Financial industry trends - How will finance teams need to adapt?
Blog //04-05-2022

Financial industry trends - How will finance teams need to adapt?

by Daniel Docherty, Director of Strategy

There have been many challenges faced by finance teams in the past few years. The unprecedented pandemic came with a wide variety of new business demands, including forecasting and real-time reporting. The adoption of new technologies while working from home meant that CFOs had no blueprint for steering the ship as companies across all industries had to become more digitally savvy in order to cope with changes.

Finance will continue to experience significant innovations and developments throughout 2022, under the umbrella of digital transformation. As well as influencing global economic growth, it will likewise influence the evolution of finance.

It will be crucial over the next few years to see which businesses can adapt to and thrive in such a dynamic environment. Another key driver of new financial trends is our increasingly digital and “always-online” lives which generate an exponential amount of data which needs to be managed in real-time.

The finance function has the potential to rise to new heights by focusing on digital transformation and ESG initiatives, rethinking the workplace, investing in talent, and partnering in new ways to innovate.

Staying on top of financial industry trends

Technological advancements, ESG responsibilities at the top of boardroom agendas, and the aftermath of the pandemic still impacting consumer behaviour means businesses need to adapt, transform, innovate, and shift to meet new employee and customer needs. To stay competitive throughout 2022, CFOs and finance teams must focus their attention on digital transformation.

We now have a chance to answer some important questions about the future of finance. What changes are here to stay? Will brick-and-mortar locations remain relevant in the future? How is the finance function evolving? As digital solutions become more permanent, how can momentum from the past two years be maintained?

The following key trends in finance will help you answer these questions as we continue through 2022.

Current trends in the financial industry

Finance applications on mobile devices

From WhatsApp to Uber and Just Eat - you carry your processes, systems, and applications with you everywhere you go. In a business sense, a variety of self-service applications that address risk management, international payments, analytics and other services have made it easier for businesses to serve mobile, on-the-go employees. To ensure that finance operations are performed quickly and efficiently, self-service applications are evolving from a "nice to have" to a "must have" concept.

Contactless payment services

The pandemic created challenges which accompanied rapidly changing consumer behaviour over the last few years. At its peak, the sudden need to comply with social distancing guidelines led businesses to shift their operations rapidly. Along with requiring employees to work from home during lockdowns, this shift led to a rise in contactless payment services. As customers become more familiar with simpler and faster ways of paying, this trend is set to continue in 2022 and beyond. Therefore, businesses that intend to stay competitive must move in step with the rest or risk falling behind the curve.

The race to Net Zero

Today, businesses face greater pressure than ever before to go beyond superficial "greenwashing" efforts and demonstrate truly sustainable practices. There are more resources than ever available for eco-conscious individuals to learn about the impact of resource consumption. Lip service alone will no longer serve as a convincing explanation.

CFOs must implement reports on financial sustainability data throughout their entire business, starting with the reduction of energy and paper consumption. In these reports, finance functions can also take a closer look at products and services that contribute to broader sustainability, for example, reducing the carbon footprint in supply chain processes as well as researching sustainability-linked incentives and ESG-focused investments.

Adapting to hybrid workforces

Just as the preferences of customers are shifting to being more inclined to make weekly food purchases on their phones in the comfort of their homes, so too are the expectations of employees with regards to working from different locations instead of being constrained to a five-day work week in the office. In light of this shift, businesses must think carefully about how to promote collaboration and workplace productivity across remote and in-person environments.

For the past few years, businesses have relied on Microsoft Teams, Zoom, and Google to keep employees connected and to ensure smooth interactions that enable effective collaboration and effective teamwork from anywhere in the world. The fact remains, finance teams still using outdated or legacy software are limited by manual reporting, number crunching via spreadsheets, and rigid processes that keep them from spending time on strategic and value-added projects.

As CFOs lead digital transformation initiatives for the finance function, they need to identify their current internal workflows and identify the manual tasks that can be replaced with secured, automated and connected digital tools through Cloud accounting software. By preparing employees for success and improving internal efficiency, critical business processes can be improved.

Technology trends in the financial industry

Bringing finance to the Cloud

With the Cloud, the emphasis has shifted from the implementation itself to operationalisation, modernisation, and continuous evolution of the way finance teams operate. A key benefit of Cloud technology is its speed-to-value.

The importance of embracing Cloud accounting software is to ensure that finance teams operate with agility and can effectively tell a story through data to help the C-suite form timely and accurate business decisions. This will simplify end-to-end business operations, and as companies grow and scale, CFO's will have a solid foundation to sustain that growth.

Automation of manual tasks

Automating processes to enhance user experiences is becoming increasingly important in the finance sector, where many businesses have moved beyond proof of concept/pilot projects into real-life applications.

There is no doubt that manual services are time-consuming and not the most effective option for businesses. Automating business processes in finance, from payments to lending, to front-end services, and back-end core functions can be costly in the beginning. However, many companies have begun to automate in the last few years. The automation of the intake process enables finance teams to do more value-driven work by freeing up their resources which ultimately improves workplace productivity.

Predictive modelling

Using Cloud accounting software, decision making can be handled in part by prediction-based models when it comes to cash flow management. By leveraging the Cloud, finance teams can identify weekly profit and loss (P&L) reports and weekly forecasts as two areas where predictive forecasting can be applied successfully. By using historical data for better planning and forecasting, companies can make better decisions.

Using real-time analytics to make accurate decisions

In the finance department, it isn't enough just to close the books and have an effective month-end cycle. Businesses can get a complete picture of real-time data by integrating data from finance and other departments through a centralised data source. Better and more informed decisions can then be made.

Enhanced employee experiences

When it comes to motivating talent using technology, our experience at work is particularly important. The aftermath of the pandemic, economic changes, new legislation and getting to grips with hybrid working means finance teams have had more to deal with than ever before.

Using outdated technology throughout these unprecedented events means that it was increasingly difficult for finance teams to be productive and efficient with their time. Moving forward, the adoption of Cloud accounting software which allows for user-friendly interfaces, one single source of information through data, flexibility as well as scalability should be the main priorities.

Operating on a global scale

Most businesses today have clients across the globe, so CFOs need to ensure their finance functions align with globalisation. This includes meeting the multi-GAAP and regulatory requirements in those countries.

Emerging trends in the financial industry

Artificial Intelligence and machine learning

Covid-19 caused major changes in the way many businesses operate during the pandemic. One of the earliest adopters of AI in the finance sector has been the automation of repetitive processes, risk assessment, and fraud prevention. Thus, we will continue to see a rise in use cases aimed at understanding and responding to the evolution of what finance roles entail throughout 2022.

As tech giants, Apple, Amazon, and Google all sign up customers to services traditionally reserved for them, businesses face fierce competition from more directions than ever. In order to stay competitive, traditional businesses must adopt AI and smart, data-driven technologies themselves. In other words, CFOs and finance teams will need to master the art of incorporating these technologies into backend operations to automate repetitive tasks such as reporting.

Another area where growth is expected is the use of AI to ensure fair and equitable treatment of credit applicants. In order to ensure that all segments of the population have fair access to lending and business funding opportunities, algorithms will become more efficient at determining where bias is present in these processes.

Blockchain

We usually hear blockchain discussed in conjunction with cryptocurrencies but the true potential of blockchain will likely be seen much more throughout 2022. A blockchain, at its core, is a secure system that facilitates transactions, financial and otherwise. Banks can use such technology to handle remittances for lower costs and greater productivity, enhancing transaction efficiency without compromising security.

As an example, Mastercard and PayPal allow customers to pay through their networks with blockchain currencies (cryptocurrencies). This revolutionary technology will undoubtedly lead to more innovative use cases. While initially restricted to cryptocurrencies and digital money, its potential in financial services has now clearly expanded far beyond that.

Enhancing customer experience with Cloud technology

In the past, finance functions have successfully automated and streamlined processes like reporting, cash flow management, transaction processing and cybersecurity. The more businesses become comfortable with these technologies, the more likely they will be to deploy them to solve problems related to their most valuable asset - their customers.

Here is where Advanced expects to see real growth and innovation continue throughout 2022. For AI, Cloud services, blockchain, and mobile to be transformative, they must be merged to create solutions that greatly improve customer experience.

Now, software service providers are competing to differentiate themselves by leveraging the hottest trends to further improve the experience for everyone. As an example, many apps now feature built-in AI assistants that can perform tasks like helping users manage their finances more efficiently by analysing spending patterns and suggesting ways to maximise efficiency. Moreover, voice interfaces and chatbots - both of which are gaining in sophistication to the point of becoming truly useful - are high on the list of must-haves.

Stepping up cybersecurity and fraud mitigation efforts

Digitisation of internal and external interactions has created new security vulnerabilities for businesses. Most of the time, companies become complacent about keeping their systems secure and tend to ignore updates until they are confronted with a security breach, lose valuable data, and are faced with the aftermath of restoring and repairing the system. Rather than reacting to cyberthreats, now is the time for CFOs to innovate in a way that will refine and secure their accounting software systems.

The security landscape isn't just evolving for businesses. Regulators know the landscape has changed and will keep a tighter watch on financial institutions. Data sharing and security will be covered by new regulations with open banking, already gaining popularity in Europe and gaining traction in the U.S.

The finance function houses the most valued data for cybercriminals and hackers, so it is important for CFOs to implement security measures.

Listed below are a few best practices to keep in mind:

  • For greater security when your remote team is working, consider incorporating solutions such as multi-factor authentication, knowledge-based authentication (KBA) or electronic identity verification into your software system.
  • Manage the system from a central point of control so that sensitive documents and customer information are tightly controlled.
  • To avoid security breaches in which cybercriminals obtain sensitive financial data, utilise advanced analytics to track activity in real time, detect potential threats, and respond to incidents quickly.

Developing a blueprint for the future of finance

Finance teams are operating in a changing world, a world they can help define, as we enter a new phase of recovery. Finance teams have a pivotal opportunity to shape the future of business and themselves as we continue to navigate through 2022, including financial planning and analysis (FP&A), cash flow management, and staying on top of legislation.

For CFOs, this year presents a great opportunity to review and future-proof their existing accounting software systems. These financial trends illustrate the direction the industry is headed, and proactive finance functions will continue to evolve and adapt to meet new expectations. In order to keep up with all the industry changes and business demands, finance teams will need a more robust set of digital tools.

Embracing a digital-first approach through the adoption of Cloud technology will allow businesses to implement clear sustainability initiatives as well as streamline employee and customer experiences in order to remain relevant in an ever-changing market.    

Get ready for the future with Advanced Financials

With Advanced Financials, you can empower your finance team by giving them the tools they need to manage these trends. From real-time metrics and reporting to automation and self-service capabilities to access from anywhere, our Cloud accounting software streamlines all accounting functions, such as general ledger, accounts payable, credit management, bank reconciliation, and more.

For CFOs and financial leaders to be successful, they need to think beyond traditional bottom-line metrics and put purpose and trust at the forefront of their strategies. The time is now for CFOs and financial leaders to take the initiative to transform the finance function into a strategic and value-driven powerhouse both now and in the future. Get in touch with one of our experts today.

Blog Keep up with the pace of change in my industry Financial Management Financial Services Advanced Financials
Daniel Docherty

Daniel Docherty

PUBLISHED BY

Director of Strategy

Daniel joined Advanced in May 2019 to lead our Software as a Service portfolio, moving on to lead the overall Finance Management, Spend Management and People Management strategy. He brings over 18 years of experience in core business and finance solutions, working with customers from a wide background of industries and scale.

Read published articles