It is evident – and inevitable – that technology is altering our world at an astounding level. From new gadgets that are often released to new machines that will make your daily life easier. Financing has also been affected by the changes. Without a doubt, the advancement of financial technology has accelerated throughout the years.
It is still causing havoc in the economy, from retail to banking to financial services. The fintech industry develops novel technologies that are used to provide better financial services that are suitable for the modern customer.
In recent years, the business sector has witnessed how technologies are being integrated into the financial industry. Cloud computing and artificial intelligence are increasingly frequently used by engineering teams in financial management and risk management. Overall, this contributes to a more productive, streamlined, and stable working environment.
What is FinTech?
According to Investopedia, the term “financial technology,” or “FinTech,” refers to new technology that tries to improve and automate the delivery and usage of financial services. Fintech, at its heart, is used to assist corporations, company owners, and consumers in better managing their financial operations, procedures, and lives through the use of software applications and analytics that are used on computers and, progressively, smartphones.
When the word “fintech” first appeared in the twenty-first century, it was initially used to the technology used at the back-end systems of renowned financial institutions.
However, there has been a shift to more consumer-oriented services and, as a result, a more consumer-oriented definition since then. Fintech currently encompasses a wide range of sectors and industries, including education, retail banking, fundraising and nonprofit, and investment management, to mention a few.
In general, the word “financial technology” refers to any advancement in how people do business, from the introduction of digital money to double-entry accounting. However, financial technology has grown explosively since the internet and mobile internet/smartphone revolutions, and fintech, which was originally referred to as digital technology applied to the back office of banks or trading firms, now refers to a wide range of technological interventions into personal and commercial finance.
Fintech today refers to a wide range of financial activities that can be performed without the assistance of a person, such as money transfers, check depositing with your smartphone, bypassing a bank office to apply for credit, obtaining funds for a business beginning, or managing your investments.
Possible future of financing using technology
As Deloitte points out, none of us knows what the future holds, but we all have a responsibility to consider what is likely to happen and plan for it. In the finance function, this means putting in place the proper people and technology now to capitalize on the impending disruption. That is unlikely to happen in the absence of a clear vision and strategy for finance in a digital age. Now is the moment to take a step back and ensure that your path to the future is clear.
The method we used to generate our predictions is simple. We carefully examine what financial executives are doing as well as the technology that is available, and then we pose the following questions: What might be possible if multiple technologies were integrated to rethink the future? How would the financial job be done, and who would perform it? How could finance assist even more to the company’s success?
1. Transactions will be touchless
Cloud-based ERP, automation, and cognitive innovation will keep growing, allowing for radical process simplification and human liberation. Adding blockchain will only speed up this tendency. Humans’ ability to add value will be released as this transformation accelerates.
Some think that finance may vanish under the weight of technological transformation, but we don’t see that occurring. Yes, finance will likely be leaner, but operational finance will be the main beneficiary (order-to-cash, procure-to-pay, transactional accounting, etc.). As a result, demand for business finance (business partnership), specialized finance (tax, treasury, IR) will continue to expand.
2. Finance will double down on business insights and services
Finance’s ability to add value will determine whether it continues to guide the resources under its control. This will necessitate excellent customer service and quality insights. Some finance departments will grow into full-fledged business service centers.
Companies understand that sharing knowledge across specialties is beneficial, even if it causes hassles. Discover how to make the most of fading boundaries.
3. Finance goes real-time
When actuals and forecasts are available quickly, traditional cycles lose relevance. Less and less separation between operational and analytical data. Outside investors may seek more frequent performance reports, in addition to cyclical information. Leaders will adopt a new mantra: There is no close. You don’t forecast monthly or quarterly. It’s all occurring now.
Technology and data processing constraints drive many finance cycles nowadays. Things happen on a regular timetable because they must. Traditional cycles are obsolete when knowledge is instantly accessible. This allows people to focus on fresh ideas and actions.
4. Self-service will become the norm
Many entrepreneurs don’t need help with fundamental financial matters. They’d be pleased to have their questions addressed by a digital voice on their phones. Various tasks, from budgeting, to report generation, will be automated. Smart agents will eventually understand what business information an individual requires and will deliver it proactively. Visually rich information that is naturally accessible and easy-to-use will replace data in spreadsheets.
With rising customer expectations for quality and speed, self-service is critical. The last thing finance wants is for their consumers to be irritated or unhappy.
5. Robots and algorithms will join a more diverse finance workforce
Companies will weigh the advantages of automation against the costs of onshore and offshore operations. Automation provides a new cost-cutting lever, allowing financial businesses to rethink how they’re organized, where work is done, and what types of operations no longer require human interaction. Finance-as-a-service will spread beyond mid-market firms.
Individual suppliers and their capabilities may look very different than they do today, causing major disruption in the offshoring and outsourcing industry. At the same time, the requirement to form dynamic, cross-functional teams will put pressure on finance companies that aren’t already planning for the future. As with any change, effective leadership will be required to navigate these transformations.
6. Traditional ERPs will be challenged
ERP companies are already incorporating digital technologies such as automation, blockchain, and cognitive tools throughout their solutions, but this will not be enough to keep up with the competition. Expect the landscape to alter as new ERP vendors enter the market with advanced applications and technologies that sit on top of—and integrate with—ERP systems. A cloud-based ERP system will keep you up to speed on the most recent release.
Finance is experiencing a technological golden age. Finance applications and microservices will flourish as cloud computing becomes the norm for ERP. You will be able to significantly minimize the cost and complexity of technology while maintaining functioning.
7. The proliferation of APIs will drive data standardization
Few companies are aligning and integrating data, which means they won’t fully benefit from digital transformation. Those searching for a panacea for data issues will be disappointed. Work will be simpler with automation and cognitive, but still difficult and tedious. What do we mean? Nomenclature, commas, and hundreds of other criteria. It’s not glamorous or glitzy. But it matters.
Many CFOs are unaware of data issues, and some are unaware of the difficult lifting required to meet their needs. That’s partial because the concerns are technical, and partly because individuals are reluctant to address them. Nobody wants to bring terrible news.
8. New things in new ways
Data scientists, business analysts, and storytellers are in high demand in finance. This is a big change for many finance businesses. Make sure your new personnel reflects your vision for the future. Along with technical talents, great customer service focus, flexibility, and teamwork skills are important attributes. Also, everyone in your organization should be able to communicate, affect, and influence the value of finance. Make each hire count.
Changing your talent model is easier than implementing new technologies. Clearly linked, yet cultural and organizational issues affecting your staff may require more time and care. Every new hiring in finance should be evaluated for 2025.
According to what has been said, technology has played an important role in our daily lives, and it is clear that it has much more potential in the future. Financial technology, while making it easier to manage our finances, does not change the fact that how we move in the future is still in our hands – albeit with a little assistance from technological advancement.