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Digital accounting: the brand-new hub for innovative fintech

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Trends in fintech in 2022

Chip Mahan, VP, Global Payments and Banking at Sage

 

Professional accounting services and fintech might sound like a bit of an unusual coupling. But in reality, fintech providers are discovering new vertical market opportunities in the accounting space and propelling rapid growth through professional services.

The truth is that digital accounting and fintech complement each other perfectly. Businesses can incorporate payment and banking services into their accounting software to facilitate online payments, reconcile transactions and invoices, and even connect with banks to manage loans and investments.

This vertical integration has created a vibrant ecosystem of fintech partners driving service innovation. What’s more, these services can be scaled globally through partnerships with established brands, providing customers with automated processes that combine payments and banking with accounting, finance, and payroll. Here’s how accounting experts are helping to spearhead this accounting revolution alongside their tech partners.

 

The push for untapped tech adoption

One issue that’s long been a challenge for UK enterprises, and accountants in particular, is a relatively slow adoption of technology.

Modern digital tools help organisations to increase agility, improve communication and coordination, automate tasks to free up staff, and much more. Yet new UK research shows that the current level of technology used by small and medium businesses (SMBs) contributes less than half of its potential revenue. The study states that if SMBs leverage the full benefits of the technology on offer, they could unlock an extra £232 billion for a total UK tech use value of £448 billion annually.

Reasons for the relatively low uptake could be a hesitancy to depend on technology, insufficient awareness of its benefits, and a desire to do things ‘the way they’ve always been done’. But perhaps the main culprit is a lack of technologies that support the exact needs of the UK’s assortment of businesses and professionals. And it’s this scarcity that’s led to the growth of exciting, important partnerships between professional service providers and fintech innovators.

 

Disruptive digitisation

Digital accounting software has evolved exponentially in the last few years, automating everything from bookkeeping to tax and compliance. This has coincided with the recent boom of self-service technology, particularly during the pandemic, meaning that customers now expect all their money transfers, payments, loan management, and banking to be simple, secure, and immediately available 24/7. This is reinforced by numerous industry disruptions like digital challenger banks, and new regulations such as Europe’s Open Banking and the UK’s Making Tax Digital.

Partnerships between digital accounting providers and fintech experts allow for the creation of specialised software that automates and digitises financial services. Working with hundreds of tech partners, companies can bring innovative solutions to market far faster and support users of their existing products and services with upgraded functionalities and transformative app integrations. This hub of innovation offers fintech providers the unfettered freedom to work on inventive new ideas and develop ground-breaking features, safe in the knowledge that their partner’s vast customer base is waiting to buy into them.

With new products now tailored to suit countless vertical use cases, these fintech companies can extend their reach, create fresh business models, and tap into new revenue streams. Culminating in state-of-the-art products that deliver all-in-one solutions to help customers plug into everything from eCommerce to digital banking.

 

Supporting customers to save time, money and worry

To unlock the mutually-beneficial opportunities, leaders in the accounting and financial technology spaces are now forming multiple tech partnerships, working on everything from niche new features to comprehensive platforms.

Recently, Sage partnered with Lloyds Bank and Satago to offer fast, flexible access to cash based on the value of unpaid invoices, regardless of payment terms, to help businesses to manage and protect their cash flow. The company also joined forces with Tide to build a complete end-to-end accounting and tax solution for small businesses. With this new service Tide members can enjoy integrated, automated accounting and bookkeeping services from within their bank account, helping them to gain better control of their accounting while staying compliant and avoiding penalties.
It’s these types of collaborations that are helping to drive the sector in bold new directions. They’re simply a win-win for all types of organisations – the sharing of knowledge, skills, and resources consistently results in thrilling innovations, stronger value propositions, and accelerated mutual growth. Meanwhile, customers get to enjoy brand-new products and services that transform their day-to-workloads. As new partnerships continuously pop up with fresh creations, it’s an incredibly exciting time to be a part of the digital accounting and fintech industries.

 

Business

How can businesses boost employee experience for finance professionals?

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By Martin Schirmer, President, Enterprise Service Management, IFS

Over the course of the last year, The Great Resignation has seriously impacted organisations across the globe. Staff are quitting in huge numbers, leaving companies unprepared and struggling to fulfil their workloads. In fact, mass departures are happening at all levels of the labour market, as employees attempt to adapt to the hybrid working model and growing socio-economic uncertainty.

In light of this, optimising the employee experience (EX) to attract and retain talent has become a top priority for employers. Organisations have come to understand the necessity of taking immediate steps to drive employee engagement and reshape workplace culture.

The financial services (FS) industry is no exception to this trend. From increasing employee burnout to growing career dissatisfaction, the pandemic has exacerbated the need for transformation across finance teams. This is exemplified by recent data from Spendesk, which found that approximately 40% of finance professionals are willing to leave their roles or already have concrete plans to do so.

Organisations looking to get ahead of the competition must put in extra efforts to retain their existing workforce. The fact is that employee expectations and requirements have irreversibly changed, with more workforces becoming increasingly distributed. Today’s hyper-connected workforce values flexibility and simplicity, and it is organisations which offer these experiences that will succeed in the long term.

As part of this process, finance companies must look towards the power of technology to create seamless user experiences across devices. From automating workflows to improving overall efficiencies, Enterprise Service Management (ESM) can help organisations to boost user satisfaction and go that extra mile for their employees.

How poor EXs are driving finance teams to quit

With over 40% of employees spending a significant proportion of their time carrying out mundane, manual tasks, it is not surprising that poor EXs are having a detrimental impact on job satisfaction. Finance teams in particular have been slower to digitise core processes, leading to a heavy reliance on manual tasks. This not only increases the amount of time spent on each task, but also impacts the engagement levels of finance professionals who cannot focus on more strategic aspects of their roles.

As a result of the pandemic, flexibility has also moved to the forefront of finance teams’ desires. Given the fast-paced nature of this industry, the conversation surrounding work-life balance has increased rapidly. Failure to offer flexible working policies, coupled with a lack of technology to facilitate this flexibility, has led to poor EXs across the board.

Most notably, the overarching move to omnichannel, digital-first approaches has dramatically reset both customer and employee needs. Finance is the third-slowest running corporate function behind legal and IT. Operating in a competitive environment, 73% of finance operations are facing pressures to speed up, improve efficiency, and prioritise automation.

Mitigating the problem using technology

ESM, an offshoot of IT Service management (ITSM), is the cornerstone of smart digital transformation for organisations. It can help finance teams to streamline and automate routine processes, such as monitoring the status of service requests, approving expenses, sending invoices, and tracking payments. In turn, this will free up employees’ time, reducing the burden of manual tasks and enabling them to focus on the more strategic tasks.

Another advantage ESM can offer finance teams is the ability to adapt to each department’s minimum requirements for data privacy. Accounting, for example, needs additional layers of compliance built into the system.

ESM can also facilitate cross-departmental collaboration, helping finance professionals to communicate with the wider business and perform tasks more effectively.  Organisations can use ESM to incorporate all internal services into a single platform, offering employees a well-rounded view of the business and promoting a sense of community across all levels of an organisation. This will boost productivity, whilst enhancing visibility and control.

Ultimately, the current job landscape has brought with it a new set of challenges. Organisations in the FS industry looking to navigate the storm and retain top talent must refocus their efforts on bolstering the EX. Embracing a new era of technological innovation that empowers employees and boosts engagement is a critical step in this process.

 

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Finance

The penny has dropped – the finance sector needs Data Governance-as-a-Service

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By Michael Queenan, Co-Founder and CEO at Nephos Technologies

 

In our data-driven world, the amount of data is growing exponentially and it’s predicted that the amount generated each second in the financial industry will grow 700% this year. Leaders of financial services organisations have realised two things since the start of the pandemic – that data on their customers and services is their greatest asset and that they must embrace technology to make intelligent business decisions to grow successfully and outperform competitors.

Since the financial sector holds arguably the most valuable and sensitive information, organisations must do more than just store this data. They need to ensure its security, integrity, and governance so that it’s useful in improving the brand’s customer experience, innovating products and services or predicting future trends to improve risk management.

Yet without a robust data governance model – a strong set of rules and processes for what data means, and how it is categorised, owned, accessed, stored, and used – data is worthless. Only when an effective data governance model has been established, will data meet regulations and be secure. Data leaders must shift gear in their data processes to avoid hefty compliance penalties and unlock potential value from their data assets.

 

The data governance challenges faced by financial sector organisations

The barriers for achieving ‘good governance’ are many and varied. Ignorance of the benefits of data governance is a major hurdle for developing a governance strategy. Many financial firms have invested – at significant cost – in data governance tools, but struggle to deliver the benefits they are looking for. Many don’t have the right skills and resources to maximise or set the right metrics to measure the business value. Some are compromised by unoptimised gaps in their approach.

With many different elements to master, data governance is complex – from identifying the right tools to managing the challenges presented by encryption, all whilst ensuring that data quality is sustained and data is managed responsibly.  The negative impact of misplaced investment in ineffective data governance strategies can be significant, for the short and long-term.

 

Why data governance matters

With the acceleration of digital adoption in the financial services industry, it has become crucial to deliver seamless, intelligent customer experiences. Data governance is the key to managing data flow, ensuring compliance, and scaling up. Proof that data governance matters is evident in the Master Data Management Market growth prediction, from $16.7 billion in 2022 to $34.5 billion by 2027.

Data governance is a comprehensive methodology for ensuring the quality and security of the company’s data. The various benefits of an effective data governance strategy include minimised risk, coherent policies, metrics and processes, and better implementation of compliance and enhanced data value. However, for financial services, there are significant advantages as a result of the following:

  • Data governance saves the company money by increasing efficiency. Precious time can be saved by having good quality data and a single source of truth, with less duplication of data, and less time needed to correct data errors.
  • Good data governance gives the business confidence in having accurate and trustworthy data, the holy grail for delivering outperforming customer experiences.
  • A data-driven culture can also be introduced to your business through good data governance. With the ability to gather critical customer and market insights that can guide the direction of your business, data governance allows financial institutions to drive innovation and gain competitive advantage.

 

Bridging the governance gap with Data Governance-as-a-Service (DGaaS)

Increasingly organisations are turning to the ‘as-a-Service’ model to bridge the gaps in their data governance capabilities, as well as ensure critical alignment between objectives and results. This dedicated approach aims to minimise the risk of investments and delivers the strategy and proven technologies required to ensure data governance success.

DGaaS can be applied across each major component required to deliver good data governance. First, it uses software tools to scan all data within a typically complex financial services data infrastructure in its data discovery and classification phase. Without this detailed insight, organisations can’t always identify their data assets, any data mishandling and the level of risk generated.

The next part of the process is creation and documentation. This means organisations can drive their governance objectives through to execution, while removing the operational and recruitment overheads, which means they can purely focus on value created from data. In doing so, organisations can convert the raw outputs from the toolsets into meaningful business outputs.

With a holistic approach, DGaaS allows financial services organisations to focus on the transformational potential of data while critically staying compliant.

 

Reaping the benefits

Data is a vital asset to enable financial sector organisations to build the right capabilities to deliver their services and remain competitive. With a robust data governance model, financial firms can assess risk, predict trends, and seize market opportunities based on data-driven insights. Only data-driven processes, built on high quality and effectively governed data, will enable them to build outstanding customer experiences. It’s essential that leaders realise data governance is a fundamental discipline, not a luxury, and establish an effective model to formalise processes and responsibilities before their data lets them down.

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