Finance Digital Transformation: What Is Its Importance In 2021?

 Finance Digital Transformation: What Is Its Importance In 2021?

Nobody certainly knows what is there for us in the future. But we all have responsibilities to think about what might happen in the future and work towards that. Likewise in the finance sector, the scenario is similar. We must work now to get the right people and technology in its place to take advantage of the unstoppable disruptions that will be coming in the future. And that is not possible with a clear vision and a well set strategy for finance in the digital arena. So a finance digital transformation is very important in the field of finance to attain all the goals we are setting now for the future.

What Is Finance Digital Transformation?

Finance digital transformation is also known as finance digitalization which refers to the integration of various strategies and technologies that allows the finance function to offer value in this age of digitalization. 

Corporate businesses are now concerned with digital transformation in financial services and are encountered with the requirement to digitize their accounting techniques and at the same time adapt manual practices to accomplish their other goals. These goals include smoother flow, achieving greater agility, and simplicity; working on improving customer relations, which is a problem that hinders both sales and margins; getting a grasp over electronic platforms to boost productivity and performance; and rethinking HR management to boost the digital skills of people.

The Role Of CFO In Finance Digital Transformation

Companies and finance departments are going to continue investing for finance transformation in finance courses that have been pressed by upper management. According to a report, European companies dedicate nearly 271 billion dollars to the finance digital transformation of their company. 

Two third of all CFOs believe the future success of their organization depends on proper coordination with technology. The CFOs need to keep up with the progress in technology even more than the regulatory problems. Digital transformation in finance and accounting is as important as any other thing in this field. According to a study,

“Process automation, implementing digital solutions for corporate departments, and the need to limit management costs and risks are issues of concern for finance professionals.”

8 Future Predictions On Finance Digital Transformation

Keeping in mind the importance of digital transformation in finance below are 8 predictions for finance digital transformation based on the activities by the finance leaders and the available technologies.

1. The finance factory

The first prediction implies that transactions will be touchless and blockchain and automation will enter into every operation of finance. The future is all about automation, cloud based ERP, and cognitive innovation. This will drastically simplify the process and will free up the manual workload. And then adding blockchain to this process will further stimulate the growth. 

Some argue that finance is disappearing under the thrust of digital disruption. But that is not the real scenario. Yes, it is true that finance will likely be leaner but that is pointed to being a function of headcount in operational finance. 

2. The role of finance

Whether finance prevails to direct the resources under its complete control will be based on its potential to add value. That will need exceptional customer service and quality insight. Some finance organizations are expected to grow into full fledged business service centers. 

Companies understand that communicating knowledge across disciplines is a good thing, even if it is the reason for headaches.

3. Finance circles

Finance works in real time, so periodic reporting will no longer allow any decision or operation. 

When both forecasts and actuals are available instantly on demand through digitization, the traditional cycles become irrelevant. The old difference between analytical and operational data starts to vanish. Finance entities will still be required to meet outside demands for recurring information, but the outside investors may also demand for more frequent information on performance. 

Many current finance cycles are technology driven and have data processing limitations. Things take place on a regular schedule as that is the only method they can happen. When information is instantly available to people who are in dire need of that, traditional cycles become irrelevant. This frees up people to focus on finding our new things and starting to act on them.

4. Finance digital transformation will enable self service

Self service will become the new normal by 2025. There are ample business people who do not require hand holding when it comes to primary finance. If they can get their donuts cleared by digital voices in their smartphones they will be delighted to do so. Tasks ranging from report production to budget queries and more will be available with just one click on your smartphone. With time, the digital agents will be able to evaluate the type of financial information the finance world needs and will proactively deliver such information. By 2025, data in spreadsheets will be successfully replaced by visually rich data that is easily accessible and is also easy to use.

5. The emergence of new operating models

Against onshore and offshore operations, companies will evaluate the benefits of automation. Automation offers a new lever for managing the costs, one that provides the finance entities the chance to reevaluate how they are organized, where the work is done, and what kind of processes do not require human intervention any longer. Finance will gain traction as a service beyond the companies that are in the mid market. 

6. Traditional ERPs will be replaced by finance applications

The ERP vendors have already started to construct digital technologies like blockchain, automation, and cognitive tools into their items, but they will not be anticipating the competition. Search for the landscape to shift as new players enter the area with much advanced technological tools that are at the top and integrate with ERP platforms. Cloud based ERPs will allow you to stay updated with the latest releases. 

Finance is now entering into the golden times of technology. As the cloud becomes the most important thing for ERP, microservice and finance applications will flourish.

7. Proliferation of API

There are few companies that are doing the hard work that is required to integrate and align data which implies that they will not be capturing the full value of finance digital transformation. Cognitive and automation will make it easier to get the work done but still, this is not going to be as easy as you think. 

There are many data entry issues that hide beneath the CFOs some of whom don’t completely appreciate the weight required to satisfy their requests. This is partly because the issue involves technical problems and partly because there is very little motivation for people to escalate the issues to the corner office.

8. The tech savvy employees

There is a quick evolution of the financial talent model along with a premium placed on business analysts, data scientists, and storytellers. This portrays a dramatic shift for many finance entities. So to be future ready it is very important to ensure that the new hires are all tech savvy and can be at par with every advancement in technology. Important qualities in employees include flexibility, strong customer service orientation, and a good collaboration and communication skill in addition to the technical capabilities that are a must among the list of requirements.

Conclusion

The future of finance is glowing. All that is required is a proper implementation and acceptance of the fact that digitalization is the only future. There has to be a finance digital transformation roadmap to be able to reach that goal.

Frequently Asked Questions On Finance Digital Transformation

What are the 4 main areas of digital transformation?

The main area of finance digital transformation is the process, technology, data, and change in organizational structure.

What is a digital transformation roadmap?

Every company is unique and so is the effort and scope needed to achieve a digital transformation of its business. Digital transformation roadmap is the plan for coordinating and bringing change to the organization.

How digital transformation is changing the finance function?

Digital transformation in finance functions also aims at using data more effectively to make informed business decisions. Integrating new sources of information, better visualization, more sophisticated analytics, and more real-time information offers finance with opportunities to provide more insights and improve the way of decision-making.

How are digital technologies transforming the financial sector?

With ever-evolving digital technology, fintech has to change the whole world of finance and banking. Digital technologies such as expenditure tracking, chatbots, and online budgeting tools are shifting the financial services into the modern era.

Andrey Ivanov

Andrey Ivanov is a business and finance expert. He has analyzed the finance and business market closely and writes all his articles with utmost precision.

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