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HOW FINANCE AS A SERVICE IS SHAPING THE FUTURE OF FINANCIAL SERVICES

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Ivo Gueorguiev, Co-Founder and Executive Chairman, Paynetics

 

Finance as a Service (FaaS) is revolutionising the financial industry as we know it. As a dynamic delivery model that improves on the old manual legacy systems, it provides companies with quality finance management processes using advanced technologies such as artificial intelligence and process automation. FaaS also helps companies better manage their working capital, quickly deliver accurate forecasts, and reduce operating costs.

Consumers have been the key drivers behind the proliferation of FaaS. High customer expectations of financial services have caused providers across B2C and B2B to improve the quality of their user experience and the speed at which they are able to provide services.

The erosion of payment processing costs, increased customer expectations for user experience, and the reduced regulatory barriers have all helped usher in this new generation of payments.

 

Ivo Gueorguiev

The adoption of new financial services

Consumers have become more willing to adopt new technologies and new financial services providers during the pandemic. Visa, for example, processed 400 million extra contactless payments last year. And the number of Brits with a digital-only bank increased by 23% in 2020. Historically, getting consumers to adopt non-traditional providers has been difficult. Banks have spent years building customer relationships and delivering products, therefore they maintain strong levels of residual trust with consumers.

However, the tide is turning as FaaS reshapes the way we think about the finance products we consume. The “push” for this change comes from providers offering services which create a benefit or an unmet need for consumers. The main one being convenience in payments, with digital payments projected to hit $6.6tn in 2021, a 40% jump in two years. The “pull” is derived from something which is highly desirable to the consumer. Both need to create a compelling enough reason for consumers to move, change providers, or sign-up to a new service. What’s clear above all else, is that consumers are in the driving seat.

 

Consumers driving banking innovation

The adoption of new technologies and processes is always faster in consumer audiences than in business audiences. Some of the new and innovative financial services offered to consumers will need to be extended to the SME sector. This is because customers now demand the same speed and User Experience (UX) in their business dealings as they are used to receiving in their personal finances. As technologies like APIs and Open Banking enable consumers to see a range of data from different providers in one view, ease of set-up and use will become a key differentiator.

However, it’s important to acknowledge the tension between what’s good for the consumer and what makes business sense for providers. Ultimately, whoever best understands the consumer is likely to succeed in the market but there are other factors to also consider. Customer desires include product variety, lower costs, and social purpose included in offerings – such as financial inclusion or support for ESG causes. All of these demands combined pose significant challenges to the providers, who are expected to do the impossible by providing more for less.

This is why it’s essential to lower the total cost of ownership. Scaling globally will help smaller fintechs to lower their operating costs.

 

Future winners and losers

Customers, along with the merchants most attuned to consumer needs, will be the main winners in the shift to FaaS. Meanwhile, larger, more established firms might struggle to identify their unique offering. New market entrants that have a clear sense of their purpose and value proposition will do well.

Financial service providers poised to succeed will have a willingness to innovate, digitisation as part of their DNA, and a large customer base from which to mine user-generated data for product and service development. Hence, Big Tech poses a significant threat to both the incumbent players and the emerging fintechs. Companies like Amazon, Google, and Facebook have billions of consumers, and therefore have the rich resource of data to challenge the existing big banks.

 

Remaining competitive

Smaller players must be willing to form alliances and collaborate in order to make up for the huge amount of investment required to build the technological backbone necessary to remain competitive. Operational solidity is also a key building block for FaaS success; payments systems must be highly scalable, always-on, and frictionless. Those who can ensure this will benefit as the demand for such service grows exponentially.

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Finance

HOW AI IS HELPING FINANCIAL ADVISORS ENHANCE GO-TO-MARKET ACTIVITIES

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By Andy Baillie, Vice President, Seismic

 

Financial services have been utilising artificial intelligence (AI) for a range of services for some time now. But more recently, the pandemic has acted as a catalyst for their investment in AI technology.

Adoption of AI in financial services was already high before the pandemic. A McKinsey survey showed that 28% of the financial services firms intend to further increase investment in AI, despite the pandemic’s challenges. Financial advisors who are tasked with increasingly high-value and complex sales cycles can especially benefit from leveraging AI. The ability to combine human intelligence with machine learning can provide precise data-guided pathways for clients at each stage of the sales cycle and improve the buying experience.

It is clear that AI is already playing a critical role in finance and its adoption is forecasted to rise further. But how can AI-guided technologies enhance go-to-market (GTM) activities for financial institutions? And what sort of impact will it have on meaningful, long-term business success?

 

Supporting digital GTM activities

Private banking and wealth management sales teams have been adapting virtual selling quicker than ever before during the pandemic, and change is continuing at a rapid pace. As the sales motion shifted to remote interactions, it became heavily focused on establishing strong relationships with clients in a virtual environment, but this has brought complexities of its own.

Since almost every financial advisor will have followed this shift over the past 12 months, the competition across digital channels has increased. Due to this, potential clients are constantly being bombarded with content from financial services, so it’s vital that these communications are differentiated from the rest in order to stand out from the crowd.

Clients are also beginning to take greater control of their buying journey. With a wealth of online content to compare and inform their decision-making, they can already formulate a judgement – and expect to have the content to formulate their judgement on the company and/or service – before they even interact with a business representative.

On the flipside, those who manage their business’s sales function are required to hit targets, and to do so by optimising their GTM activities. Despite all the disruption, more than half of businesses across all industries have increased their sales targets for 2021 and over 8 in 10 see business growth as a top priority. Data indicates that these trends will continue into the future, with sellers under immense pressure and customers driving a digital-first marketplace.

Ultimately, financial services have to adapt. They must deeply understand their clients’ needs and pain points. In today’s highly competitive market, having a library of effective marketing content that is up-to-date and directly addresses their clients’ concerns is now essential for success.

Fortunately, AI-guided selling has come of age to act as a compass throughout the digital sales cycle and reach even the most ambitious targets. Financial advisors, along with their AI-powered sidekick, will be better equipped to create meaningful customer relationships and simplify high-value GTM and sales activities.

 

Marrying AI with sales success

The key to success in virtual selling is data. Every engagement with clients provides more data in terms of how they are interacting with specific pieces of content. And with these insights, financial advisors can better optimise future interactions. By collecting and analysing contextual data at scale, they can diagnose their clients’ patterns and behaviours to inform their next move.

AI-guided selling solutions enable financial advisors to work smarter. AI technology supplies them with intelligent content insights and recommended actions to advance client conversations. By empowering them with information and data to make their client interactions relevant and worthwhile, they can unlock more effective personalisation.

For example, GTM teams can capitalise on real-time data on content and channel performance to speed up tedious tasks such as writing, tailoring, or converting content, or to determine which content to use for their client meetings. This level of insight ensures resources are better allocated, freeing up time for higher value activities and enhancing the quality of engagements with current and prospective clients.

Financial services have been at the forefront of digital transformation. Therefore, as interactions continue to shift online, AI systems allow financial advisors to customise each piece of content to differentiate themselves from the competition, deliver a more engaging investor experience, and do so at scale.

AI-guided selling is helping financial advisors navigate a competitive digital market by eliminating the vast majority of the guesswork and helping to build stronger relationships that set the financial industry up for success.

 

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Finance

HOW RISING CUSTOMER EXPECTATIONS HAVE BECOME A CATALYST FOR CHANGE IN THE FINANCE FUNCTION

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Ashish Kwatra, Vice President of Finance & Accounting Solutions at Teleperformance India, discusses what the new generation of customers expect from finance outsourcing providers and how businesses can capitalise on emerging market opportunities.

 

Business needs are ever-evolving, leaving every department ripe for digital disruption. Gaps between customer expectations for digital services and current capabilities in the Finance and Accounting (F&A) function are creating more reason for organisations to explore outsourcing. Firms are turning to external service providers that, in essence, become their cloud-based finance teams. Outsourcing operations in this way is giving businesses an opportunity to meet new expectations of becoming agile, resilient, and insights-driven, and ultimately create a long-term competitive strategy.

A recent ISG Report reveals that organisations are on the hunt for F&A outsourcing providers to enable data-driven decisions. This comes as 86 per cent of customers admit their expectations of brands’ digital capabilities have increased since the pandemic struck. The more traditional financial institutions are finding themselves at the centre of this growing pressure to offer advanced technology, holistic advisers, and improved collaboration with clients. F&A outsourcing specialists are improving that level of visibility into finance operations and using generated insights to enhance the end-customer experience (as well as meet general financial needs).

Practices that manage to keep pace with expectations and market trends will therefore gain a significant advantage. – When investing in outsourcing, CFOs should be considering the following factors to ensure its adding the most value to their business.

 

Making the  case for F&A outsourcing

It is a common debate for businesses to decide whether the finance function should be outsourced. As disruptive technologies become more widely adopted and customers more conscious of cutting costs and adding value, the bar for expectations will continue to rise. To deliver the best-in-class performance that is expected of end-users, CFOs must make an informed decision on whether to invest in the specialised services of F&A experts. By partnering with dedicated service providers, organisations can have a direct channel to scalable processes with the below benefits:

Reduction in cost of finance: Taking the steps to boost profitability internally by refocusing on revenue-generating activities and increasing efficiency.

Streamlined target operating model: The daily workflow can become more productive by allowing the experts to streamline operations where possible.

Reduction in revenue leakage: The shift away from cumbersome, legacy processes to more advanced technologies such as Robotic Process Automation can prevent unprecedented revenue drains.

Working capital enhancement: Dedicated teams are equipped to optimise the balance between assets and liabilities, to grant firms more freedom to focus on the company’s core goals – without the hassle of chasing overdue accounts.

 

Demanding more than just transactional services

Aside from performing the transactional duties that come with closing the books on time and remaining compliant, organisations are leaning on F&A outsourcing to tap into more strategic capabilities. Automation, Artificial Intelligence (AI), and Machine Learning are all integral to delivering valuable financial insights to CFOs and translating added value to the end customer. Technologies like these can enable businesses to dig deeper into the financial functions, resulting in seamless, easier financial transactions.

It is not just about using new technologies, the rise of APIs is allowing businesses to work collaboratively to source services that they do not have with third parties, driving data simplification.

Looking ahead, it is expected that new delivery models will emerge as RPA and algorithms join a more diverse financial workforce, whilst new tools and microservices will challenge the traditional ERPs

 

Customers deserve best-in-class service

Clients increasingly expect their service providers to get closer to their customers’ needs. F&A providers should be exceeding the typical service and remaining agile in managing customers finances, and guiding revenue growth and business modelling. Transactions aside, relationship-building has become a must in the remote working environment.

Trust and honesty is core to relationship-building in accounting, and customers will want to know there is a human agent on the other end of the transaction. A High-Tech, High-Touch approach to customer service can be a firm’s brand differentiator in a sector driven by data, whereby empathic connections are balanced with advanced technology.

 

Reimagining the future finance function

Indeed, customer expectations have seen a gradual rise. Many companies have understood the changing dynamics of custiomer expectations, therefore, they have set up several cloud-based finance departments in order to provide the best services to their customers.

In the post-pandemic era, companies trying to remain relevant and keep customers’ finances stable will be more technologically advanced. There is a growing opportunity for organisations to focus on such revenue-generating activities by working with experienced external providers. Outsourcing models ultimately grant CFOs access to the latest technologies and in order to keep up with the latest trends, and in some cases stay ahead of the curve, CFOs must be aware of the changing finance function.

 

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