finance transformation digital finance business


Digital is the new reality for finance and business

Digital transformation of finance: Key to make the shift work toward a digital organization

The biggest news doing the rounds in India these days is the currency demonetization, where the currency notes of INR 500 and INR 1,000 became invalid overnight. While this has impacted one and all, the degree of operational impact felt by the tech-savvy, online, mobile consumers is considerably less.

Consider this, a 25-year old gets up and goes to work in an Uber and pays her cab fare via credit card or Paytm wallet linked to her Uber account. She uses the company provided food card to buy her lunch and gets her evening coffee at Starbucks using her Starbucks loyalty-cum-payment card. On the way back home, she stops at the nearby grocery store and picks up groceries, again via plastic money. When it comes to the monthly payments, such as rent, utility payments (phone, electricity, etc.), all are paid online using net-banking, credit cards, or mobile wallets.

Fairly safe to say that the younger generation is creating an India that is very tech-savvy and mobile, as is echoed in the recent India Consumer Close-Up Report by Goldman Sachs. This connected, mobile, and tech-savvy youth is leading to a socio-economic disruption. Improved education and rapid growth for 440 million millennials and 390 million Gen Z teens and children, tracks India on the consumer story to be one of the most compelling in the next 20 years. With a mobile phone subscriber base of 1 billion, the number of smartphone users crossed 220 million making India the second largest smartphone market in terms of active unique smartphone users. The number of connected devices is estimated to reach 27 billion by 2020, and India is likely to account for 5 percent of the global pie.

This signifies a steady change in our personal lives towards digital and mobile. With our personal lives becoming digital and on-the-go, why is it that our work-life should be any different?

Taking a cue from the consumers’ preference toward digital, businesses have started to transform their core to adopt digital and define their digital transformation. Further, with the core businesses becoming more digital, finance function is not behind in adopting the digital trend. In fact, most of the finance leaders we speak to today are looking to enable (and in some cases drive) this change in their organizations toward digital.

While digital disruption in Finance is fast becoming an inescapable reality, the Deloitte’s 2016 Global Outsourcing Survey reveals that most CFOs remain grossly underprepared. Finance leaders today have metamorphosed as strategic co-pilots to the CEO and have the opportunity to play a lead role in shaping the digital agenda of the organization. Digital transformation of Finance holds the key to make this shift work toward a digital organization – as routine processes get automated and exponential technologies usher in the power of unmatched computing to support the judgement and decision-making roles of the CFO.

The finance organization of the future will look drastically different from the shape and form it exists in today. Operational Finance will transform into Finance Factory, with fully automated transaction processing and continuous close. While the Finance control center monitors the process performance, global process owners direct continuous improvement in the processes and the teams. Business Finance will drive deep data-driven business insight and foresight and integrate risk-intelligent planning models to support the business objectives and position Finance leaders as valuable business partners. Specialized Finance will provide deep subject-matter expertise, guidance, direction, insight, and advice through specialists embedded in the business. Finance Enablers (People, Process, Systems) will change to adapt to and accommodate digital technologies; and enable operational, business, and specialized finance roles.

This transformation of the finance function will be powered by the break-through technologies of Robotics Process Automation (RPA), In-Memory Computing, Machine Learning, Natural Language Processing, Cognitive Analytics, Internet of Things (IoT), and many others that form the building blocks of a Digital Finance Ecosystem. For example, RPA can speed up some of the finance processes by five times while getting the job done at 1/9th the cost of an onshore resource, freeing up finance talent to do higher value activities and improve their skills. As such, increasing automation is one of the top business priorities for Global Business Services Leaders over the next 10 years with an estimated spending of $40 billion on Robotics by 2020.

Along with the changing consumer preferences and the core business changing, the third and another critical piece of this journey to the future of Finance is the talent dimension: the aging finance workforce versus the millennials. There are several finance organizations in India where the staff has been around for over 20 years, doing the same job. On the other hand, there are these millennials, who come and join several Global In-House Centers (GICs) and Finance Business Process Outsourcing (BPO) vendors each year. Several of these are involved in substantially manual tasks. While the millennials are more likely to adopt and adapt these digital technologies, the impact is going to be felt by both.

The HfS future workforce impact model (by services research company HfS Research) predicts India is set to lose 6,40,000 (around 28 percent decrease) low skilled positions by 2021. This is largely because there are a large number of noncustomer-facing roles at the low skill level in the back-office processing and IT support work that are likely to be automated and consolidated across fewer workers. While there will likely be new jobs created with newer roles coming into play to manage automation, 6,40,000 at risk low skilled jobs will only be offset by 1,60,000 mid-high skilled jobs being created. In effect, what this means is that the headcount-related growth model that most IT/ITES and GICs had is no more valid and the armies of graduates coming from the academia each year has poor prospects with these organizations. As such, it becomes critical for us to upskill and cross-skill our existing talent and guide the newbies to roles that will remain relevant in the future. Further, the Indian government has launched several services and programs to help improve the digital literacy in India. For example, the National Digital Literacy Mission (NDLM) is aimed at enhancing digital literacy and aims to provide training to 5.25 million people by 2018. The government is also planning to launch a digital literacy mission scheme aimed at providing digital skills to 60 million people in rural areas representing 40 percent of the rural population in the next three years. The government intends to invest INR 300 on each training bringing the total cost of the program to INR 18 billion ($265 million). Some education institutes have been offering data science training to support the increasing demand for data analytics type roles.

The future is not all grim for the fresh graduates. While automation will take away jobs, digital start-ups will offer new and different roles to the graduates entering the workforce. Newer skills that are likely to be in demand in the future are: Big data analytics, mobile application development, new user interfaces, social media, and cyber-security.

While most of these may sound like non-Finance roles, the Digital Finance organizations in the future will also look to employ talent that appreciates and understands technology. For example, when invoice processing and approvals go mobile, Finance needs to be able to work with IT and help develop these apps and dashboards. Finance analytics centers that several GICs are looking to set up will require Finance majors/ accountants that can enable and support this transition. Finance teams will need to work together with robots and cognitive technologies and support the end-to-end process flows, and the process teach the machines how to handle situations that the machines are unfamiliar with.

To sum it up, digitization of the business, and especially Finance, has begun! The sooner we as the Finance and business community embrace it, the easier the transition will be of us.

Digital: New reality for finance & business

In this authored article by Soumen Mukherji, Deloitte India, read how digitization of business, especially finance, has begun! Sooner the finance and business community embrace it, the easier the transition will be for them.

Read the article

Click here

Authored by Soumen Mukerji, Partner; and Kulpreet Kaur, Manager, Deloitte

Did you find this useful?