The top three challenges for finance leaders going into 2023
Laurent Charpentier, CEO at Yooz
There have been plenty of challenges for finance leaders during the past 12 months. If it’s not a recession, cost of living crisis, and increases in energy and operating costs, it’s skills shortages or rising corporation tax.
As we start to enter 2023, many finance leaders will be wanting to turn a new leaf, and indeed their backs, on 2022. Yet these will remain critical issues throughout the year. Left unchecked, they could disrupt businesses for far longer.
29% of UK finance leaders said attracting and retaining talented staff has become their biggest concern right now, just ahead of remote/home working practices (28%) and strengthening cybersecurity practices (27%), according to recent research. So, what can be done to solve these issues in the new year?
- Automation helping fill skills gaps
A global shortage of digitally skilled professionals as well as a post-pandemic power shift in employee demands have created a recipe that’s currently leaving a sour taste in business leaders’ mouths. But the technology businesses use could be an unlikely hero in the battle to bridge the skills gap.
When it comes to hiring new employees, finding people with the necessary skills (40%) is the biggest challenge, more so than being able to meet wage demands (39%) and offering flexible/home working preferences (37%).
Competition for new talent is fierce, but throwing money at the situation isn’t the answer. Employees want a purpose, not just a job, and businesses can ill afford to increase spending during a period of economic uncertainty.
The situation is driving finance leaders to look at more efficient ways of operation – doing more with what they have right now.Not only is leading businesses to increase their use of automated tools, but by adding new technologies, they can also help attract and retain top talent.
It could be something as simple as offering a brand new laptop or smartphone to show that your company prioritises flexible and hybrid work. But it could also cover critical, back-end systems such as automated processes and workflows that help take away stressful or repetitive tasks.
Many accounts payable staff are still shackled by outdated and manual processes, spending hours on basic data entry tasks, scanning documents, or managing invoices. By automating these tasks, not only could businesses realise new efficiencies during a hiring crisis, but they can also liberate staff in their current role – increasing general happiness and company culture.
- Tech can make remote working more productive
Despite plenty of benefits surrounding the ‘new way of working’, we’re yet to see its true potential. But coupled with automation and the removal of time-consuming processes, remote working could get a lot more productive.
The benefits of remote and hybrid working have been clear. Staff are content with having a better work-life balance and can spend the hours they would normally be commuting by starting and finishing work earlier. Businesses meanwhile can save thousands of pounds in operating costs while increasing productivity.
But while over a third (36%) of finance leaders say they have been more productive moving to remote working, yet 37% said they have been working just as efficiently and 18% that work has been less productive. And although just 7% said they haven’t got the technology needed to work remotely, around half (47%) are still having issues processing invoices from home.
Because, despite the large uptake of remote or hybrid working environments across the world, several teething problems have yet to be properly ironed out. For example, although finance teams now have access to remote and cloud technology, productivity will never increase as long as manual processes are still being used.
Moving from the board room to the kitchen table hasn’t changed the way staff truly operate. Sure, systems such as Slack, Teams, and Zoom have helped keep colleagues in constant communication, but what about the critical processes in the background?
Digital tools and cloud-based systems are a must for remote working, but as many accounting and finance departments are still reliant on manual processes and even paper documents, it makes remote working tougher than it needs to be.
And not only can Cloud-based systems allow staff to work wherever they want, but it also means better security. Financial documents digitally stored in password-protected systems and two-factor authentication ensure only those responsible have access to information.
- Prevent fraud
The risk of fraud is always lingering for finance leaders. But with automation by their side, staff can feel at ease knowing they have a safe and secure system that keeps money within the business and away from criminals.
Staff moving to remote working locations has increased the risk of fraud. We’re no longer able to determine if the person at the other end of the email exchange is really who they say they are, while other phishing-related attempts are becoming a lot more sophisticated and therefore successful.
The most common methods of fraud within finance include fake bills and receipts, tampered invoices, and emails pretending to be from finance leaders that trick staff into sending money. An example within accounts payable might be an invoice that lists a bank account number and sort code that doesn’t match up with previous payments made to the same supplier.
To combat this, adding automation into accounts payable means that all finance activity is held centrally in one place, providing staff with a full, real-time view of the entire payment process. Staff can better identify any suspicious activity and quickly go through the necessary steps to prevent fraud from taking place before payments are sent.
For example, staff are unlikely to remember every supplier’s sort code and account number, which is why methods such as three-way matching need to be implemented. By using AI and machine learning to compare invoice data with relevant purchase order numbers and receipts, fraudulent activity is swiftly identified and prevented.
Not only does this stop the chances of fraud from taking place, but it also helps stop the likelihood of duplicate payments or paying out for the wrong amount. The automated system check invoices against purchase order numbers and receipts to make sure that everything is 100% correct before approving the payment.
Solving key finance issues in 2023
As skills shortages, remote working, and fraud continue to threaten businesses in 2023 – as well as inflation and a cost of living crisis – finance leaders that are embracing technology will be the ones best placed to deal with any disruption.
But embracing the continued digitalisation of the finance function and implementing automation for day-to-day tasks won’t just allow businesses to survive. Realising new levels of productivity, efficiency, and security will see many thrive long past the new year, outpacing competitors during a challenging period.
How to identify the signs that your IT department need restructuring
Eric Lefebvre, Chief Technology Officer at Sovos
For firms to execute transformations and meet their overall vision, it is crucial that their CIOs are able to recognise the signs that their department is in need of some internal change. In the current economic climate, CIOs working to fulfil their organisation’s priorities and meet business goals might hesitate to acknowledge that their IT department needs restructuring, never mind be able to identify the signs.
However, these problems rarely fix themselves and organisational restructuring requires conviction and determination from leadership for it to occur successfully. So, what are some of the key signs that CIOs should look out for?
Struggling to keep up with industry demands
CIOs unsurprisingly are working in an extremely demanding environment at the moment. Meeting these evolving demands is crucial for companies. When demands are not met and not handled properly, this can have a lasting impact on organisational goals and objectives, and even impact the way in which transformations are put into effect.
Depending on the organisation’s structure, the way in which being unable to keep up with demands manifests itself can differ. Despite double digit reductions across the industry, the search for talent across the tech world continues, project costs continue to rise as the cost of labour has increased and schedules have been disrupted by significant attrition. Many companies will also find business costs, such as that of third-party software, are higher than planned and technology debt continues to pile up faster than it can be sunset.
Whilst leadership teams might dedicate their department’s attention on the factors discussed above, they may find that their team will fall short when it comes to timely deliverables and helping maintain your organisation’s tech stack and guide its business transformations. Looking beyond the immediate problems of high costs and considering an internal reshuffle may be the solution for many IT departments.
Internal conflict within the team
Organisational designs with underlying issues can cause constant friction, especially when they go unacknowledged. An IT department that lives in conflict will certainly be reflected in results and less than successful tech transformations. CIOs will find that by adopting an organisational design which works through staffing issues, will better innovate, especially if they can all work together.
Department leads should have a strong understanding of their team’s work environment and guide them through any long-term or potential problems. When an individual is working in a demanding or complex industry, working well with your team shouldn’t be the main impediment to innovation. By acting quickly to eliminate internal conflict, CIOs can better lead and ensure their team’s focus is entirely on producing more optimal outcomes.
Delays are commonplace
When a large amount of your team’s time is spent setting objectives, budgets and timelines for the projects they are working on, it is vital that they are met. When delays are coming from the IT department, they will inevitably hinder the development of any business transformation, especially if it prompts teams to spend excessive amounts of time rearranging budgets and timelines and therefore hindering innovation.
IT departments are a crucial aspect in many different parts of a company’s transformations, so remaining on track when it comes to timelines and innovation is critical to operational plans. If delays have become commonplace in an IT team, and external factors are impacting projects, CIOs should look at restructuring an IT department to solve these issues.
The strongest team relationships do not happen by accident and are the result of good planning, strong leadership and a motivated team. CIOs can ensure this by providing vision and long-term strategy with clear goals and objectives to produce high levels of quality output.
When internal issues are noticed in an IT department, and are noticeably impacting team morale or productivity, this should indicate the need for departmental restructuring. Be that due to an inability to meet market demands, issues with productivity and meeting deadlines or internal conflict, these issues all risk a department’s functionality and an organisation’s ability to achieve its goals. In short, don’t overlook the warning signs!
Top banking trends of 2023 and global outlook of banking and fintech for the year ahead
Author: Professor Marco Mongiello, Pro Vice-Chancellor, The University of Law Business School
You’d be forgiven for assuming that the global outlook for banking and fintech will be dominated by the usual suspects:
Artificial Intelligence – AI plays an increasingly prominent role in banking and fintech by enabling personalised services, fraud detection, predictive analytics, use of chatbots and robo-advisors.
Blockchain and Cryptocurrency – the secure, decentralised and swift system for financial transactions that blockchain has brought to the fore a few years ago, is now becoming ubiquitous. An increasing number of transactions are recorded through blockchains technology, primarily in the cryptocurrency market.
Digital Banking and fintech – accelerated by COVID-19 pandemic, the adoption of digital banking is a trend that will persist as customers have become accustomed to the convenience and efficiency of digital banking. Moreover, fintech enables access to financial services for previously underserved populations in developing countries or less affluent social groups in more affluent societies. This includes mobile banking services, peer-to-peer lending platforms, and microfinance solutions.
Open Banking – another global trend is the use of open APIs (Application Programming Interfaces) that allow third-party developers to build apps to facilitate customers’ access to financial data and services from banks.
Nonetheless, the challenges posed by these rapid changes are reminders that banking, an industry that by its very nature needs to be conservative, risk averse and solid, wobbles on the unchartered grounds of fast and turbulent innovation, where entrepreneurship instead thrives. The underlying rationales of banking and fast digital innovation are not incompatible but do need solid operations and thought-through decision-making to avoid causing catastrophic collapses.
The recent examples of Silicon Valley Bank, Silvergate, FTX and Wirecard are stark reminders that digital entrepreneurship applied to banking doesn’t just bring to customers the visible transformation of valuable new services, but also dents (perhaps as an unexpected consequence) the rationale itself of the role of banks in the global economy. Moreover, the central banks’ ability to contain the effects of single banks’ defaults is no longer a certainty, as experienced just over a decade ago and more recently. The markets’ sentiments are hardly reassured by the commitments of even the most coveted players, such as the European Central Bank, the Federal Reserve, and the President of the United States himself.
Regulators are lagging behind and their attempts to catch up may cause further seismic shocks to the global banking system. For example, another trend that is emerging is one of artificial intelligence decision-centres (i.e., decentralised offices of banks which take autonomous decisions on behalf of investors) outside the most stringent regulatory environments, enabling banks to operate globally more efficiently and more competitively. And we can expect that regulators will close the gap either abruptly, as it is currently happening in China, where private banks are subject to an escalation of regulatory and monitoring restrictions, or more gradually as it is happening in Europe and in the US.
The questions we face, as individual or trade customers of our high street banks, as direct investors or clients of managed funds, are whether banking will become more user-friendly yet, for our daily use but riskier, too, or is it simply becoming more efficient, transparent and also safer.
I’m afraid that the answer is by no means an obvious one. Therefore, caution, level-headed decision- making and critical thinking have never been as important as these days. Whether you are looking after your family savings or growing your pension reserve, the imperative is that you keep updated about the providers of the financial services you rely upon as well as about the general regulations that apply to your financial transactions. This is where, for example, you need to be familiar with your rights in case of cyber fraud, as well as learning how to minimise the risk of becoming a victim thereof. Also, taking additional steps to evaluate the credibility, solidity and reliability of the online provider of that app that was recommended by a trusted friend, may prove a very good move.
Similarly, whether you are the CFO of a medium or large company, or are a sole trader wrestling with your own business’s finances, you need to reflect on what you really want from your bank in the first place. That is before you started to be swayed by the whirlpool of offers of ‘opportunities’ to multiply your financial investments. Chances are that your initial approach to your bank was dictated by either a need for financing your working capital, as per your budget and strategic plans, or to find a safe place for your temporarily idle liquidity. Perhaps you were also after some basic treasury services such as swift payments and debt collection. Maybe some other financial services closely related to your business operations, e.g. factoring. The advice is to give very careful consideration to services that are more remote from your business, because the trend for the next years is that more and more of those will be offered to you. But many new services will disappoint those who, sadly, cannot afford financial mishaps as they look to run and grow their business.
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