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Finance

STOP COUNTING THE PENNIES (YOURSELF): WHY NOW IS THE TIME TO DIGITISE ORDER-TO-CASH PROCESSES

By Thomas Dobis, DXC’s BPS Global Advisory Finance and Accounting (F&A) lead

 

Improved efficiency and cycle times on order-to-cash (OTC) processes are key issues for finance managers across the world. As organisations increasingly digitise systems and update processes, finance departments are looking to do the same. Some businesses will choose to undertake system updates, adding third-party bolt-ons wherever they can, others might choose to start from scratch with new digital platforms that incorporate new automation processes. This can be daunting, but there are some common starting points.

Many organisations will use enterprise resource planning (ERP) platforms to process and manage the majority of transactions in their finance ecosystems, such as accounts receivable, credit, payables, statement preparation, and others. Often ERPs have been incrementally updated, or have offered supplementary tools, to support new digital formats and produce better results. These retooled platforms are delivering results and offer companies a standardised platform to manage not only finance transactions, but also similar activities in other domains where administration of transactions is important. While these platforms have become more flexible, they can be time-consuming to configure or re-configure because they are often multi-dimensional.

In addition, OTC is customer sensitive – it can have important impacts on customer satisfaction and therefore future relationships. Using the standard functionality of an ERP system is not possible when managing line-item or customer invoice information, where there may be thousands of transactions a month that need to be processed and converted digitally. Bolt-ons frequently take too much time to configure and require too much data transferring and reconciliation to maintain. Thankfully there is another way.

 

Modernisation to automation

Let’s face it, no one likes replacing functional systems that are core to their business operations. But the lure of technologies such as digitisation, robotic process automation (RPA), machine learning, artificial intelligence (AI), and digital agents or chatbots, as well as newly designed workflow tools/case management tools, promise to improve efficiency and cycle times, and lower costs more quickly than reconfigured ERPs and bolt-ons.

However, upgrading entire IT ecosystems and adopting new tools has proven a challenge. As companies experiment with new tools, they often struggle to execute integration with existing platforms and tools. The challenge is how to leverage the power of digitisation and automation to achieve optimum benefits. This is not necessarily easy, especially as various generations of systems will need to be configured and reconfigured in a smart way, so they all work together efficiently.

Just as processing power needs to be sorted out, companies will also need to determine which types of generic activities to target for digitisation and RPA. Here are a few examples of OTC activities to consider for RPA:

  • Inputting data
  • Checking data for compliance with business rules
  • Extracting data from disparate sources
  • Merging data sources
  • Reconciling/validating data between sources/within defined business rules
  • Creating, combining and amending documents
  • Uploading files to applications
  • Manging files
  • Reporting
  • Sending, reading and receiving emails

The next step is to concentrate on specific types of transactions and using an integrated approach, tackle the efficiency gap that exists from receiving many different types of inputs to process certain transactions. The quick wins for RPA are in the source-to-pay domain, focusing on e-invoicing with suppliers, supplier master data, and blocked and parked invoices. But we’re starting to see more complex domains targeted, and OTC is one of those processing areas that ripe for redesign.

 

The case for automating OTC

Taking information that comes from customers and converting it into a digital format for use with RPA, AI, digital agents, and machine learning solutions, is fertile ground for harvesting digitisation and automation opportunities. While there are certain processing requirements that make OTC unique and require analogue (like telephone contacts) data, as well as digital data (payment info from banks), there are also some very generic, every-day activities that happen at the core of the OTC process, such as document processing, adjustments to orders and invoices, application of promotional offers, etc.

When grouped together, these generic activities create thousands of on-going daily adjustments. These can be automated with RPA, using cloud-enabled software bots and scripts. If you add up the workers employed for managing these transactions across the enterprise, there could be hundreds of workers either clustered or decentralised, who impact processes downstream and upstream in other domains (customer remittances, bank information, adjustments to invoice values or sales updates/requests from customers). These processes determine payment behaviours, dictate working capital requirements and impact customer satisfaction.

Arguably the OTC process will be most beneficial if all information is digitised, identified, and used in various ways to drive new insights from raw data. A well-designed and maintained RPA solution could potentially save enterprises more than 30 per cent; given that most organisations won’t want to replace their core operating platforms or ERP systems, they will need a standardised approach across different systems and tools. It will also be essential to extend core systems so they can add RPA and other digital technologies to improve processing capabilities, either running them alongside bolt-on tools or instead of them. Although today this might seem like a leap for many businesses, the benefits are clear and waiting even longer to modernise these processes could see them falling behind competition.

 

Finance

2020: THE YEAR OPERATIONAL RESILIENCE AND CYBER-RISK TAKE CENTRE STAGE IN FINANCIAL SERVICES

Miles Tappin, VP of EMEA for ThreatConnect, explores how financial providers can build a cyber security strategy that enables operational resilience

 

Financial institutions are operating in a new digital landscape. New disruptive technologies – from Artificial intelligence (AI) to crypto-currencies and big data – have driven change and innovation. In retail banking, new fintech providers have seized the opportunity to offer personalised services and challenge existing providers. For example, Klarna, has successfully disrupted the payments sector and is now established as Europe’s biggest fintech firm. It has quickly emerged as an alternative to credit cards since bursting onto scene, allowing consumers to shop now and pay later with retailers, such as H&M, Ikea and Zara.

To compete with the rising number of fintech providers and fulfil growing consumer expectations, traditional financial institutions are developing robust digital ecosystems that can deliver omnichannel service models. However, it’s becoming clear that the pace of technological change is a double-edged sword. It enables innovation and change but it is also one of the most destructive forces in the financial services ecosystem today.

 

Financial services emerge as a hotbed for cybercriminals

2020 has emerged as a defining year for cybersecurity in the financial services industry. It started with an unprecedented attack against Travelex where hackers successfully took some of the currency providers offline for nearly a month. Then came Coronavirus which sparked a new wave of malware and phishing threats. Research from VMware Carbon Black Cloud revealed that threats against financial institutions have surged by 238% since the start of the pandemic.

The renewed interest from cyber criminals comes at a time when regulators are paying close attention to the resilience of the sector. After a string of IT failures and breaches, financial organisations in the UK have been given a mandate from regulators to improve operational resilience. This means ensuring business models can withstand disruptive events from hackers or adversaries and quickly recover to protect the stability of financial systems.

In December 2019, the UK’s financial regulators published a series of consultation papers outlining their proposed approach to achieving greater operational resilience. The proposals suggested that financial institutions will be required to map out the systems and processes that support business services in order to identify any potential vulnerabilities that would pose a risk to the stability of the UK financial system or the firm’s standing.

 

A mandate for change

Where cybersecurity used to be a classic back-office concern, it’s now a central part of digital strategies and a key pillar of both reputation and customer retention – financial legislation leaves no room for failure. All financial institutions need to ensure they have full visibility of their systems and can detect any potential threats.

The challenge for financial institutions is making the security tools they have purchased separately work together in tandem. Security teams buy a firewall, an email filter, threat intelligence feeds, antivirus software or enhanced endpoint protection, and whatever else they need individually. Each of them does a good job but they don’t talk to each other and valuable time is lost tending to individual systems that become a burden to run. At the same time, running multiple security systems is expensive. The more systems you have, the more highly skilled staff you need to manage them, and they’re few and far between.

 

Improving intelligence sharing across borders and communities

To reduce complexity and simplify decision making, financial organisations need to unify processes and technology to harness the security intelligence that comes from across their own security programmes and external sources to drive down risk. However, no financial institution can tackle the problem alone. Experienced threat actors using advanced techniques are constantly targeting the financial sector. The industry needs to come together as a whole to foster a sense of collaboration and data sharing.

In the same way that financial institutions have introduced open banking to deliver a fairer service to customers, the same needs to apply to security – all parts of the financial ecosystem need to unite and share information to learn from one another and succeed in the fight against adversaries that operate across borders.

By sharing alerts on cyber hazards and risk across financial institutions and with law enforcement, government agencies and other relevant authorities, it’s possible to build industry specific insights into cyber security threats and quickly pivot to gain more information on those specific threats and threat actors. By working together, a picture can be painted on threats coming from all manner of malicious activity, from malware to ransomware, to phishing and software vulnerabilities.

 

Breaking down barriers

Having the right intelligence is not enough to ensure that intelligence is turned into action. Breaking down information and process silos across security teams allows financial organisation to analyse and act on the most pertinent information. Everyone has access to the risk and threats that matter most, and orchestration and automation of response helps overwhelmed security teams prioritise response plans and improve efficiencies in their security programme.

Integrating internal security tools and technologies, while also connecting to external sources of intelligence, creates a single source of intelligence that feeds operations and enables organisations to direct action against the threats that matter most. The outcomes of those actions further feed intelligence, providing the ability to further refine the efficacy of the entire security lifecycle.

This approach provides a continuous feedback loop for the people, processes and technologies that make up the security programme. It allows financial institutions to keep up with threat actors that have consistently adapted their methods to profit at the expense of the financial industry. Something that won’t stop anytime soon.

 

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Finance

GROWTH OF FINANCIAL MARKETS AND TECHNOLOGY

Ashish Jain,CEO, Future FX

 

The economic development of any nation completely depends on its financial structure both in long term and short term. The financial system and its efficiency determines the success of the nation in terms of economic growth.

As most of the sectors are taking advantages of the technology evolved since 1980, financial sector has also transformed immensely.

The Bombay Stock Exchange (BSE), dating back to 1875, started as a broker’s forum under a tree on Dalal Street, and is Asia’s oldest stock exchange. For over a century, registered brokers have made trades happen.

The National Stock Exchange (NSE) came up in 1994 to provide screen-based electronic trading. It gave fibre-optic access to brokers in other cities who could join the trading in the centralized exchange located in Mumbai.

Dematerialization of shares started in the late 1990s and online trading began at the turn of the millennium where investors could buy and sell shares through electronic brokers such as ICICI Direct and Sharekhan.

As more and more elements of the stock market get digitized, it increases its potential to attract a new generation of investors.

Online financial services company Zerodha brought “discount broking” to India in 2010, applying a flat fee of ₹20 on a trade whatever its size. This attracted young investors who could do a trade in less commission. Now, we have all the marketing and trading apps on our phones and we can easily make trades.

The insurance sector has eliminates the role of broker and now anyone can buy insurance through mobile phones. Some such apps are HDFC ERGO insurance, Insure, Caringly Yours, etc.

Trade has always been shaped by technology but the rapid development of digital technologies in recent times has the potential to transform international trade profoundly in the years to come.

From the moment we wake up to check how the markets performed overnight until the time we go back to bed before doing another check of how the market is set to open on the other side of the globe, technology now plays a critical role in everything we do and the way we do things.

For the financial markets, the coming of advanced technology has been the key factor behind the transformation in the way things are done. Technology is also at the core of how companies operate and maintain their competitive edge in this vicious environment.

While forex trading and trading in general used to be the domain of institutional and corporate players, today even retail and private investors consider forex an essential component of their overall portfolio. And this is no doubt due to the ease of access and price transparency offered on the electronic platform.

Nowadays, providers need to have the latest technology all the time. They need to add new and build more features to their platform to attract and retain clients.

Traders are now able to monitor their trades from anywhere as long as there is an internet connection. This gives traders more freedom, mobility and flexibility.

The trading in global markets has thus become easy and convenient like never before.

 

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