Limited functionality available
Forecasting the future is a dangerous game in any sphere of life, but in finance it’s perhaps doubly so. The world is changing so fast and across so many aspects of our work that what would have seemed futuristic just a few years ago is already becoming reality. The tech revolution is here and it’s changing everything. Does that thought excite or unsettle you? For most finance leaders, it’s usually bit of both so take some comfort, you’re not alone.
At the Deloitte Private CFO Conference for Private and PE-backed businesses, we took some time to consider what the future might hold for CFOs and finance leaders.
The first thing to say is that digital finance tools and technologies will reshape not only how finance functions operate but, more fundamentally, what they do. Let’s look at just a few of the areas of impact and make some predictions.
Over the course of the past few years, a whole new digital finance ecosystem has evolved, using disruptive technology, innovation and data to elevate and differentiate the capabilities of the finance function.
The direction and impact of digital finance is being driven by the evolution of a new finance toolkit, featuring a combination of modernising technologies that offer substantial but incremental improvements on current activities, and exponential technologies that offer systemic change. Modernising technologies include cloud computing, process robotics (RPA) and visualisation – the visual presentation of complex, rich data through dashboards. Of these, robotics has attracted the greatest attention and level of take up so far. RPA is the automation of transaction processing across technologies: robots or ‘bots’ take care of the recurring processes, tackling them faster and with fewer errors. Sound good? Well, their potential impact becomes even more attractive when you consider that bots work 24/7, are agnostic about ERPs, work at multiples of the speed of trained accounting technicians and they can take on a host of other systematised activities. A single bot can be the equivalent of 3–4 professionals – and they don’t take holidays or get sick! Interestingly we’re beginning to see a reversal of the outsourcing boom as companies look to bring processes back in-house to be delivered by even cheaper bots.
In the longer term though we expect that the real game-changers will be what we’re calling the exponential technologies – advanced analytics, in-memory computing, cognitive computing and blockchain. These innovations will, we believe, recast the nature and fabric of finance. At the conference, it was blockchain that most preoccupied attending CFOs and their questions largely focused on a simple but fundamental question: what is it?
There are whole books and courses about blockchain, so this isn’t the place for a detailed exploration, but, in simple terms, blockchain is a distributed ledger system in which all participants verify and store transactions on a network of connected nodes. Blockchain’s superior levels of integrity are already being used in the authentication of products as diverse as diamonds – thereby addressing the issue of blood diamonds – medical-grade zinc and chicken-meat. What makes blockchain so disruptive is the fact that it is self-validating: because any changes or irregularities in a transaction will immediately clash with the distributed ledger, it obviates the need for involvement from trusted third-party intermediaries, such as banks, securities exchanges or regulators.
The evolution of advanced analytics, cognitive and in-memory computing will enable finance leaders to benefit from better, faster insights – which they use to drive value in the businesses they support. With insights delivered in real-time by systems that can intelligently analyse and interpret huge quantities of complex data, CFOs and those around them will become more strategic, able to identify and unlock value and play an increasingly prominent role in supporting the CEO in realising business strategies. They will be able to do this safe in the knowledge that the bots are handling the transactional side of Finance.
Our 2025 predictions
So, if that’s a quick look at some of the technologies that are set to shake things up in finance, what will the world look like a few years from now, when these technologies have matured and become embedded in our activities? Taking a thematic approach, here are our eight predictions for finance by 2025:
Simon is a Director within the Finance, Operations and Support group that sits within Risk Advisory at Deloitte. His main area of focus is Finance Improvement projects in the Corporate sector, specifically within the TMT and E&R sectors. He has over 12 years of post-qualification Finance experience. Simon originally joined Deloitte as a graduate, working on a variety of internal audit, risk management and internal control projects. In 2011 Simon moved into industry, joining BP, where he initially worked on a Group wide risk management project, before moving into the Upstream Finance team where he took on a range of commercial Finance roles. In 2016 Simon returned to Deloitte, where he has led a number of projects around Finance transformation and process improvement.