Technology is advancing so rapidly that it can take entire industries years to completely overhaul their outdated internal operation to implement new digital practices. Though finance departments have adopted digitization, customer-facing processes have been digitalized far more quickly than similar back-office updates. The result is a fast-paced game of catch up to update internal operations. Finance is facing its digital finance transformation reckoning.
The major challenge of enacting a digital transformation in finance departments is the money aspect. It’s crucial to play it safe when dealing with financial information, regardless of the context. With digital initiatives and innovations changing rapidly, it can be difficult for CFOs and corporate finance teams to choose the path and tools that are right for them.
However, the time has come for finance teams to benefit from digital innovations, including real-time data, streamlined tasks, optimized processing, and advanced analytics.
Here’s everything you need to know about digital transformation in finance, how it impacts finance departments, and trends to keep an eye out for in the coming years.
The Definition of Digital Finance Transformation
Digital transformation isn’t a process that’s limited to finance. As a whole, digital transformation is an umbrella term that describes any efforts of a business to utilize digital technology to improve or amend current operations. It includes items such as migrating to cloud-based software, utilizing digital platforms, and general automation made possible by implementing innovative technology.
Within the finance function, digital transformation has prevailed through customer-facing technologies. Customers can download a plethora of useful apps on their smartphones from banking apps that let you transfer money instantly to investment apps that let even complete novices try their hand at investing in stocks.
Financial advisors and investors have leveraged tech to advise clients through AI-powered chatbots. The financial function is furthering its offerings to clients by becoming more accessible and convenient through digital transformation at scale.
There has been a significant shift to focus on improving back-office operations by utilizing innovative digital technologies. Internally, digital transformation in finance looks to enhance processes in three significant areas: automation, analytics, and collaboration.
Finance teams and businesses can look to SaaS solutions, cloud migration, and other innovative technology to aid in their digital transformation. However, it’s essential to be selective when choosing a solution. As the movement toward digitalization expands, so will the various offerings targeting the finance function. It pays to make an informed decision.
Why is Digital Transformation in Finance Important?
It’s critical for the finance world to shift toward digital practices, to keep up with emerging technology, and address the needs of consumers. The industry has already witnessed the benefits of client-facing digital transformation initiatives, though it is lacking when it comes to back-office digitization efforts .
Whether it’s an AI-powered budgeting service like Digit or an instant payment platform like PayPal, digital transformation has completely shifted the customer-facing section of the industry.
However, businesses should focus on back-office digital transformation processes as well. Digitalizing internal operations makes employees more productive, streamlines business functions, and helps businesses deliver better service. Here are some of the benefits of digital transformation in finance.
Reduced Error and Reporting
Human errors are a constant source of issues within the finance function. Regardless of skill level, even finance professionals aren’t immune from simple errors such as typos, broken links, old unreliable data, and other related issues. Digital transformation emphasizes the use of a single platform. Teams get a 360-degree view of reports and the numbers in them, so errors become much easier to spot.
Additionally, data is shared and updated within the single system, so outdated data is a thing of the past. Organization is a key element of reducing errors, and digital transformation works to keep everything centralized and organized, even across departments. The end result is reduced errors and better compliance with finance laws and regulations.
Finance operations require teams to work with sensitive data. Unfortunately, finance professionals aren’t cybersecurity experts. That’s why it’s up to CFOs and other leaders to find a system that prioritizes information security. Within a digitalized system, sensitive data can be stored within a secure cloud-based system. SaaS solutions that are designed for finance teams often offer advanced security to protect sensitive data and limit those that can access it, even within a team.
Numbers, formulas, and other vital data can be leveraged to work for you, rather than the other way around. Leveraging innovative machine learning, the power of AI, and real-time data processing, digital transformation can give you and your team access to advanced analytics.
The process of manually reviewing analytics could be completely overhauled to improve accuracy and reduce the time expended. Moreover, with the right solution, your finance team can take advantage of automated analytics that are adaptable and don’t rely on manual processes to come up with intelligent insights.
Improved Employee Performance
If you want your finance team to succeed, then you have to give them the tools to do so. In action, this is providing your team with solutions for effective automation and collaboration.
Employees lose time performing repetitive, tedious tasks that can be streamlined through digital transformation. Digital tools can help to streamline processes like vendor management, cash flow forecasting, accruals, and audit preparation.
This includes looking for ways to strengthen search tools within your database, automate task execution, and improve business processes. In short, digital transformation provides support to finance teams making their jobs easier and their operations more efficient.
Digital transformation might be a little behind when it comes to finance back-office operations, but expect more businesses to start to shift their efforts. This move might be accelerated in light of the current pandemic — as uncertainty looms, implementing digital processes can enable teams to work from home with the tools they need.
Auditoria is one of those tools.
Auditoria is a comprehensive solution designed to improve the back-office operations of modern financial businesses. With automation, AI and machine learning technology, and advanced analytics, Auditoria works to support finance teams by streamlining financial tasks, enhancing collaboration, and making your data more powerful with automated analytics. It’s a powerful solution set to change the finance industry for the better.
Want to learn more? Get in touch today.