Insights

Finance and fiction

The twain shall meet someday

Imagine a day in Paris 2025. Imagine the CFO of Daydreams is rushing back to her office at 10 p.m. in an autonomous vehicle. She has a task to attend and her team is already on the job. Two global OpCos are coming dangerously close to breaching their Bitcoin denominated liquidity limits. The auto analysis function was putting this down to the recent social media chatter around a product failure in Colombia. She has to act fast and act now.

10:25 – The CFO pulls up a real time query on the visualization of the trading and balance sheet positions. External data on market movements and competitor response is also pulled in seamlessly and Artificial intelligence reports throw up various scenarios. Decision trees come up on the virtual projector shared across Istanbul, Toronto and London on how she could divert contingency funding until the noise settles down. Finance teams go through scenario testing and each scenario is quantified live during the conversation, using Big Data simulations.

10:55 – Finance teams collaborate with the various global teams to create appropriate scenarios on the central corporate document collaboration area before uploading the proposed solution for the Board’s decision screens for approval. The night is still young for the street party at the Champs de Elysees!

As much as this seems like a lift from a work of fiction, the world of finance is getting ready at an exponential momentum towards a future of unbelievable digital dexterity. The forces of technology are upending the traditional ways to closing books, paying vendors, and planning for tax exposures in an increasingly cyber-insecure world. We believe that Finance operates through four distinct faces and each of these “faces” are awaiting a radical face-lift.

The four distinct faces of Finance

In our view, six discernable trends will define the future of finance:

Six discernible trends defining the future of Finance

Innovations in technology in the last 50 years have enabled the Finance function to evolve from hindsight to insight. Whereas it took 30 years for the technology of the twentieth century to capture and distribute data, a shift in half that time has empowered people to leverage that data through performance tracking, mobile devices, and robotic process automation. Smart CFOs are currently investing heavily in fully robotized and automated transactional processes and controls, which is a stepping stone to enable the next big shift: cognitive computing, where systems not only present data but truly process that data and generate actionable information. Refined datasets will empower the CFO to focus on making the decisions that maximize business and customer impact. And it is this technological enablement that will allow the balance in the roles of the CFO to evolve.

Big data, analyzed through sophisticated visualization tools, will enable the CFO as a catalyst to make real-time decisions and execute on the financial objectives. Amplified intelligence leveraging internal and external data will strengthen the role of the Strategist. But if you are not already preparing to make the shift, you may already have fallen behind: it will not take another 15 years for the disruption to happen—this change is coming in the next five years.

There are four main levers that will influence, expand and disrupt the power of Finance in the future:

  • Enabling technologies: Bolt-on applications that provide additional functionalities to support the process execution (e.g., E-invoicing, Robotics, etc.) can dramatically expand factory capabilities.
  • Autonomic platforms operating in inter-operable environments provide reconciliation capabilities using (un)structured data from internal and external sources (e.g., social media).
  • Monitoring tools analyze processes on a continuous basis to provide insight in how processes are executed as well as the outcome of those processes (e.g. real-time process analytics), can yield dramatic insight into the business and alert against cyber threats.
  • Data collected from an evolved eco-system with deep cognitive skills, market trends and disruptions, and the expanding availability of external data (e.g. Internet of Things), can become powerful allies to a Finance function equipped to handle them.

Today, the role of the CFO is under greater scrutiny, internally and externally, and faces never ending pressure to cut costs, grow revenue, and ensure control. Economic uncertainty, increased regulatory requirements, financial restatements and increased investor scrutiny have been forcing a continuous evolution of the role of finance from an “operator” to a “strategist.” The forces of digital disruption in the world around us is making this transition even more complex—the rules of the game are changing with the changing business landscape. It is imperative for the finance function to wake up to this tectonic shift in the expectations, and get ready for an ever evolving future.

Authored by Soumen Mukerji, Partner; and Kumar Gaurav, Manager, Deloitte India. The article first appeared in the quarterly newsletter of the Indo-French Chamber of Commerce & Industry (IFCCI), June 2016.

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