Author:
Андрей Бойко
Transformation of financial function in the era of digital technologies
The use of the process approach in financial management is a long ago not innovation, but a necessary standard practice. And how do digital technologies affect finance? – We will try to understand basic directions of transformation of financial function.
Are digital technologies the basic driver of financial function development?
Undoubtedly, digital technologies (automation, robotics and artificial intelligence) give large possibilities for business transformation – and supporting directions of the company.
Thus, the McKinsey Global Institute (MGI) study confirms that the introduction of digital technologies in the company’s core business processes is economically viable and increases the company’s value in the market. Companies paying much attention to automation in their strategic initiatives and realizing potential of artificial intelligence have higher profitability, than their competitors today. At the same time, the productivity of such companies will grow at a rapid pace in the next few years.
And what is the financial function? – Ernst and Young respondents (769 CFOs of companies and well-known financiers in 32 countries), confirmed a clear understanding of the growing role of financial function in companies. At the same time:
- 47% of respondents believe that now the financial function does not have the correct combination of economic feasibilities and human competences for the effective decision of future tasks;
- 69% of respondents declared that the strategic role of financial function substantially mutated in connection with the automation of standard financial tasks or to the transmission of them on outsourcing.
It is difficult to deny the fact circumstance that enables to financial service flexibly, quickly and faultlessly to form various current forms, top management or business units for the acceptance of administrative decisions.
Digital technologies will also allow to process constantly growing and changing volumes of information about customers, external and internal conditions of the company’s functioning, and conduct a deeper analysis of financial data. This means that financiers are more likely to identify critical risks and threats, as well as new opportunities and potential advantages of the company in the market.
Can technology in the future completely replace people? – Computers and specialized software today solve some problems faster and better than people do. And already in the near future artificial intelligence will force out a man from many professions and will leave millions of people out of employment. So, the scientists of the Oxford university suppose that during the following 20 years in the USA every second workplace will be automated – 47 of workers
will replace machines, in China – 77.
Clearly, this applies to the financial function.
According to the numerous researches and prognoses, some workers of financial service can be successfully replaced by robots (automation, artificial intelligence). First of all, we are talking about the standard functionality with a regularly repeated algorithm of actions, which is typical for such positions:
- an accountant: introduction of e-flow, automation of book-keeping and tax account, controlled from distance services and services of public institutions- all this allows to shorten the quantity of book-keeping to the minimum;
- financial analyst: analysis of a huge amount of data, making forecasts, searching for optimal investment solutions – modern computer systems are successfully cope with it.
However digital technologies are not only decision for distant transformation of financial function. Moreover, technologies should become the instrument of a smarter, perspective and flexible financial company service.
In fact, a global challenge for CFO consists in development of future operating model of financial function that focuses the most competent and active workers on key priorities of the company, and at the same time – promotes the level of their technological equipment.
Thus, the employees of the financial service will be reoriented from routine operational tasks to strategic ones. Therefore, a professional financier of the future will need a wider range of practical skills and a variety of experience to be successful and effective in a new role.
It is needed to mark, in many companies financial service (article “Evolution of the role of financial service of the company”) already now is proactive subdivision of strategic value for the role of consultant and partner taken for business-subdivisions. And this implies the presence for the financiers of intellectual and creative component, consequently – their replacement by “soulless” robots is practically impossible.
So, who will ultimately realize the financial function of the company? – In our opinion, the effective financial function of the near future implies an optimal combination of technologies and human creativity. The struggle for valuable shots will continue!
And finally, we want to remind you that one of the terms for automating a financial function is the same “process approach”. Therefore, in the absence of described and formalized business processes, talking about “automation and robotization” at least prematurely!
The use of the process approach in financial management is a long ago not innovation, but a necessary standard practice. And how do digital technologies affect finance? – We will try to understand basic directions of transformation of financial function.
Are digital technologies the basic driver of financial function development?
Undoubtedly, digital technologies (automation, robotics and artificial intelligence) give large possibilities for business transformation – and supporting directions of the company.
Thus, the McKinsey Global Institute (MGI) study confirms that the introduction of digital technologies in the company’s core business processes is economically viable and increases the company’s value in the market. Companies paying much attention to automation in their strategic initiatives and realizing potential of artificial intelligence have higher profitability, than their competitors today. At the same time, the productivity of such companies will grow at a rapid pace in the next few years.
And what is the financial function? – Ernst and Young respondents (769 CFOs of companies and well-known financiers in 32 countries), confirmed a clear understanding of the growing role of financial function in companies. At the same time:
- 47% of respondents believe that now the financial function does not have the correct combination of economic feasibilities and human competences for the effective decision of future tasks;
- 69% of respondents declared that the strategic role of financial function substantially mutated in connection with the automation of standard financial tasks or to the transmission of them on outsourcing.
It is difficult to deny the fact circumstance that enables to financial service flexibly, quickly and faultlessly to form various current forms, top management or business units for the acceptance of administrative decisions.
Digital technologies will also allow to process constantly growing and changing volumes of information about customers, external and internal conditions of the company’s functioning, and conduct a deeper analysis of financial data. This means that financiers are more likely to identify critical risks and threats, as well as new opportunities and potential advantages of the company in the market.
Can technology in the future completely replace people? – Computers and specialized software today solve some problems faster and better than people do. And already in the near future artificial intelligence will force out a man from many professions and will leave millions of people out of employment. So, the scientists of the Oxford university suppose that during the following 20 years in the USA every second workplace will be automated – 47 of workers
will replace machines, in China – 77.
Clearly, this applies to the financial function.
According to the numerous researches and prognoses, some workers of financial service can be successfully replaced by robots (automation, artificial intelligence). First of all, we are talking about the standard functionality with a regularly repeated algorithm of actions, which is typical for such positions:
- an accountant: introduction of e-flow, automation of book-keeping and tax account, controlled from distance services and services of public institutions- all this allows to shorten the quantity of book-keeping to the minimum;
- financial analyst: analysis of a huge amount of data, making forecasts, searching for optimal investment solutions – modern computer systems are successfully cope with it.
However digital technologies are not only decision for distant transformation of financial function. Moreover, technologies should become the instrument of a smarter, perspective and flexible financial company service.
In fact, a global challenge for CFO consists in development of future operating model of financial function that focuses the most competent and active workers on key priorities of the company, and at the same time – promotes the level of their technological equipment.
Thus, the employees of the financial service will be reoriented from routine operational tasks to strategic ones. Therefore, a professional financier of the future will need a wider range of practical skills and a variety of experience to be successful and effective in a new role.
It is needed to mark, in many companies financial service (article “Evolution of the role of financial service of the company”) already now is proactive subdivision of strategic value for the role of consultant and partner taken for business-subdivisions. And this implies the presence for the financiers of intellectual and creative component, consequently – their replacement by “soulless” robots is practically impossible.
So, who will ultimately realize the financial function of the company? – In our opinion, the effective financial function of the near future implies an optimal combination of technologies and human creativity. The struggle for valuable shots will continue!
And finally, we want to remind you that one of the terms for automating a financial function is the same “process approach”. Therefore, in the absence of described and formalized business processes, talking about “automation and robotization” at least prematurely!
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