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Stand at the forefront of digital transformation: automation strategies transforming finance

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Benedikt Dischinger, VP, Finance, DocuWare

 

The role of a Chief Financial Officer (CFO) has changed dramatically over the past few years. Finance leaders, who once found themselves simply forecasting, budgeting, and reporting, are now responsible for defining a strategy for a company and seeking productivity improvements that increase growth potential.

It has never been more important to understand business technologies and the benefits they can bring across an organisation. Modern technology not only brings innovation to a business but also better manages risk and meets compliance mandates. That is why CFOs need to stay close to technology trends which are transforming finance and the industries within which they work.

To stand at the forefront of digital transformation, CFOs should look to invest in secure, cost-effective, information-centric technology which automates processes to free up time for employees to focus on innovation and making a profit.

The new age of productivity lies in automation

Common, repetitive tasks and routine decision-making can be expedited and improved with office automation software. Documents and information can flow through workflows that require a human touch only when needed. Old technology like Microsoft Excel simply cannot deliver what finance needs.

Benedikt Dischinger

Let’s look at the example of a simple invoice payment process. When an invoice arrives – be that paper or digital – often an order review and approval is needed by an individual before it even reaches the step of say a manager or finance team. This done manually can take days, sometimes even weeks or months. With automation, however, it is captured, intelligently indexed, electronically routed for approval, and then posted back data to an ERP. Those days and weeks can be cut down to mere hours or minutes.

This one small example of automation freeing up staff time and saving a company money clearly demonstrates that when automation is baked into every process, the benefits grow exponentially.

Make audit prep accurate, simple, and secure

Over the past decade, financial scrutiny and oversight have certainly not eased up by any stretch of the imagination. And that is a good thing. As only from internal and external audits can we ensure accurate reporting and overall healthier corporate behaviour.

Audits are not just on the accounting department’s shoulders. For those businesses that are still dependent on manual tasks or paper-based information, every team is affected by the time-wasting document searches and endless inquiries that come with an audit.

An intelligent digital document management solution empowers finance, controlling, HR, procurement, and other teams to prepare for audits with absolute confidence. Simple queries pull together relevant information and deliver it digitally. With a complete set of files, the threat of fines and delays disappears. We also know that precise monitoring of audit trails has never been more important and through these systems whoever accesses highly confidential financial data this information can be monitored anytime, anywhere, whenever necessary.

Data is a valuable commodity that must be protected

Every month we see another data breach hit the headlines. No industry has been safe from the target of hackers, threatening the privacy of employees and customers alike, the competitive advantage of the business and the credibility of the brand. Information is a hugely valuable commodity in this day and age and that with why it has never been more vulnerable as well.

The CFO and the finance organisation must invest in secure technology to manage their information. Every system, from the ERP through the analytics tools to the capture and document management solution, must adhere to the strictest protocols to support the likes of redundant data storage, tight access rights and data separation, comprehensive disaster recovery, support for compliance mandates and end-to-end encryption. It is more than fair to say that these issues will continue to top the priority list of every finance leader in companies of all sizes for quite some time.

Implement technology to prevent fraud rather than fight it

In companies of all sizes, the escalation of fraud against finance is an unfortunate trend that just won’t go away. CFOs and finance teams must improve fraud monitoring and the prevention against vendor fraud schemes. The risks are simply too high to ignore, with threats delivering real consequences including severe damage to the company’s reputation, direct loss of business, exposure to civil or criminal liability and increased risk of noncompliance with industry and legislative requirements.

Even basic technologies and processes can go a long way in preventing disastrous outcomes for an organisation. For instance, digital approval workflow can reject invoices that are questionable quickly, and AI-based indexing can verify invoice numbers to eliminate duplicate payments. Strong information and document management tools will provide clear visibility of processed invoices to also help decrease fraud.

Make your move to the cloud now

The shift from on-premises IT stacks to on-demand cloud services has been one of the technology stories of the decade, bringing us subsequent technologies like big data analytics, blockchain and machine learning. And, given recent challenging economic conditions, this transformational trend has only accelerated further and continues to do so.

There are so many advantages to make the move to the cloud. Employees are no longer bound by internal networks and distant data centres. Lighter subscriptions to services (which are only required as needed) enables predictable budget planning. Simplified maintenance as cloud service providers assume responsibility for system upgrades and apply security patches. Deeper, up-to-date security beyond anything most businesses could practically do in-house. And that’s only to name a few.

With the cloud, a business can free IT from reactive patching and focus on more strategic projects like system integrations. And, with CFOs being tasked with finding secure, cost-effective, information-centric technology, cloud services without exception must be part of a strategic technology roadmap — especially those that connect and automate workflow.

Standing beside you on your digital transformation journey

So, CFOs and finance leaders take note of these strategies to ensure your company stays agile and competitive. But, always remember that any technology implemented must be evaluated with the challenges and opportunities that accompany them in mind, alongside how it may require a team’s time and attention to meaningfully leverage for strategic gain – that is why it is recommended to partner with technology provider you trust, who can stand beside you and help you along your digitalization journey.

Finance

Demonstrating fintech resilience in 2023

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By

Melba Montague, Head of Financial Services, Genpact 

 

Despite ongoing economic turmoil and a slowdown in investment, the UK has managed to retain the top spot as Europe’s financial centre, and London, as the Silicon Valley for fintechs. While 2023 looks uncertain still, fintechs are known for swift innovation and reinvention. UK fintechs in particular, will ride this wave, capitalising on the $28.2 million in capital invested in the industry in H2 2022.

However, the fintechs that come out on top will be those that focus on, and demonstrate to investors, one word: resilience.

To do this fintechs must remain laser-focused on operational basics to prove their worth. This is even more vital as the world watched the collapse of cryptocurrency exchange FTX and lender BlockFi in 2022. And with growing industry concerns around alternative finance, there is also no doubt that regulatory complexities will increase in the coming year, especially with a greater presence of Buy Now, Pay Later (BNPL) products on the market.

Access to capital will diminish sooner than you think

According to the latest Innovate Finance report, global fintech investment reached £75.6bn ($92bn) in 2022, a decrease of 30% from the previous year. The drop is the result of the macroeconomic and geopolitical disruption, but despite this, the UK fintech industry received £10.5bn ($12.5bn) in investment – only an 8% drop from a record-high 2021. This demonstrates great resilience in this space. Further, the report shows that the UK is still receiving more fintech investment than all the next 10 European countries combined and remains second in the world only to the US.

That said, for rapidly evolving fintechs looking to continue their scaling journeys across the UK and beyond, access to capital and a global slowdown in venture capital (VC) investment will test their durability in the market. Even as the cost-of-living crisis drives demand, inflation has hit BNPL companies, bringing down valuation as Klarna announced that it had closed its major financing round with an 85% decrease of its valuation, down to $6.5bn in the latter half of 2022.

This year, investors will want to see fintechs lower their reputational risks, follow regulatory advice to maintain compliance, keep customers well-protected, and make use of innovative technology to accelerate and scale their processes.

Regulatory complexities will increase

While the UK government cultivates a strong culture of innovation and boasts a strong reputation for financial services, it needs to be more proactive in its regulatory stance. This is especially true for areas of alternative finance, such as BNPL.

BNPL’s resurgence in recent years has made it an attractive alternative to traditional spending, but not without major risks. At present, BNPL is an unregulated, decentralised industry, and presents major risk to consumers borrowing beyond their means without adequate financial advice or safety nets. Arguably, BNPL has made it easier to create debt, with figures showing that 4 in 10 people will even use additional lending to pay off their BNPL debts.

With urgent calls for the FCA to advocate for new government regulations from the UK Treasury and consumer champions alike, this will begin to establish concrete guardrails for both fintechs and for shoppers looking to manage their finances. While waiting, providers must step up and protect customers as more structured regulatory models are finalised.

BNPL providers have also made growth commitments to investors. They will be expected to keep those promises this year, as well as maintain operational stability, all the while customer experience is not adversely impacted. It will be crucial for fintechs to take the high ground and look for innovative ways to both educate and protect their customers whilst preparing for regulations recommended by the FCA come into play this year.

Resilience will be critical

The FCA is expected to introduce new requirements to perform credit checks this year, fintechs, neo banks, and BNPL companies now hold a greater responsibility to identify those at risk and support them with appropriate measures.

This presents growing opportunity for fintechs to promote financial resilience to improve their valued customers’ financial health. For example, with open banking-enabled solutions, they can provide insight to customers looking to monitor and consolidate spending.

As the industry awaits these incoming regulations, the onus will remain with fintechs to ensure their products are not at risk of endangering consumer debts. As such, it is critical that a proactive approach to educate the consumer is taken to avoid exacerbating an already fragile cost-of-living crisis. This could be done in many ways, from improving financial education in schools and boosting financial literacy across the board, to turning the onus of accessibility on banks to ensure that customers can receive tailored, personal support and counsel on their finances.

BNPL providers must also ensure their collection process engages empathetically with its customers navigating through financial hardship. Providers should leverage data-driven insights and segmentation from data, technology, and AI (artificial intelligence) to align with BNPL users’ specific communication preferences and chosen payment methods.

In addition, machine learning, AI, and automation of complex manual processes will enable secure operations with consistent quality and controls, while finding new ways to pre-empt risk and meet compliance and reporting obligations.

Persevering in today’s financial landscape

Not only do fintechs need to demonstrate resilience to their investors this year, but they must encourage and enable financial resilience amongst their customers. Fintechs participating in BNPL schemes must be made aware of the potential pitfalls that come with unregulated short-term lending, as practice shows that it increases individual risk as consumers borrow beyond their means without sufficient financial advice and regulation.

Implementing advanced technologies, such as AI/ML and data analysis into fintech operations also improves efficiency, enhances the user experience, and saves cost, particularly vital during a time when companies are confronted with record-high inflation and a volatile stock market.

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Banking

E-commerce marketplaces have become more than third-party platforms

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By Luke Trayfoot, CRO, MANGOPAY

 

E-commerce marketplaces have become an essential driver of e-commerce growth. As found by Ascential in their annual Future of Marketplaces Report, by 2027, third-party sellers using marketplaces will capture 59% of global e-commerce sales. A trend accelerated by the pandemic. Marketplaces are helping more brands cater to the ever-changing needs of consumers.

As businesses are continually being challenged to provide a seamless shopping experience, marketplaces can support this venture. Without the added costs of warehousing, supply chain and logistics for additional products, marketplaces can help to alleviate some of those pressures, especially as consumer demand grows.

Now, marketplaces need to further evolve their offering through payments infrastructure, whilst remaining compliant with payment regulations.

 

The marketplace offering – lowering barriers to entry

 Beyond access to the best deals, seamless checkout and quick deliveries, marketplaces also exceed consumer expectations for an intuitive one-stop shopping experience. Through marketplaces, retailers can continue to evolve their proposition, collecting data on what their customers want and need and continually refining their offerings at the right time and in the right place (web/app).

Marketplaces can also support businesses entering new markets or competing with bigger players in their respective fields. Entering a marketplace network allows small businesses to quickly gain influence, benefiting from larger audiences and quickly generating high sales volumes.

With multiple sellers, many with an international presence, implementing a sophisticated payments environment is much more complex than building one for an e-commerce website. Trading globally has different rules and regulations to adhere to per country which means payments environments must be multi-layered, accepting various forms of payments, which can be an inhibitor to businesses scaling at pace. Marketplace’s innate customer-centredness must be maintained end to end, including the purchase journey, so a sophisticated environment is essential.

 

Building the right payments environment

 A crucial part of the customer experience, it is important that merchants provide a choice of payment methods at checkout. As payments have evolved, marketplace operators should consider what options they provide to sellers, and subsequently, their end consumers.

The number one expectation is of course payment security, which is a key step in building a long-term relationship based on trust. Increased control points, however, generally means more friction being introduced into the payment process, so this is a balancing act.

As the retail landscape continues to grow, so does competition and as new players enter the market, businesses must find new ways to innovate, and the creation of payment options is one of the most important avenue to do so.

 

Considering regulation at every step

 Increased marketplace activity has led to the introduction of regulation for the platform economy. In the UK, HMRC has implemented changes to VAT reporting requirements for digital marketplaces and their third-party sellers, especially for overseas sales. Across Europe, KYC (Know Your Customers) regulations intended to protect customers from data breaches on a marketplace and identify the persons (legal or natural) with whom the marketplace does business, as part of anti-money laundering and terrorist financing directives, have also been enacted.

As online platforms continue to play an increasingly significant role, the implementation of the Digital Services Act supports creating a safer, online experience for citizens. This regulation enables the expression of ideas, communication, and online shopping by reducing exposure to illegal activities and dangerous goods. Regulation can seem extremely daunting, especially for those looking to enter the market. However, its purpose is to protect both the business and users.

Marketplaces need to work with payment infrastructure specialists that can support providing methods for local users, as well as options that are familiar and trustworthy for a global audience. Additional flexibility also needs to be built in to adapt to different demographics to ensure that a variety of consumers are appropriately catered for. If a brand wants to establish itself in a new market, varied payment methods are not a nice to have, but a must.

Despite the current economic climate, global e-commerce will continue to grow in the years ahead. Those that will be able to stay ahead of the curve will ensure that their customers’ experience is balanced with greater choice and varied payment options, in tandem with regulatory compliance.

 

 

 

 

 

 

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