Finance and Accounting

Automate or stagnate: The future of finance has arrived

Do you remember the walkie-talkie-like mobile phones? That was in the 1990s when only 0.2% of the world’s population had mobile phones. Contrast that with the 91% of people who use smartphones today—a startling example of highly rapid technological adoption.

Not just in the communication sector, but also in finance, finance technology (Fintech) has snuck up on us. We rarely pause to acknowledge how ATM machines, credit cards, or online banking applications have improved our lives. These once-exciting tech disruptors are no longer noteworthy, instead they are an essential part of our day-to-day functioning.

Today’s tech talk centres on data analytics, AI & ML, and process automation. Many industrial sectors appear to have improved because of these innovations. Do these innovations have a role to play in the finance sector as well? Plenty, since back-office troubles never cease.

The Humdrum of the Finance Back Office

The back office is the spine and heart of any organisation — critical and supportive, but also rife with monotonous tasks.
Despite this, mundanity is the least challenging circumstance. Back-office workers frequently have to follow antiquated procedures, put up with outdated data handling tools, and put in exorbitant amounts of time on repetitive tasks such as:

1. Gathering and analysing data (20%)
2. Audit and compliance-related activities (24%)
3. Process improvement activities (17%)

Machines can readily complete these. Automation is the solution. So, why not automate boring processes and free up people for more creative tasks?

What can automation achieve?

It is crucial to look for answers to a few questions before adopting any disruptive new technology: What is the benefit to me? Does the investment make sense?

Here are some reasons why financial organisations might consider investing in automation:

• Effective staffing: More free time for employees translates to more hands for strategically more relevant tasks.
• Better overall efficiency: More fulfilled demands for the same employee strength.
• Improved data handling: Meticulous storage of digital data.
• Frictionless processes: Flowing processes, leading to improved customer satisfaction scores.

What should you automate, now that you know its benefits?

Wide-ranging opportunities

We often limit our thoughts to retail banking service when talking about the finance sector. But it includes many other services such as investment banking, insurance, tax & audits, wealth management, portfolio management, stocks & mutual funds, and so on. All these have common automatable denominators. To name a few:

Automated response:

Generic requests, which are frequently the same, require standard answers. These lend themselves well to automation. Create a template of pre-made responses that are triggered for simple inquiries, whether you use chatbots or automated emails.


Cloud-based Services:

Digital transactions are definitely on the rise. Think of a transaction being interrupted by a "server down" message, or having its security hacked.  Absolutely not welcome. The most suitable place for finance apps to run is in the cloud like accounts payable cloud solutions, because they must always be accessible and, more importantly, safe and reliable.


Digitised Payment Processes:

Have you noticed the payment options when you make an Amazon purchase? Card, UPI, bank transfer — in the future, Bitcoin might be an option too!

The majority of businesses now operate online, which has increased the demand for quick, easy, reliable, and effective online payment processing techniques and security measures (biometric authentication, PIN verification, and so on).

Even for business-to-business transactions, it is now possible to transfer invoices in bulk (through file uploads and APIs) to generate payments into companies' online banking tools — it is the end of manual invoice processing and payment creation.

AI and ML:

With a wide range of applications, AI and ML have made a substantial contribution to the finance industry.

Financial monitoring (to prevent money laundering and improve cybersecurity), market investment predictions (to identify market changes and develop automated investment advisors), algorithmic trading (to detect patterns in stock prices by monitoring trade results in real-time), transaction security (ML is excellent at spotting fraud), and financial advisory (to track expenses and manage budgets) are just a few on a long list.

Data Analytics:

This is useful for identifying process improvements and providing insightful financial information. Positive results like improved efficiency and risk management follow. When it comes to providing clear perspectives on the functioning of the organisation and allowing informed decision-making, data analytics is most valuable.

The future

“In the attempt to make scientific discoveries, every problem is an opportunity — and the more difficult the problem, the greater will be the importance of its solution” ~ E.O Wilson

The expectations and challenges in the finance industry will only grow over time. Older methods and equipment won't be able to handle them, and in the most extreme cases may even impede growth.

Technology has the capacity to propel this sector forward decisively. Yes, some applications are still in their infancy, but there are many more that are in use and have proven useful.

The future of automation is bright. Are you prepared to accept it?

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