Digital transformation in finance: why you can’t ignore it
No matter what future you see ahead for your finance organization, one thing is sure — if you, as business leader, are going to success in the digital world, you need to process information more efficiently, and turn that information into deeper insights faster than ever. What means you should use for that – read in our new article.
In fact, many finance organizations are lack such digital basics as automated processes, ability to integrate and analyze data and a workforce with digital capabilities. The finance function is often hobbled by slow, legacy systems that don’t talk to one another. Without integrated data and a full set of digital tools, CFOs are unable to detect and quickly respond to real-time business changes. And they risk falling behind their more forward-looking peers, who are already transforming their business models and gaining a competitive advantage from their digital investments.
Nowadays there are a lot of digital tools for fintech. Some of them available to focus specifically on updating core systems and existing capabilities. Other tools, “exponentials”, are designed to deliver new and different capabilities. Together, they form a toolset finance can use to improve its own performance and serve the business more effectively, especially when they are used together.
Our research suggests seven technologies with growing interaction and relevance for finance:
Blockchain
2017 has been the year of the blockchain. It become popular not only for cryptocurrencies, but as a technology with entirely transparent ledger of transactions as well. Moreover it offers security and low transaction costs. Banks, who are working to increase the effectiveness of peer-to-peer (P2P) payments, can use blockchain as the foundation of that system.
Branchless Banking
Consumers want to do their banking without having to go to a branch. Statistics says, over 40% of consumers have not used a bank branch in the past six months. Therefore banks need to develop themselves to satisfy customers branchless wishes. Digital transformation is the solution. Features such as online personal banking, offering the ability to sign up for services online and digital peer-to-peer payment systems will allow consumers to forego using a branch while still being able to meet their banking needs.
Cashless Transactions
The future of transactions lies in peer-to-peer payment systems. Paper currency is on its way out, thanks to technologies such as blockchain ledgers and P2P payment systems. In the future, cash will have no place in any developed society. It’s time for banks to implement digital payment systems that require nothing but a smartphone. One day, even cards will be considered a nuisance.
Transforming enterprise operations
Institutions are going back to basics in 2018. Many firms often start by focusing on repetitive, logic-driven tasks with potential for a quick payoff and without a lot of process reengineering—areas like reconciliation, data remediation, regulatory reporting, and account-opening processes. But too many firms fall into the common trap of thinking that “digital transformation” means “deploying technology”. You should understand, it’s not just cloud strategy and implementation; it’s also designing how you govern the relationship with your cloud provider, how you actually change the skill set of your team so they can be brokers of services as opposed to engineers, how you build a culture that fosters lifelong learning, and so on.
Customer experience improving
Digital transformation is usually not about what you do. Rather, it’s about how you do it. In 2018, I think we’ll see firms paying a lot more attention to data and analytics as a way to change user experience. For example, they’ll finally be able to calculate the return on their marketing investments, so users will see messages that are actually relevant and interesting to them.
Armed with a digital foundation, CFOs can begin deploying a wide variety of digital tools that can dramatically improve the performance and efficiency of the finance organization and increase the value it delivers. (See “Digital Tools for the CFO”.) Acting like that will yield dramatic improvements in the performance and efficiency of the finance organization and in the value it delivers.