Although financial principles, theories, and concepts remain relatively consistent over time, the technologies and processes that companies use to enact these functions are constantly in flux.
If you study finance departments in the leading firms throughout the world, you’ll find that most use some form of innovative technology to assist their activities.
Five Major Technological Innovations in the World of Finance
Financial theory without a progressive tech strategy to back it up will probably leave you at a competitive disadvantage in the coming years. Fortunately, you don’t have to look very hard to see what’s working for others.
Here are some of the major trends and the ways in which they’re propelling savvy finance departments forward. Perhaps you could leverage some of them in your own organization.
1. Artificial Intelligence
Artificial intelligence is all the rage right now … and with good reason. When you study it in the context of finance, there are many use cases and benefits, including:
- Automatic generation of contracts and legal documents
- Ability to offer real-time customer service chat capabilities
- Mine data to find new business opportunities
- Perform real-time analytics and robust reporting
Artificial intelligence isn’t necessarily eliminating finance jobs — a result that fear-mongering techies like to project — but changing the roles of finance department employees. It’ll be interesting to see the kinds of impacts it will have on various companies and industries in the near future.
2. Machine Learning
Machine learning is another one of those buzz terms that’s tossed around frivolously in the business arena. Most people have heard of the concept, but few understand what it is or how it differs from artificial intelligence.
The best way to look at machine learning is as a type of artificial intelligence that gives computers the ability to grow from the absorption of data and get “smarter” over time without having to be explicitly programmed.
In the finance world, machine learning has specific applications in terms of fraud detection and legal compliance (among other things). Companies that have experimented with machine learning typically discovered it helped them stay ahead of the curve.
3. Digitized Procurement Processes
Procure-to-pay “is the process of integrating purchasing and accounts payable systems to create greater efficiencies. It exists within the larger procurement management process and involves four key stages: selecting goods and services; enforcing compliance and order; receiving and reconciliation; invoicing and payment.”
Leading finance departments are finding ways to digitize the procurement process with advanced procure-to-pay software that strengthens compliance and eases some of the burden on accounts payable. This leads to fewer manual tasks and the headaches they generate, while driving savings to the bottom line.
4. Cloud Data Storage
Historically, financial services companies have been reluctant to adopt cloud-based solutions because they fear a loss of control or the development of compliance issues. But as business executives have learned more about the cloud, they’ve gradually come to realize that cloud data storage is safer than traditional on-premise solutions.
The key to choosing a proper storage provider is to look for ones that have been in business for a comfortable period of time and offer solid, long-term contracts with other firms.
A good cloud provider will be quick to furnish up-to-date compliance, security, and financial health audits.
5. Advanced Cybersecurity
Businesses are spending more than ever on cybersecurity … and much of the onus falls on the finance team. But the days of reactive cybersecurity are passing. If you want to stay ahead of hacks and data breaches, you have to be proactive.
“To get ahead of the cyber criminals, firms are turning to systems powered by artificial intelligence that are able to learn to spot new attacks rather than relying upon the pattern of previous attacks, either as specific deployments of general machine-learning systems, such as IBM’s Watson, or dedicated systems like Cylance,” business journalist Dan Barnes explains.
If you want proactive cybersecurity to work for your operation, communication between IT and finance is critical. The more you can streamline that relationship in both directions, the smoother the entire process should become.
Are You Properly Leveraging Innovative Tech?
Do any of the aforementioned technologies grab your attention? Do you see any obvious use cases in your own organization?
Sometimes it’s the simplest tweaks that make a huge difference. Try focusing on one specific change you can make to upgrade your finance department in the months ahead. It could be one of the greatest investments you make this year.
