Digital Finance Transformation

Technologies are advancing at a rate most organizations are not comfortable with. While many customer-facing processes are already digitalized, the same cannot be said for back-office processes, which continue to rely on legacy systems.

Moreover, digitalization has reached an extent where it is not just about competition and customer satisfaction any more. There are already stringent regulatory policies that have made digital finance transformation a necessity for businesses.

What is Digital Finance Transformation?

Digital finance transformation is a holistic finance management approach relying on innovative digital technologies. If executed correctly, the transformation could provide businesses with a host of valuable benefits.

However, as the digital transformation of a function like finance requires significant changes and updates to the existing methodologies, processes, and business practices, the venture can be challenging. But as the benefits far outweigh the deterrents, CFOs globally are already working on digital finance transformation strategies.

By not transforming the finance function per the updated digital standards, businesses can lose out on opportunities – a risk no corporate entity would like to take amid the ever-growing competition.

What are the Benefits of Digital Finance Transformation?

To keep pace with emerging technologies and fulfill customer expectations, it is essential for the finance processes to upgrade digitally. Businesses across industries are already witnessing the extensive benefits of digital transformation of customer-facing processes.

From online payment services to AI-powered tools and mobile banking apps, digitalization has completely changed client-facing industry segments. But the same level of innovation is yet to be fully explored for back-office processes. Lack of awareness related to the benefits of digital finance transformation is one of the reasons for businesses to continue using legacy systems.

But with a dedicated and effective digital finance transformation strategy, businesses can experience several benefits, including-

Improved Analytics

With digital transformation, formulas, numbers, and other critical data points can be used in ways like never before. For instance, businesses can use innovative technologies like AI, machine learning, data processing, and Big Data to equip themselves with advanced analytical capabilities.

Improved Analytics

Reviewing analytics manually can be fully transformed to boost accuracy and save a considerable amount of time. Not only this, but there are custom analytical solutions available for businesses that can adapt according to internal finance processes to offer intelligent insights and enable improved decision-making.

Advanced Security

Finance processes involve the use of sensitive customer and business data. While the financial professionals in your team might be very good at what they do, they don’t have cybersecurity skills. As a result, it is essential for decision-makers and CFOs to look for digital systems with advanced information security features.

For instance, there are digitalized systems that securely store all the sensitive data on cloud-based servers. In addition, various Software-as-a-Service (SaaS) solutions are also exclusively created for finance processes to help your team protect sensitive data by limiting access.

Reduced Human Errors

While human errors can be drastically reduced, they cannot be eliminated from finance processes. No matter how experienced a finance professional is, as humans, we are prone to make mistakes. And sometimes, the smallest of mistakes could have severe consequences.

But with digital finance transformation, there is an increased reliance on using the same platform throughout the finance function. As a result, teams always have a holistic view of all the data and numbers added to a report. Due to this, errors are easily spotted. Moreover, as digital systems keep all the data at a centralized location, data loss becomes a thing of the past.

Boosts Employee Productivity

Modern finance teams must be provided with the tools and technologies they need to do their job effectively. Using traditional systems to perform tedious, repetitive tasks is not something that modern finance professionals can relate to. So, your legacy systems are, in fact, negatively impacting employee performance.

With the help of digital tools, various processes, including creating reports, forecasting cash flows, preparing audits, etc., can be streamlined. Moreover, team members can easily collaborate on projects digitally even when they’re not physically present at the same location. All of these aspects help your team members and boost their productivity.

Finance Digital Transformation: Predictions for 2025

Finance Digital Transformation: Predictions for 2025

How are digital technologies expected to transform the finance function in the future? Here are some predictions for 2025-

  • Touchless Transactions- Thanks to technologies like blockchain and automation, finance processes will continue to get simpler, giving team members more time to focus on other core business functions.
  • Real-Time Finance Reporting- Periodic reporting is expected to be a thing of the past, as digital technologies can allow on-demand production of financial reports. The line between analytical and operational data is already blurred, and it is expected to disappear entirely with time.
  • Rise of Self-Service- The growing popularity of AI and ML will pave the path for making self-service the norm. People will no longer require hand-holding for finance-related matters as most of their queries can be resolved through their smartphones or software.
  • Reimagined ERP- Traditional Enterprise Resource Planning (ERP) solutions will have to compete with finance apps and microservice providers. It’ll require them to equip their solutions with advanced digital technologies like Blockchain, AI, and automation or get replaced by newer, more advanced players.

How to Plan Digital Finance Transformation?

Here are 5 steps you can follow to start building your digital finance transformation strategy-

1. Understand What Digital Finance Transformation Means to Your Organization

Every organization can define the transformation process as per its needs, challenges, and objectives. So, the first step is to understand and define what it means for your company.

2. Define Leadership Roles

Throughout the transformation process, the finance and accounting roles will evolve. As the use of digital tools and solutions will eliminate the need for several repetitive accounting tasks, your team members will have more time and resources to focus on tasks critical to business growth.

3. Identify Potential Roadblocks

Digital finance transformation is not something that could be achieved in a week or two. It is an ongoing process that will involve a host of challenges. And the challenges will be unique for every organization. So, while working on the strategy, try to identify potential deterrents and work on how they can be resolved.

4. Identify Automation Opportunities

Identify Automation Opportunities

Automation is one of the reasons why businesses consider digital transformation. Effective transformation plans can pave the path for various automation opportunities. Customer onboarding, employee onboarding, transaction processes, creating reports, and financial data management are some tasks where automation could help.

5. Develop the Right Mindset

Digital transformation is a lot more than just keeping up with time. It is an opportunity for you to rethink your business processes and make them more effective, agile, and efficient. It can also help unlock unique business opportunities that can prove highly profitable. So, try to keep an open mind and think about ways digital transformation can benefit your business.

Improved Business Processes with Digital Finance Transformation

With the finance function rapidly evolving, it is time for businesses to consider upgrading to digital technologies. A carefully planned transformation strategy can improve the finance function in various ways and assist organizations to continue growing.

But while digital finance transformation holds a lot of potential, it can only deliver expected results if the strategy is approached wholeheartedly. Executives should collaborate and work on ideas to bring about change. Only then can the initiative start working for the organization and demonstrate its effectiveness.