Finance and Accounting

Sink or Swim: Why CFOs Need to Adopt Digital Transformation

Tighter margins, stronger competition and increasingly stringent regulatory policies – some of the major challenges that have culminated in a situation where any forward-thinking CFO would see the need to evolve. Archaic practices conducted with the aid of legacy systems can no longer support businesses in the current real-time ecosystem. In a world where every percentage point counts and the competition is making constant progress, CFOs cannot afford to ignore the need for digital finance transformation -

What is Digital Finance Transformation?

It is a holistic approach to financial management that relies on the digital landscape and innovative technology. If executed effectively, finance transformation can offer significant benefits, such as:

• Improved efficiencies
• Reduced errors
• Accelerated processes
• Optimized workforce allocation
• Tangible financial gains

With benefits as wide-ranging and substantial as these, is it any secret that why CFOs all over the world 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 appear to be deterrent, but not taking the next step may cause your company to lose valuable ground - a risk you cannot afford in today’s competitive and unforgiving ecosystem.

Digital finance transformation – everything you need to know

Yes, the future of finance is digital transformation. But what does this makeover entail? What sort of digital technologies does it employ? And how do they work to deliver the benefits? All of these are pertinent questions, that we have resolved to answer right here.

First, it is imperative to understand the salient tools and technologies that help upgrade and transform the financial practices:

• Real-time data visualization:

  A technology which involves the use of cloud-based data lake and intuitive software architecture, to allow the sharing of data and trends in real-time between key stakeholders. This eliminates guesswork and enables critical decisions making without the need for reliance on historical data

• Robotic process automation (RPA):

  A system in which mundane and repetitive tasks with preset variables are executed by digital systems rather than actual people. Simple activities such as data entry can be converted to RPA, allowing the users to utilize their human talent in more suitable avenues that require dynamic intelligence and application

• AI-supported analytics for business and finance decisions:

  Future plans can only be made effective if crucial and logical data support them. Conducting analytics based on data mining can be a tedious process with lots of room for error if artificial intelligence (AI) technologies do not aid it. This can help in identifying gaps, measuring expenses, and making forecasts based on numbers, to further help optimize the entire business process

These technologies form the backbone of digital finance transformation, and there are various benefits that can be derived from their usage. Here are some specific real-world scenarios where finance transformation can provide additional value over traditional methodologies:

• Digital dashboards with real-time data visualizations can identify what is the impact that the MVP performances of a sports star of a team sport like football or basketball has on jersey sales, week-on-week. This allows retail chains to alter stock availability of a specific player’s replica jersey based on his performances
• Onboarding is an important process in financial institutions such as banks, which is a mundane and repetitive process that traditionally required tedious data entries for every new customer. RPA can be used to completely digitize the onboarding process. This can make the process quicker, reduce issues stemming from human errors, and free up the workforce to perform more meaningful, dynamic tasks
• A logistics and transportation firm with international dealings can use powerful analytics to identify changes in foreign currency patterns and budget these changes in for the entire year at the very beginning. This allows the corporation to account for these fluctuations and predict financials accordingly, resulting in a more streamlined business assessment and the inclusion of safety valves to counteract extreme volatility in currency exchange rates.
• Today, compliance is a huge concern for corporations across scales and practice. Regulations are stricter and penalties are greater; accounting errors can snowball into major issues if they aren’t nipped in the bud. This is where digital tools can help. A control system that is entirely digital can eliminate the risk of human error. Strong algorithms ensure that data is not just processed but validated as well. This further improves transparency levels and ensures integrity, that too, in a quicker timeframe and with the need for substantially lesser human resources
• AI provides predictive analysis that uses patterns and processes to identify outliers. This, in conjunction with machine learning, can help identify patterns and automatically eliminate nonpayers or fraudulent parties – be it for the customers of an online retail site or for some unsavory elements trying to open up a fraudulent bank account. Using digital tools, you can pick out the patterns that mark these nonpayers and eliminate them even before a transaction is made, ensuring that disagreeable entrants don’t dilute your customer base

While there are plenty of advantages of adopting a digital finance transformation system, they can bear fruits only if you approach the process wholeheartedly. It all comes down to taking that first step and embracing the process without reservations. Since digital transformation is an overarching process that involves every aspect of the corporate machinery, transforming the financial sector will result in actionable outcomes that need to be adopted by management teams outside the finance function as well. For a successful digital transformation, all top-level executives need to collaborate and create a shared space where ideas can be incubated and findings from specific industries and practices can be applied without reservations. Only then will this process come into its own and truly showcase its effectiveness.