Technology has completely transformed how finance functions work, making it an essential part of the finance industry. It has revolutionised every element of finance, encompassing continuous accounting, automated systems, advanced analytics, data quality, and even how transactions are carried out.
Technology is crucial in supporting profitability too. In our Annual Trends Survey Report, 94% of respondents highlighted it as ‘important’ or ‘very important’. More than half (54%) recognised that technology helps them with faster task completion, allowing employees to get more done during the working day.
So, let’s take a deeper dive into the important role technology plays in the finance sector, and the considerable impact it has had across the whole financial landscape.
What is financial technology?
The use of technology to transform and improve financial processes is known as financial technology (or ‘Fintech’). It includes a wide range of digital products and platforms that make use of cutting-edge technologies like blockchain, big data analytics, and artificial intelligence. These innovations are constantly enabling finance teams to be more and more efficient.
Developments such as internet banking, mobile payments, peer-to-peer lending, robo-advisory services, and cryptocurrencies, among others, have significantly changed the finance sector.
The objectives of these pioneering inventions are often to enhance consumer experiences, streamline processes, and promote financial inclusion. Fintech companies challenge established financial institutions by delivering cutting-edge services that meet the changing needs of customers.
Fintech has enabled underprivileged communities and emerging nations to engage in the global financial ecosystem by democratising access to financial services. As a result, traditional banking and payment structures have been upended, and it has revolutionised how individuals handle their finances.
A brief history of Fintech & Cloud finance
Fintech and Cloud finance have advanced significantly in recent years. Let's examine a brief history of the most significant developments within these fields:
1. Systems for online banking and payments
By enabling users to execute transactions remotely, online banking revolutionised traditional banking in the 1990s. When it was established in 1998, PayPal gave users a safe and practical way to make payments online, revolutionising e-commerce, as well as the way businesses transact with one another.
2. Mobile wallets and banking
The iPhone, and other smartphones in general, opened the door for mobile banking applications. When Google Wallet was introduced in 2011, consumers could now make payments using their smartphones, increasing accessibility and ease. This ultimately enhances traceability within businesses and assists with the likes of expenses.
3. Peer-to-peer lending
By bringing together borrowers and lenders directly, platforms like Zopa (2005) and LendingClub (2006) challenged the traditional lending industry. These platforms made use of technology to speed up the loan application process and provide lenders and borrowers with better conditions. This sort of technology inevitably helps finance teams to source credit faster when they need it.
4. Cryptocurrencies and Blockchain
With the launch of Bitcoin in 2009, decentralised digital currencies and blockchain technology came into existence. Blockchain revolutionises financial transactions and record-keeping by enabling safe, transparent transactions. Decentralised finance is now a major consideration for CFOs as it begins to impact finance teams within organisations, and may change the way they manage supply chains, payments, and invoices.
5. Crowdfunding platforms
By enabling people to raise money for their initiatives, Kickstarter (2009) and Indiegogo (2008) revolutionised fundraising. By connecting project developers with potential supporters across the globe, these platforms democratised access to funding. They also help not-for-profits to have greater visibility and control over the funds they’re managing.
6. AI and Machine Learning in finance
Chatbots, virtual assistants, and fraud detection systems, which are all powered by AI, have revolutionised risk management and customer service. AI and machine learning have automated many of the important processes within the finance department, such as spotting fraudulent activity that is related to the likes of expense submissions/approvals.
How technology has improved the finance function
Technology has made enormous strides in the finance sector, transforming how financial data is managed, as well as the way transactions are carried out. Here are some of the important ways technology has changed finance:
Efficient data management
Financial data is now easier to organise and access if we compare new technology to outdated finance tools. Through digital platforms, users can effortlessly manage their financial information. Customers can check balances and execute transactions, for instance, using banking applications rather than going to physical branches. For processes like payroll management, large organisations can ensure they keep everything in one place.
Many monotonous financial tasks have been automated due to technological advancements. Chequebook balance and tax receipt management can now be efficiently organised using a variety of tools. This speeds up task completion while also making the tasks even simpler. With the use of smartphone applications, jobs that used to take hours, days, or even months, can now be completed rapidly.
The way business is done has changed dramatically due to technology. Virtual transfers made possible by smartphone applications have replaced actual transfers made with cash and cheques. With the introduction of new financial instruments and secure online transactions, cryptocurrencies have become a significant development in the finance world. While hazards are still present, they are being ironed out all the time with continuous improvements.
What does the future role of tech in finance look like?
Technology in the finance sector has a bright future, with some interesting developments on the horizon. Automation will continue to be driven by artificial intelligence (AI) and machine learning (ML), which will also deliver advanced analytics and enable organisations to make quick, data-based choices.
Risk management will be revolutionised, and fraud detection capabilities will be strengthened, with the combination of Big Data and predictive analytics. Finance professionals will have real-time access to data from linked devices as the Internet of Things (IoT) develops, improving their ability to make decisions. The rise of cryptocurrencies and digital assets will also change how people think about money in general, opening up new investment opportunities.
The future of Fintech is constantly evolving, so it’s essential that the finance function is ready to adapt to industry changes, new technologies, and ongoing developments.
Prepare for the future with Advanced Financials
To thrive in today's business landscape, CFOs and finance leaders must embrace a mindset that goes beyond conventional metrics and prioritise the incorporation of new technology into their strategies.
One crucial step in this transformation is breaking free from traditional on-premise systems. By adopting modern technology solutions, you can liberate your business from rigid data structures and outdated processes. This enables you to overcome underperformance and improve productivity, leading to better outcomes for your organisation.
It's important to recognise that customer and stakeholder expectations are constantly evolving in response to market dynamics, competitor innovations, legislative changes, and technological breakthroughs. Therefore, your tech strategy shouldn’t just address immediate needs, but also anticipate future requirements too.
With Advanced Financials you can take a forward-thinking approach that will ensure your organisation remains adaptable, competitive, and well-positioned for the years to come. Our Cloud accounting software provides finance teams with valuable insights while ensuring they remain on the cutting-edge of innovation.