Most of us already know that cybersecurity risks should be top of mind for any business, company, or organization in the current world where technology applies in almost every sector. According to predictions, hackers are more likely to shift their center of attention to supply chain attacks, a fragile and integral part of the global economy. Other 2022 cybersecurity predictions point out the possibility of the percentage of successful cyberattacks on companies, businesses and organizations decreasing but may still linger above the pre-pandemic levels.
So, how can finance professionals, including those specializing in personal finance, use their skills and knowledge to boost efforts to mitigate and prevent cyberthreats? Cybersecurity experts emphasize that not underestimating how important finance’s role is to cybersecurity issues is fundamental. And although many outside the department might be unaware of the contributions that finance can make, experienced and analytic finance professionals who are also critical thinkers are indispensable to addressing cyber risks.
With that said, finance teams can drive the effort to mitigate and prevent cyberthreats in the following ways;
Following the Money
First, it is essential to understand that cyberattacks are often financially-motivated because financial assets are organizations’ crown jewels. Organizations must understand what their assets are to keep them safe. On this note, the recommendation is to identify key software applications and financial data assets, the likes of cloud finance solutions, and their vulnerabilities. And using their knowledge of organizing finances, the key data’s location, and what systems are used, the finance crew can play a vital role in securing such assets.
With the help of a risk register, organizations can capture and describe identified risks. In most cases, the finance department is usually the owner or holder of the said risk register. Therefore, finance can ensure that the board and the C-suite often review the risk register and that relevant levels throughout the business contribute to reviewing it. It’s also finance’s responsibility to ensure that all levels in an organization are aware of ongoing cyber risks. Additionally, an organization’s finance team can provide insights on managing third-party risks because the finance department is often considered the gatekeeper of transactions with the institution’s outside suppliers.
Focusing on Consequences
Organizations need to understand that cyberattacks could lead to economic and reputational damages and that their finance team is capable of quantifying and communicating possible outcomes of any failures to address these threats effectively. Take, for instance, reputational threat. It can diminish an establishment’s standing in the marketplace. Such damage to the company can transpire when one (or more) of the institution’s vendor or customer data is exposed because of inadequate cyber risk management. Insufficient cyber risk management might intimidate even the best-run and largest businesses’ survival by damaging future profits or market capitalization.
But a finance team can help an organization or business ensure compliance with regulations and related relevant legal and regulatory authorities. Additionally, educating the business leadership and other departments throughout the company about such rules and their role in cybersecurity can help them understand the data breache’s seriousness and ways of addressing them.
Changing Cyber Outlays Perception
Viewing cybersecurity spending as an investment instead of a cost is critical to institutions and businesses. While some company leadership may view cybersecurity as a cost, it’s the finance team’s role to shift this perception by constantly reminding all company levels that they are securing their operations. When such messages come from groups that hold the purse strings, it makes more sense.
In addition, it’s usually very easy for businesses to overspend on cybersecurity. Sometimes companies might even find themselves spending in the wrong areas. By simply failing to examine where funds are accurately needed, many establishments may waste resources. But an organization’s finance lineup can provide informed counsel and guidance on making the best use of cybersecurity spending and assigning it correctly. The finance team ensures a company’s budget decisions are vigorous and challenging.
For instance, a business might throw a lot of cash into a technology solution because it is new and flashy. And to prevent such happenings, the finance department might raise questions on why the technology is fit for the company and whether it genuinely presents more benefits. A company’s finance team can also raise concerns about whether employees are properly armed to use the technology to the best advantage, where training may be a precondition.
Being at the Core of Planning
Organizations and companies should feature a risk security committee with a senior finance individual among the key members. The risk security committee should also set cybersecurity as a priority on its agenda. And depending on the company’s size, the board might require a cybersecurity threat subcommittee with a senior finance employee also involved. With long-term spending plans considering unknown threats, organizations will realize the need for penetration testing for weaknesses in the company’s infrastructure. While the CIO might oversee the incident response plan on the mitigation side, the finance team should also participate.
Management accounts can help handle cybersecurity risks, and the finance team in any organization or business plays a role. In addition to the above ways that finance team leadership can help mitigate and prevent cyberthreats, they can also set the correct tone within the company by setting an example. And that’s not forgetting maintaining vigilance.
Accounting Automation in the Future
Accounting automation is the process of streamlining repetitive tasks in financial processes. For example, some processes like invoicing are time-consuming and repetitive. Automation can reduce manual labor and save businesses both time and money. Also, it helps improve accuracy, reduces errors, and provides more accurate financial reporting.
Accounting automation in the future will be increasingly important for businesses to stay competitive. But every new change comes with both advantages and challenges. Let’s dive in to get ready for this future trend.
Potential Future Benefits of Accounting Automation
Increased Efficiency and Cost Savings
Accounting automation is a great way to increase efficiency and cost savings. For example, AI bookkeeping uses advanced algorithms to automate many accounting tasks. So, companies can track expenses, prepare financial reports, and more using AI.
It reduces the time needed for manual entry. So, businesses can spend fewer labor hours on tedious processes. They can increase efficiency by freeing up resources for more strategic work. It also helps reduce errors and inconsistencies associated with manual processes. So, the cost of compliance is lower because of greater accuracy.
Improved Accuracy and Reliability
Accounting automation can improve accuracy and reliability in accounting processes. For example, Automating bank reconciliation is less prone to errors from human mistakes or miscalculations. You can automate the process to identify discrepancies between the bank statement and accounting records. It helps to ensure that financial reports remain accurate and reliable. So businesses can take corrective action faster than processing data manually.
Streamlined Business Processes
Streamlined business processes involve eliminating unnecessary steps, reducing paperwork, and automating repetitive tasks. This allows businesses to focus on higher-value activities, such as developing new products, improving customer service, and developing strategic plans for the future.
Making a Better Decision
Accounting automation can enhance decision-making in 3 ways.
1. It enables businesses to access real-time information from multiple systems. So they can identify trends for better decision-making.
2. Automated accounting also helps with forecasting, budgeting, and auditing tasks. It enables businesses to be more proactive in their decision-making processes.
3. Also, automated accounting tools can integrate with enterprise resource planning (ERP) systems. They can manage data across the enterprise and make concise decisions that are favorable to the company as a whole.
Increase Customer Satisfaction
Accounting automation can help businesses increase customer satisfaction by streamlining their processes and providing a more efficient customer experience. For example:
4. Automated accounting systems can automate tedious manual tasks such as invoicing, data entry, and payroll processing. This allows businesses to focus on other aspects of their operations that are more important for customer service.
5. Automated accounting systems can also provide customers with more accurate and timely financial information. The information can help them make better decisions about their finances.
6. Also, accounting automation enables businesses to respond quickly to customer inquiries. It helps reduce wait times and improve the overall customer experience. So, you can build better relationships with their customers.
Accounting automation takes place online or comes with cloud-based solutions. So, you can access your information and do your job from anywhere instead of being confined to one spot.
Challenges to Implementing Accounting Automation in the Future
Cost of Technology Infrastructure Upgrades
Automating an accounting system often requires businesses to invest in new hardware and software, such as servers and other associated equipment. These upgrades come with a hefty price tag that may be difficult for small businesses to afford.
There are also extra costs, such as installation fees, setup charges, software licensing fees, cloud storage costs, and maintenance fees.
Training Requirements for Staff Members
Accounting automation involves using advanced technology to automate certain processes. So, it creates a need for trained staff members who can handle the new technology. Training requirements vary depending on the type of software used.
Some common training includes record-keeping procedures, software applications, and troubleshooting skills.
Regulatory Compliance Issues
Accounting automation can be a time-saver, but it also requires firms to be aware of the applicable rules and regulations. Companies must ensure that their automated systems are compliant with relevant laws and regulations such as Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS), and other applicable accounting standards.
Besides, they must also comply with legal requirements related to taxes, financial statements, and other reporting obligations.
So, businesses must consider the complexities of regulatory compliance when automating accounting.
Security and Data Protection Concerns
As businesses move their accounting processes to the cloud, they are exposed to a wide range of potential security risks. Data breaches can cause significant damage to the business’s financial and reputational integrity. Besides, the complexity of automated accounting systems can make it difficult to identify and detect suspicious activities or errors in the system.
To ensure data is kept secure, businesses must have strong measures in place to protect against unauthorized access, encryption, and regular backups of data.
Furthermore, companies must train their staff on the proper use of the system. It helps staff to know how to protect confidential information from being accessed or misused by unauthorized personnel.
Businesses may also need an experienced IT team to monitor and maintain the system to keep up with any changes or updates for optimal performance.
Accounting automation has come a long way in the past few decades. It is likely to continue to advance in the future. As technology continues to evolve, more businesses will likely begin taking advantage of automation in their accounting processes. So, businesses should be aware of the potential challenges and prepare to stay competitive.
Author bio: Kassidy Li is a Certified Public Accountant and online entrepreneur who is passionate about helping people to solve problems and grow wealth with accounting knowledge and technology. She has 10+ accounting experience in small to large-scared corporations and expertise in financial accounting, management accounting, budgeting, and payroll.
Three ways data can help financial organisations thrive in today’s economy
By Rinesh Patel, Global Head of Financial Services, Snowflake
Financial organisations are caught in the middle of an ever-evolving landscape caused, in part, by emergent fintechs, shifting consumer expectations and increased regulatory change. Businesses are therefore turning to their data, re-imagining how they collect, process and analyse it, to drive growth and opportunity.
Despite this intention though, firms can often find themselves overwhelmed with the amount of data at their fingertips. Data tends to reside in individual departments that have no secure, efficient way of sharing it with other teams, creating silos of information. When teams need to collaborate, organisations are faced with additional costs and complexities in the movement of that data. The current infrastructure used by many financial institutions is not able to support the changing requirements of the industry, where data is the lifeblood.
Firms looking to harness their data should leave behind their outdated legacy architecture and implement an enterprise data strategy with a cloud-native platform. They can reposition themselves to accelerate time to market and value, with differentiated products and improved client offerings to gain a critical competitive advantage. Here are three ways that financial services are using better technology and enhanced data management to add business value.
Adhering to regulatory requirements
The volume of global regulations and reporting obligations has risen exponentially in the past decade, creating greater complexity and security challenges for firms capturing and processing data. Many of these regulations were taken by supervisors to ensure financial stability after the financial crisis of 2008. Regulators have greater expectations of firms with the aim of risk mitigation and transparency. With advanced technologies facilitating data capture, storage and analysis now available, supervisory bodies are also keen in part, to ask for additional disclosures because it’s now possible to demand more documentation and seek greater transparency.
The landscape of differing interpretations, overlapping regulatory requirements across asset classes and geographies and strict, even unrealistic deadlines for implementation have forced customers to take tactical quick-fix solutions, elevating operational risk and the chance of regulatory fines. Compliance departments have therefore been spending years building reporting processes, managing inconsistent data sets, maintaining ageing data stores and importantly overseeing differing levels of governance, adding more cost and complexity to the task at hand. For a large multi-segment global bank or asset manager this fragmented and manual approach to data management and analysis is not sustainable given the scale of processes and multi-geographic considerations that they have to comply with.
As regulators continue to push the long-term structural change agenda, financial services must now ready themselves to meet more robust reporting requirements to comply with the ever-changing regulatory landscape. The objective is to simplify and better manage data across teams with the governance and security provided by technological capabilities now offered through modern cloud capabilities to drive needed reporting. This will allow firms to replace old and inconsistent data with a centralised data architecture, providing a single source of truth. The time and cost reduction from data sourcing, ingestion, and the normalisation of data for analysis, can shrink to significantly streamline reporting processes.
Customer 360 experience
Consumers provide financial institutions with a vast amount of information, ranging from their banking habits to their behavioural preferences. Financial organisations have traditionally been slow to tap into the totality of this information to provide a better experience for customers.
The quest to provide greater visibility and a 360-degree view of customer behaviour is at the core of financial services organisations’ priorities. Customers want smooth, easy digital experiences that can speak to their desire for ease of use and convenience. This is seen in the ways virtual banking consumers have opted for technologies that are simple to interact with, self-directed and frictionless when it comes to carrying out digital transactions. New regulations, such as PSD2 and rules around open banking have also primed customers to expect more.
The challenge for legacy institutions is to bring the ease and usability of digital-first platforms with the sophistication of a major, global provider. Tapping into the full spectrum of data created by consumers is central to a successful transition.
Wealth advisory, investment management professionals are increasingly looking at data capabilities to support ongoing relationship management with their clients. Using data to understand customers in this way helps banks to successfully move customers up the wealth value chain. Wealth management organisations can digitise the investment process – from finding customers to managing accounts, and offering bespoke plans. Effective use of data in this sector can free up time for advisors, helping to retain key customers and charge higher commission levels thanks to a new level of personalised service.
Developing an effective ESG strategy
Environmental, social and corporate governance (ESG) considerations have grown in significance with increasing stakeholder pressures, driving a response by firms to prioritise their sustainability agenda. To understand, evaluate the problem and take action, firms need access to technology providing holistic ESG data capabilities and solutions, with performance and scale.
Financial firms are amassing large data sets from the public sector, including government reports, scientific bodies and private sector reports, to understand and address the climate challenge. Businesses are moving with urgency to acquire robust data sets, to meet ESG criteria and sustainability metrics needed to evaluate impact and make progress against their own commitments. There are several pervasive business use cases for teams experiencing ESG data challenges, including portfolio construction, financial planning and regulatory reporting that will require an effective ESG data management strategy.
Ever present challenges in the ingestion, standardisation, and sharing of ESG data will be at the forefront of every organisation – as they process the magnitude of the challenge and transform their operations to address the issue. With cloud-native solutions, firms can use ready-to-use query data across established marketplace data sets. They can then share that data across teams in a secure, governed way – with greater speed to market. Organisations can meet the need for scalable analytics, and access a data ecosystem to build their own proprietary ESG applications for different user and workflow requirements.
A business fit for the future
With data cloud solutions, businesses can effectively analyse the vast amounts of data available to them, equipping them to meet the ever-changing financial landscape. Leaving behind legacy systems will open up a multitude of opportunities and benefits that will drive business growth. This includes developing a 360 view of the customer, improved data governance and the opportunity to use data to support an effective ESG strategy. Without the ability to harness data through the cloud, companies will get left behind the competition and struggle to meet the standards that modern consumers expect.
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