprise and autonomous finance function.
  • Companies were forced to undergo years or decades worth of supply chain transformation in weeks or months.

The implementation of robotic process automation can have a significant impact on an organization’s ability to digitalize its finance function. RPA can automate repetitive and mundane tasks, freeing up employees to focus on more value-added activities. By drawing on market workforce trends and the organization’s forward-looking business plans, finance leaders can more accurately forecast the finance and digital skill sets that will be required, major gaps and how these can be addressed.

The greatest challenges to digital transformation

In Financial accounting advisory services , we are digital in everything we do. We believe digital helps us unlock human potential and introduces new and better ways of working. Discover how EY insights and services are helping to reframe the future of your industry.

A full shift in culture will also require changes to mindsets, attitudes, values and behaviors. The survey affirms this, with more than 90% of respondents agreeing that all the elements of digital culture need to be considered when embarking on new digital initiatives. Among the four, people as well as strategy, processes and policies are viewed to be more important in enabling their success. Of respondents agreed that having a strong digital culture with clear strategies is what sets successful digital transformations apart from failed ones. A strong digital culture with clear strategies sets successful digital transformations apart from failed ones.

Future-forward finance leaders expect by 2025 for the teams to be far more skilled in providing counsel to business partners and services to stakeholders in a digital world. The skills they’ll need include strong business acumen, digital skills in robotic process automation , machine learning and natural language processing , as well as complex problem-solving skills. These capabilities will also ensure that finance employees can execute the judgment-based, ambiguous work that will become more of a focus for finance as transactional tasks are automated.

Steps to Plan for Digital Transformation in Finance Industry

For example, financial institutions can use automation to streamline customer on-boarding, processing of transactions, and management of financial data. In addition, automated machine learning can identify patterns and trends in data more quickly and effectively than human analysts. The finance function of the future is expected to evolve into a data-driven decision center. Finance professionals should focus less on generating reports and information, and more on using the available data to help support decision-making. The ideal future finance operating model should be smarter, better aligned to the business and more forward-looking and resilient.

Definition of Digital Finance Transformation

In their fifth annual State of Digital Transformation report, the Altimiter research group finds that, typically, the bulk of ownership is shared between the CIO and the CEO. But as digital transformation is no longer seen as an exclusively technological initiative, businesses are starting to rely more upon internal business process specialists to ensure that digital technology integrations have the best benefit for all. In the past decade, digital technologies have been driving change in the workplace. VR, chatbots, and mobile devices are customizing the onboarding process, as well as improving employee service and support. Machine learning is helping toeliminate biasand ensure that businesses are champions for diversity and inclusion.

Auditoria Survey: Accounting Automation in the Finance Back Office

Although it may sound counterintuitive, digital transformation in finance shouldn’t be for the sake of a finance transformation. Rather, it should be part of an overall enterprise-wide digital transformation. Real-time data visualization is one way that organizations are keeping up with the pace of change. It allows for the sharing of data and trends between key stakeholders in real-time, without the need for guesswork or worrying about the relevance of the information. Ultimately, finance leaders should be mindful that the success of any technology depends greatly on the skills and willingness of the people using it. By placing humans at the center, while leveraging technology at speed and enabling innovation at scale, finance leaders can truly reshape their function to create value for themselves and the whole business.

AI tools can also be valuable for a broad range of other uses within the finance sector, such as identifying potential market opportunities, predicting consumer behavior, and detecting fraudulent activity. With so many potential applications, it’s no wonder that AI is becoming increasingly popular in the financial world. How exactly is the digital transformation of financial services changing the way businesses operate in the finance sector and what are the major trends to look out for? The financial services sector is often considered one of the most traditional industries. However, it is also one of the fastest moving, making it a perfect candidate for digital transformation.

What is Digital Transformation in Financial Services

The technology that’s still in the early stages is blockchain, which will have fundamental and significant impacts on the way finance secures its ledgers. Implementing blockchain will allow finance leaders to focus on other parts of the business, rather than the accuracy of the ledger, according to Klimas. Another impediment is many finance leaders don’t have the necessary skills to use technology or don’t understand how technology can be deployed and the power of AI and machine learning. Whether it’s an AI-powered budgeting service like Digit or an instant payment platform like PayPal, digital transformation has completely shifted the customer-facing section of the industry.

As the CFO role becomes more strategic, and more assume responsibility for technology selection and data analytics, many are outlining and executing a digital finance transformation to carry their organizations into the future. From more impactful data analysis, to a better customer experience, to providing what is digital finance transformation a launchpad for cognitive tools, a digital finance transformation can deliver significant value to an organization. Digital transformation takes a customer-driven, digital-first approach to all aspects of a business, from its business models to customer experiences to processes and operations.

Data gurus, such as statisticians, data scientists and even behavioral scientists, will be invaluable in helping the finance function of the future to turn data into fresh perspectives and strategic insights. So is talent steeped in finance knowledge and literate in technologies, such as blockchain, artificial intelligence and predictive analytics, with prior experience in using or implementing them. To be effective business partners, finance talent must have the communication skills to convey pertinent insights to other internal stakeholders and help address strategic challenges faced by the business. The finance sector has always been at the forefront of technology adoption, and the move to cloud-based services is just the latest example. By migrating their services and processes to the cloud, financial service providers can enjoy increased scalability, security, and efficiency. In addition, many organizations see cloud services as a way to meet their environmental and social governance commitments.

We believe these are irreversible trends in the medium term and finance teams must take advantage of this opportune time to transform. Failing to appreciate how digitalization has changed finance’s unique strengths will risk inefficiency and irrelevance to the business. As a whole, digital transformation is an umbrella term that describes any efforts of a business to utilize digital technology to improve or amend current operations.

To give your project an early leg up, look first for processes within your business that are a high operational priority and have the least complicated path to transformation. My work includes insights from some of the world’s most advanced companies in digital transformation and what they are doing to successfully expedite change. Early in its rise though the hype cycle, digital transformation was largely technology-centric with a majority of its audience consisting of CIOs, IT professionals, vendors, integrators and consultants. While this is still the case, I noticed in my early research, that digital transformation was more than “digital.” It was also about change and change management. Finance tends to be the last in line for the investment necessary to drive digital finance, but not thinking about digital transformation as a holistic effort that must cover the front and back offices can have dangerous consequences.