Transformation in Finance – What are the Best Practices?
Among all industries that are gradually falling under the increasing pressure to adapt to modern trends, such as digitization, automation, or optimization, finance certainly feels it very much. Although financial transformation is a process that requires wise decisions, a lot of work, and a good strategy, it is beneficial for both consumers and companies focused on offering financial services. Such action is aimed not only at modernizing the business and the entire industry. It also focuses on providing value to customers, acting as an advisor and partner, and looking towards a better customer experience and performance. Modern technologies are fundamental in digital transformation. Enabling automation, introducing Machine Learning or advanced algorithms are a few examples of innovations accelerating transformation and refreshing the way the finance industry works today. What do you need to know about this process? How to transform your finance in a cost-effective and value-maximizing manner and efficiency?
What is digital finance transformation?
The financial market needs agility and adaptability to keep up with the trends and needs of the modern world. The increasing share of technology in all sectors of life will make it irreplaceable to operate effectively and achieve satisfactory results. In addition, it is vital to have a fresh business perspective that will allow you to take the right direction of change. Therefore, the transformation of finances is an appropriate adaptation of innovative technologies, a holistic business approach, and experience in the financial market. It is often associated with the expansion of the role of the financial department, which, thanks to the automation of financial operations, can conduct a deeper analysis of collected data, securely store data from various sources, to easily and quickly generate comprehensive, accurate reports and provide data-based insights. They can use real-time analytics and big data to provide business leaders with insight into customer behavior and advice. These are just a few examples of what the digital transformation of finance can bring. Undoubtedly, it brings efficiency, greater efficiency, and effectiveness, which translates into higher profits.
Trends in Finance transformation
While automation accompanies almost every digital transformation, in the case of finance, it covers not only basic accounting processes, such as generating payments or issuing invoices. It applies to many other operations because organizations try to eliminate time-consuming and repetitive ones thanks to modern tools, including robotization. Robotic Process Automation is a solution that is particularly profitable for businesses that cannot afford to replace the entire system or implement a new tool that is too time-consuming and expensive. A virtual robot will replace the manual work of a human and perform repetitive, tedious activities with the help of algorithms. It will also positively affect the elimination of errors resulting from the human factor.
Blockchain technology, which is slowly gaining new applications in finance, is an excellent solution for payment processing and reporting, and many more. Increasing authenticity, minimizing the risk of processed information, and decentralization are the critical aspects that the financial market gains thanks to this technology.
According to the Accenture report, nearly 420 billion transactions will switch from cash to digital by 2023, and by 2030 it will increase to about $ 48 trillion. This clearly shows the direction in which the financial transactions sector is heading. It was primarily due to the Covid-19 pandemic. The digitization of payment processes that lower accounting work cost is an essential element of financial transformation.
Key Features of Finance Transformation
Set a goal
You approach each process with specific results in your mind. Therefore, it is imperative to have a clear goal of going through it in a financial transformation. Defining the purpose will help determine an action plan, appropriate approach and gather the right human, financial, and knowledge resources.
Approach the process wisely, with enough time
While speed is essential in the transformation process, the rush is not advisable. The high-quality result is more important. Financial transformation is not an overnight process. Therefore, focus on researching suitable solutions, updating procedures, and implementing tools. These changes are intended to benefit, not harm, the business, so focus on action, not dizzying pace.
Work step by step
Break the transformation into stages and act step by step. Working in this way, similar or accurate as in agile methodologies, helps to react to problems that may arise on an ongoing basis and introduce changes quickly. It allows you to maximize your team’s capabilities, use resources wisely, and not be overwhelmed by the amount of work to be done. There is no need to discard all manual tools and activities immediately. Instead, digital tools can be put into use gradually, slowly replacing individual, obsolete methods.
Coordinate the transformation of finance with the change of the entire business
The financial transformation will have no value if it is not combined with the transformation of the entire organization. Consistent operation is key to achieving business efficiency.
Examples of Finance Transformation
Instead of storing data in spreadsheets and various inefficient repositories, more and more companies are starting to rely on modern financial tools. They can provide the organization with a centralized and secure database. Cloud-based systems are gaining importance here due to their ability to allocate digital resources better and reduce the need for physical hardware.
Automation, analytics, and data storage tools help you maximize business opportunities and leverage power for budgeting and process planning. They help efficiently go through the reporting process, doing it exceptionally accurately and in real-time, thanks to a centralized system.
Best practices of successful finance transformations
- Introduce Analytics – analytics tools will help you accelerate your financial transformation, reduce costs and increase efficiency. We are also talking about Big Data, predictive analytics using Machine Learning and prescriptive analytics that help automate decision-making and actions.
- Consider the order of the milestones and individual tasks – breaking the sequence of functions properly will help you keep going. Taking time to do this before starting work saves extra energy for corrections in the future. Take into account the tools you want, a team of specialists and all the data. Clearly defined goals will help you prioritise your goals and plan your activities well.
- Measure progress – remember to track KPIs as you make changes and technological innovations. It is vital to be effective with financial transformation and void failure.
- Go agile – adopt a flexible, agile work model that will allow you to control your progress better and react to potential threats. An efficient operating model, transparency and a committed team will make the process really successful.
- Do not be afraid of new technologies – for financial departments, especially those that have been operating for a long time mainly manually, digital transformation and implementation of modern solutions can be complex and breakthrough. Employees, therefore, need to understand the benefits of this process for the entire organisation. However, this is inevitable if you want to stay on top, so don’t be afraid to make decisions to modernise your organisation. You will be surprised how many processes can be automated and replace tedious manual work with digital tools.
What is the future in finance?
What we can certainly expect is an even greater share of technology in finance. Deloitte predicts that in the near future, transactions will be contactless as automation and blockchain, which are already a strong trend, will reach deeper into financial operations. Self-service will become an increasing standard, and the automation of processes will also increase the number of analyzes and services offered, contributing to a change in the employment market in the financial industry. Such a large share of technology will drastically change the skills required by financiers.