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Market Uncertainty Accelerates Digital Transformation in Financial Services

In Financial Services by itas

Reading Time: 5 minutes

Digital transformation delivers huge benefits for businesses and yet in so many cases executives tend to put off making the change, even though they know it is the right move. Over the last year, we have seen much of that reluctance swept away as uncertainty and the need for new ways of working have accelerated the movement towards digital transformation. And whilst the UK appears to be getting on top of the crisis and emerging from lockdown, the need for transformation won’t disappear.

In fact, in a recent report, Gartner forecast increased spending for some time to come. “Through 2024, businesses will be forced to accelerate digital business transformation plans by at least five years to survive in a post-COVID-19 world.” (Source, Gartner)

Covid Amplifies existing pressures

COVID has certainly accelerated the move towards digitisation but that’s not to say that there are no other pressures requiring financial services companies to modernise. The entry into the market of challenger banks and online investment firms has forced the more traditional brick-and-mortar, high street organisations and family offices to look to the future as their customers move towards digital services.

Digital Transformation in Financial Services - Deloitte DNA of challenger banks 2020

Source: Deloitte, DNA of challenger banks, 2020

Although it may seem that the issue is mainly the institutional impact of digitisation, the fact is that a well-managed transformation process can totally transform the way that the business interacts with its customers. This is important because today’s consumers demand much more from their financial services provider and if the services are lacking then it is not only noticeable but also a significant driver for changing provider. (Source, Forbes)

As BDO points out “A few decades ago, the idea of having a good “customer experience” may mean having a pleasant experience at a physical bank or other financial services firm. Today, it may include anything from being able to access an account from multiple channels, to getting a question immediately answered by a chatbot or robot advisor, to receiving automated real-time notifications.”  (Source, BDO)

Why digital transformation?

The benefits of moving to a digital world have been known for some time and in a period of uncertainty, they are intensified. Transforming the way that people communicate using apps like Slack and Teams means that even when employees are physically disconnected, work can still get done.

The management of projects and tasks is much easier and can be better controlled using some of the new generations of project management apps such as Trello or Asana, giving managers full visibility over their team’s activity.

The use of big data techniques to understand consumer behaviour provides financial services companies with a real competitive advantage and digital transformation as a whole delivers positive ROIs. The impact is real and valuable. In a recent survey by BDO, 62% of Financial Services companies said that they expected their digital transformation process to deliver an increase in revenue of at least 10%. (Source, BDO)

Digital Transformation in Financial Services - BDO Digital transformation in Financial Service companies 2019

Source: BDO, Digital transformation in Financial Service companies, 2019

What does digitisation for financial services mean?

In its simplest form digitisation can mean communicating using Teams or Zoom, but for truly forward-thinking companies it means so much more. At the heart of a true digitisation process is the understanding that the future is interconnected and the biggest benefits come from having a wide access to deep data.

The traditional way of developing systems, especially in financial services has been to have a variety of different and disparate systems that are all designed to do their own job well but aren’t particularly integrated.

Using open APIs, digitised businesses are able to develop their information management and reporting to a degree never before possible. This allows the enterprise to fully understand their customers, drives better marketing performance and provides insight into the true drivers of profitability. In addition, the automation of processes, whether that be in a single application or by linking several together, can reduce manual operations and intervention. The advent of Machine Learning and Artificial Intelligence has also massively accelerated the process of leveraging gains.

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Typically businesses look to automate and integrate:

  • Billing apps – automated billing systems that link to usage or operational subscription data
  • Accounts receivable – automated invoicing, automated payment receipts
  • Accounts Payable – Automated invoice receipt and processing, payment authorisation and bank instructions
  • Banking – automated bank reconciliations (linked to both AP and AR)
  • Cash management – settlement, capital calls, distributions
  • Tax – VAT management and reporting, capital gains and SDLT
  • Time & Expenses management – auto reporting, authorisation and payment
  • Dashboards & Reporting – automated management reporting, exception reporting

What should you look for from a system?

If you are considering a real and lasting digital transformation for your firm, what should you look for from your systems?

Robust functionality: core accounting capabilities including general ledger, accounts payable, accounts receivable, cash management, purchasing, order entry, but also look for collaborative functionality to communicate with extended teams in real-time.

Integration at the heart: was the system designed to be integrated with other systems and apps or is it going to be a struggle? Look for fully functional APIs that improve communication and integration.

Visibility: A system that offers a real-time financial and operational picture for faster, data-driven decision making. A truly digitised process gives access and insight.

Efficiency: Digitally automated workflows with push-button multi-entity consolidations to get a rolled-up view of financials in minutes, even with decentralised payables, inter-entity transactions, multiple currencies, funds, departments, locations, and more.

Flexibility: A system that is built on an advanced, proven SaaS cloud architecture that allows real-time insight into every aspect of a firm’s finances and gives employees access whether they are in the office or working remotely.

Security: It should go without saying in the financial services sector that a new system needs to take security seriously, with internal controls via automated processes and front-to-back-office audit trails. SSO, MFA authorisation integration.

Financial Services firms achieve massive ROI

Companies that have carried out a digitisation process find that they have experienced better Return On Investment than almost any other project, with many reporting up to 250% ROI.

Reducing the time it takes to carry out reconciliations and speeding up month-end close means that finance staff can spend time on much more value-add tasks.

Sage Intacct

Sage Intacct is the perfect Cloud accounting solution for the Financial Services industry, allowing organisations to get ahead of the curve with integrated and flexible systems that give you real-time information, on-demand. With Sage Intacct you can expect your Financial Services organisation to achieve:

  • A 250% Return on Investment
  • Cut your monthly close by up to 79%
  • Reduce consolidations from weeks to minutes
  • Improve productivity by over 65%
  • Easy multi-entity management
  • Real-time visibility of both financial and statistical KPIs

You can learn more about Sage Intacct for Financial Services, here. We also have an on-demand coffee break demo of Sage Intacct for the Financial Services Industry here, which you can watch in your own time.

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