The rapid rise of digital technologies in recent years has led to significant disruptions in traditional business models and finance operations. But what are disruptive technologies? And how can organisations and their finance and accounting teams keep up with innovation, meet changing consumer expectations and minimise risk?
Digital disruption refers to the transformation of traditional processes and practices in the finance function through the adoption of digital technologies. This can include everything from the automation of repetitive tasks to the development of new products and services that disrupt established markets.
The importance of addressing digital disruption in finance cannot be overstated. Failing to do so can lead to significant risks for companies. Those who are unable to adapt to digital disruption may find themselves at a disadvantage in terms of efficiency, cost-effectiveness, and competitiveness.
Finance Directors and CFOs will need to develop strategies to capitalise on new digital opportunities while mitigating associated risks. This will require a deep understanding of emerging digital technologies, their potential impact on finance operations, and a willingness to invest in new processes and technologies to stay ahead of the curve.
Emerging and established disruptive technologies in finance
Some technologies have already had a disruptive impact on the finance and accounting functions across multiple industries. Others are anticipated to become more important in the future. Trends can be varied and perceptions about the capabilities of new tech can differ widely from reality. However, these three technologies are the best examples of the power of digital disruption in finance:
- Robotic process automation (RPA)
Many types of financial processes can be automated using RPA. From core processes to more high-level processes such as budgeting, forecasting, and financial analysis, and compliance reporting. Doing so improves efficiency, accuracy, and speed. But there are barriers to implementing financial process automation. It can be costly and 21% of finance and accounting executives fail to see a strong case for adopting RPA.
- Artificial intelligence (AI) and machine learning
AI and machine learning can be used widely in many finance and accounting functions. It can be used to automate administrative tasks, and collect, compile, and analyse data. According to Deloitte, finance executives are the most familiar with AI and its uses, with 41% of those surveyed saying they were “very knowledgeable” about AI and 47% saying AI will be critically important to financial operations.
- Blockchain and cryptocurrencies
The potential impact of blockchain on finance functions is widely discussed and it has several potential applications, not least it's potential for tracing and authenticating transactions and a source of reliable financial data. Nearly a fifth of the executives surveyed by McKinsey say their organisations have launched or are working on commercial blockchain applications. However, for the technology to become widespread there needs to be greater regulation and standardisation of its use in the industry. Business leaders would be wise to focus there efforts on emerging technologies such as AI and the Cloud.
Impacts of digital disruption on financial operations
There are several operational and strategic challenges to adopting disruptive technologies in finance. Not least the regulatory, compliance and security concerns of adopting digital solutions.
Financial executives must also consider how new technologies integrate with existing systems and processes and ask themselves whether the advantages of early adoption outweigh the potential costs.
That said, the benefits of adopting disruptive technologies in finance could change the game for many businesses.
By using RPA and AI financial operations can benefit from enhanced infrastructure that improves controls, streamlines processes, and reduces costs associated with manual reconciliation. Disruptive tech can also help finance and accounting teams leverage real-time data for informed business decisions.
Finance executives in must embrace the opportunities provided by disruptive tech to stay ahead of the competition and meet the evolving needs of their organisations and clients.
5 strategies for dealing with digital disruption in finance
Dealing with the effects of disruptive technologies on your business and the finance industry as a whole can be a balancing act. But these strategies will help you take advantage of disruptive technologies while mitigating the associated risks and challenges:
1. Stay informed
Keeping up with emerging technologies and industry trends will help you make informed decisions on how you and your business can utilise disruptive tech most effectively.
2. Embrace innovation
Investing in new technologies and processes can help you get ahead of the competition and discover new ways to leverage tech for business growth.
3. Collaborate with startups and tech companies
Building relationships and collaborating with disruptors can help you embed new technology more effectively. Working together can also mitigate the impact of disruptors on the market.
4. Upskill your workforce
Allocating resources to help your workforce develop new skills and competencies will ensure your business is more resilient and able adapt to change in the face of new technologies.
5. Maintain a customer-centric approach
Whether you decide to implement disruptive technologies or not your main focus should always be on prioritising customer needs and experiences, particularly in light of new FCA Consumer Duty guidelines.
Interim managers can play a crucial role in helping financial organisations navigate the challenges and opportunities of disruptive technologies. Great interim managers bring a wealth of expertise and experience to deliver critical financial systems and technology projects on an as-needs basis.
Interim support can help to identify digital technologies that are most relevant to your business and develop a strategic plan for adoption. They can assist you in project managing your digital transformation and optimising your processes to increase efficiency. Working closely with internal teams, they can provide a holistic approach to digital transformation that considers both the technical and cultural aspects of change, while also providing knowledge transfer to permanent teams for the long-term
Access interim finance and accounting talent and leverage disruptive technology in your business
When you partner with Oakwood Resources you gain the expertise and knowledge of our specialist interim managers with the strategic delivery of a consultancy. This powerful combination means you can harness the technology you need to transform your finance function.
For a more responsive, cost-effective solution that gives you a bespoke strategy tailored to your business, think Oakwood!