Future of Finance: Rethinking Processes, Roles – and Being Conservative

As disruption unfolds, transparency issues gain momentum, and regulation intensifies, finance leaders increasingly face a world in flux. How organizations deliver value is being reset for a digital age. To reinvent itself for a new age, the finance function is transforming into a data-driven decision center, where smart people and smart machines help make better financial, strategic and operational decisions.

However, such transformation may not rest within the comfort zones of many finance functions and their leaders. According to a recent EY study, chief financial officers (CFOs) admit to being left exposed as the increasing volume and pace of data affect their ability to provide meaningful insights to boards speedily and accurately.

Many finance leaders believe that their current finance function is not equipped to meet the demands the future will place on it. Does the issue lie with technology or with people? Is the future of finance one of having new technology or of hiring new people?

Technological changes like analytics, cloud, artificial intelligence (AI), blockchain and robotic process automation (RPA), which were once thought to be rather far removed from the finance function, have in recent years reshaped the operations of finance.

A separate EY survey of over 760 finance leaders worldwide, Is the future of finance new technology or new people?, suggests that the future of finance will be one that embraces technological innovations to improve effectiveness, increase efficiency, and enhance insight. The people in finance will make the most of technology, and provide the complementary skills and competencies to drive decision-making to support the organization's strategy and business. 

Yet the same survey found that many of the finance leaders believe that their current finance function is not equipped to meet the demands the future will place on it. 

Does the issue lie with technology or people? Or perhaps more pertinently, is the future of finance one of having new technology or of hiring new people?

Technology waits for no man

With the rapid speed with which technology is evolving and arriving, there is a certain motivation, particularly in the typically conservative finance function, to be cautious and adopt a wait-and-see approach. The problem is that the change is so significant and the new capabilities so beneficial that those that wait risk being put at a severe disadvantage. 

It is thus important that finance leaders understand key emerging technologies and make pragmatic decisions about incorporating new innovations into their processes. They are not alone – the Chief Technology or Information Officer can offer much-needed advice.

For example, robotic process automation (RPA) can reduce costs significantly by automating key processes and, at the same time, improve consistency, control and traceability, and quality.

With analytics, the finance function can improve strategic insight by analyzing unstructured data, and improve risk management such as in the case of fraud prevention, by identifying patterns and anomalies in large data sets.

Rethinking finance talent

However, the success of any technology can only be as good as the skills of the people using it.

For example, the transformation of the finance operating models has seen CFOs pushing transactional accounting and finance processes to centralized "finance factories" such as shared services and managed services centers. These may, in time to come, be replaced by RPA.

While centralization has freed up people in the finance team to focus on higher-value activities and allowed the function to be more efficient, finance has to continue to evolve in order to fulfill the role of business strategist.

For this to happen, finance leaders, when considering their people management approach, must look keenly at the skills profile, as well as ongoing training and education (including exposure to new technologies), career development, and performance measurement and rewards for each finance role on the team.

For example, the leader of a "finance factory" will need skills and experience in driving process excellence through lean techniques and state-of-the-art technologies. This is a very different profile from a data scientist in the team.

In the digital age, finance functions will also increasingly rely on those rare executives who are steeped in finance and also literate in technologies such as blockchain and artificial intelligence

Abandon traditional notions

As finance leaders transform their function’s operating model, they will need to discard traditional ideas about what members of the finance team can bring to the table.

For one, look beyond traditional financial analysis skills when searching for talent. Data gurus — such as statisticians and data scientists, and even behavioral scientists — will be critical in helping the finance function of the future turn data into fresh perspectives and strategic insight.

In the digital age, finance functions will also increasingly rely on those rare executives who are steeped in finance and also literate in technologies such as blockchain and artificial intelligence. Digital expertise will be needed not only to lead technology-driven changes to the finance operating model, but also to identify the implications of digital for the organization’s business model and growth agenda.

In addition, if we accept that finance is a strategic business partner, then the influencing and communication skills that are needed to convey fresh insights to internal clients on the strategic challenges faced by the business must now become a core competency.

Alliances with universities, start-ups and other third parties can also be useful in providing the ongoing development of finance talent, which will be necessary for the organization to remain nimble.

Meanwhile, finding the right talent for the future finance function is becoming an ever more critical challenge, complicated by demographic trends, intense competition and changes in the ambitions and expectations of young finance professionals. Therefore, finance leaders need to get better at strategic workforce planning for their finance function over the short, medium to long-term horizons.

To that end, exploring alternative resourcing model may not be a bad idea. In the future, organizations may increasingly need to rely not only on their own workforce to get the job done, but also on the contingent workforce (which in itself could present its own set of challenges).

Clearly, tomorrow’s finance function will only succeed if it is nimble and responsive, and has the right people who can lead the technology debate and are willing to innovate the function.

The finance function has long been said to be risk-averse. The time is now for it to get creative.

About the Author

Christopher Wong is Singapore Head of Assurance at Ernst & Young LLP. The views in this article are those of the author and do not necessarily reflect the views of the global EY organization or its member firms.

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