Debbie Green, VP of Applications, Oracle
Financial teams across the UK have been repeatedly told that data is the key to helping a business thrive. But the reality for many finance teams is that the key data is not truly in their hands (yet) as they are left trawling through hordes of data to find simple answers to their questions.
This is why there needs to be a new approach to analytics for finance professionals. Put simply, they need to be given the tools that make it easier to stay informed about key financial measures. Finance leaders could then be empowered to make business critical decisions if they had access to a simple resource that allows them to set alerts on the most-relevant KPIs, review data through visualisations and narratives, and share these findings with colleagues via an app like Slack or WhatsApp—all from an app on their phone or laptop.
Analytics should be tied into the everyday work experience of the finance team and be used regularly to track performance, monitor activity and run what-if scenarios. In essence, the data should be coming to the user, rather than the user having to seek the data.
For example, a CFO at a company focused on top-line growth may set KPIs around operating expense, capital expenditure and payroll-to-revenue ratio, so they can see how the business’ focus is affecting the bottom line. When certain thresholds are reached, such as the cost of payroll getting close to reaching an unstainable level, finance leaders will be alerted so they can drill down into the analytics and plan their next steps strategically. They should be able to then share these insights quickly with their team so that they can react with agility and speed.
CFOs driving strategic change
CFOs hold a unique position in the modern business, if they have the ability to access data and gleam insights from across the organisation. This will not only lead to the evolution of the finance team, but also made them a vital cog in the successful running of a business.
As CFOs and their finance teams play an increasingly strategic role, they are often the ones driving investments in digital technology and advocating for more new business models, such as moving to a subscription model.
Finance leaders are increasingly becoming the biggest champions of data and analytics, but many companies are struggling with what data-driven actually means in practice.
What it often means is transitioning from a spreadsheet-dependent, collect-and-report business to one that can use data to make strategic decisions across functional areas—for example, shifting the marketing and sales strategies in a region based on projections of supply and demand. It’s a complex process involving big changes to business processes across teams, as well as to data management and access, and the very culture of decision-making in an organisation.
But to make this possible, companies and their finance teams need to be able to access this data easily and have the ability to perform the necessary analytics. It also requires a more holistic approach, where data is pulled in from multiple sources from across the organisation, so that CFOs can view performance across the company and make decisions based on these insights.
AI powering greater insights
What will drive even further insight and empower the finance teams more, is ensuring that Artificial intelligence (AI) and Machine Learning (ML) is embedded into these analytic tools. Going forward, every aspect of the production and consumption of data insights will be augmented by AI.
A productivity gap is already widening between companies using legacy systems and those using cloud-based AI and other advanced technologies. For example, industries with high productivity growth—oil and gas extraction, media and communications, and agriculture—invest in digital technology at a rate five times higher than low-productivity sectors. These industries have learned that they can seamlessly introduce ML and AI into their processes thanks to the cloud. They know that investments in these technologies have the broadest impact in the cloud compared with legacy systems and infrastructure.
When finance leaders set the KPIs they wish to analyse, a machine learning algorithm can simply sit in the background, constantly learning how each user interacts with the system so it can further personalise data and streamline processes. This gives businesses the edge, as they can quickly access the most important data and analyse the insights that can help their business thrive.
As the importance of the finance team continues to increase, it’s time to put the power of analytics in their hands.
HOW ENTERPRISE INFORMATION MANAGEMENT, CLOUD AND ANALYTICS WILL IMPACT FINANCIAL SERVICES IN 2020
Richard Mill, director at Business Systems (UK) Ltd
Business Systems’ Will Davenport on which drivers of change will most affect the financial services sector in 2020
Recent multi-million pound fines levied on financial services firms such as Tullet Prebon have acted as a wake-up call to City CIOs. That’s because the FCA now includes Voice as a record medium, and is no longer prepared to tolerate delays in locating conversations it is examining.
As a direct result, we will witness the formal incorporation of Voice as a peer form of information storage to email, text or internal documentation. That’s not happened to date as it’s historically been an unstructured and fairly unwieldy medium, but modern technology is completely changing that picture.
City firms are starting to manage all their various data assets by using an EIM (Enterprise Information Management) approach. This is a discipline centred on being able to integrate all your data into one structure and applying the right archiving and retrieval workflows across everything you do: we therefore anticipate a great deal of interest in audio-enabled EIM project work in 2020.
Cloud sweeps all before it
In 2020, the cloud tide will be unstoppable. That’s partly because people are used to accessing applications in the cloud or storing data there, but there’s now going to be a push to use cloud as a way to centralise the bank’s IT systems. The argument as to whether the cloud is insecure has long been settled with City CIOs judging cloud as often safer than their existing on-premise solution.
As a result, there’s no reason to continue paying for expensive hardware that requires tending, patching and upgrading. In 2020, look for cloud trading turrets with the back-end being remote and offering porting of voice records into the cloud. That latter step may be a challenge for financial services firms with multiple and legacy voice recording platforms in place, so the cloud move may lead to overdue rationalisation and integration projects.
Ultimately, the cloud represents a whole new approach to consuming IT and building apps in the Square Mile. Financial services firms are frustrated with devoting too much resource to old mainframe systems when they would like the modern technology infrastructure in place to support them to be more agile. Cloud will be very liberating for the sector.
Strong analytics user cases emerge
Analytics technology has evolved and what used to be referred to as dumb data is now a source of business intelligence. Useful data hidden in audio files that used to be discoverable through hours of transcription can now be processed in modern speech analytics systems — making what was originally inert, unstructured data become structured data, which can be easily queried in order to spot patterns and find interesting anomalies.
I predict that in the new decade using speech analytics financial services firms will finally gain a richer understanding of what their customers ask for and find problematic, as data mining probes can be run over a vast set of customer interactions.
It will mean trading floor managers will have even better detection and forensic tools at their disposal to understand what’s happening, which will be a win-win for customer and regulator alike.
In 2020, Voice will be seen an important strategic asset for the financial services firm CIO.
WILL BLOCKCHAIN REVOLUTIONIZE FINANCE?
By Ken Timsit, ConsenSys
Over the last 10 years, researchers, software developers, start-ups, and large companies have been conducting experiments aimed at determining whether networks based on blockchain technology can ultimately – in whole or in part – replace the infrastructure on which financial institutions and capital markets are built.
In today’s electronic databases, any information can theoretically be replicated at will. This is why most governments allow only regulated actors to keep records of digitized assets (banks, depositories), to avoid pitfalls such as the execution of misleading transactions or the creation of artificial assets. With blockchain, these pitfalls can be avoided at the source code of the technology, which is available to all members of the network. The creation of Ethereum enabled a more robust blockchain network capable of “smart contracts”, which once programmed, can run automatically without the results being modified or manipulated.
Contrary to what some critics argue, the potential of the blockchain is not the creation of a free and unregulated space in which everyone can invent new financial instruments. Rather, the potential lies in creating a much more efficient and globalized commercial and financial infrastructure, in which many layers of control and intermediation are no longer needed as they are replaced by transparent and immutable IT rules that ensure the same risk management functions.
For example, bonds are essential financial instruments on which a large part of our economy and savings are based. The issue and exchange of a bond requires the intervention of several dozen financial institutions (issuers, intermediaries and investors). Some regulated players in this intermediary chain exist mainly to ensure that it is possible to know, at any time, who holds each bond, in order to guarantee their rights to its bearers.
It is theoretically possible to simplify these stacks of operators by linking them to a global blockchain network, open to all stakeholders in the industry. The blockchain network can thus ensure at any time that the number of outstanding bonds corresponds exactly to the number of bonds issued, and that each exchange transaction is carried out without the risk of default.
The blockchain revolution is first and foremost the reduction of costs and delays caused by the current financial infrastructure. The blockchain revolution also creates innovation opportunities for consumers, savers, and investors.
The Web3 revolution, often used to refer to the blockchain revolution, will be driven by the reduction in transaction costs, allowing the emergence of new peer-to-peer business models that we are not yet able to accurately predict, but which will probably participate in a rebalancing of the relationships between financial institutions and their clients. Some international peer-to-peer payment and loan-to-peer savings investment models are already attracting increasing interest from the most sophisticated consumers.
Where are we in 2020?
Today, the blockchain revolution is still in its infancy. Transaction volumes through blockchain networks, public and private, are low compared to those of existing systems. The fixed costs of the technology are still relatively high, and the user experience leaves something to be desired.
However, innovations abound. It is already possible for me, from my smartphone, to buy digital assets whose value is equal to about one US dollar, and to lend them in three clicks to other users who will pay me between 1% and 10% per year for this service, depending on the type of platform.
The number of large operational business projects is still small, but very promising. Numerous international commodity trading players have joined forces to create Vakt and komgo, two platforms that contribute to a significant simplification of trade and oil financing. Similar and competing projects, Voltron and Marco Polo, are being launched. On the corporate side, the Capbridge 1x platform (Singapore) already allows shares to be traded on an Ethereum blockchain network. Other important projects such as LiquidShare (France), SIX Digital Exchange (Switzerland), Daura (with Deutsche Borse and Swisscom in Switzerland), Synapse (Hong Kong Stock Exchange) are in preparation. The World Bank, Société Générale and Santander have issued bonds on an Ethereum blockchain network. These initiatives are still experimental but have attracted significant interest from financial institutions around the world.
And of course, many projects aim to revolutionize global payments by creating digital assets on blockchain networks that are fixed in Euros, U.S. Dollars or other currencies, such as those of the Monetary Authority of Singapore, the South African Reserve Bank, and Union Bank of the Philippines. Since the announcement of the Facebook-initiated Libra project, many governments have expressed concern about the possibility of private companies controlling global payment flows, and have asked their domestic financial institutions to redouble their efforts to explore competing initiatives.
All of this is to say that adoption is happening, albeit gradually. The middlemen and intermediaries of the financial world will not be replaced overnight. Moreover, the exact formation or architecture of the new financial system is impossible to predict with accuracy. However, it’s safe to say that blockchain will enable a financial system that is more efficient and yields more value-add to consumers, users, and investors.
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