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Finance in the near future

14/08/2024

What direction are finances heading in the near future? By 2025, it is estimated that more than 40% of positions in finance will be new or significantly changed due to financial technologies.

Many finance transformation initiatives primarily focus on technology or organizational design while underinvesting in other decisions regarding the operating model. The digital future of finance will involve tools and techniques that differ from those used today. Data scientists, engineers, and other specialists are bringing incredible new capabilities to the finance teams, which also introduces new challenges in terms of management and organizational structure. Finding an effective way to maximize these capabilities while minimizing disruptions to the organization's functioning is one of the new challenges in implementing such technologies.

The financial operating model will need to adapt for an autonomous future. Autonomous finance must take the following into account:

  1. Financial teams will operate more like technology teams. They will need to learn the best practices that technology teams use to create an environment where most teams have partial responsibility for deploying technology, customizing it, and providing ongoing maintenance.
  2. Machines or technologies will play a larger role in decision-making. Automation is already widely used for transactional tasks, but IT/AI will become more capable of making "judgment-based" decisions and providing better advice to humans.
  3. The comparative advantages of centralizing activities and processes will increase, while the comparative advantages of regional teams will likely diminish as technology advances and standardization progresses.

Excelling in multiple areas may sound like a daunting task, but it might be easier than it seems. Progress in even one of them can create a multiplier effect, making it easier to advance in other areas. The key is knowing which ones to prioritize based on the evolving needs of the business and existing financial capabilities.

Challenges for finance in 2025 and the near future include:

  • Standardizing all non-strategic financial processes, ideally through core ERP functions or financial software without unnecessary customization.
  • Ensuring that the finance department has the right data foundation, technologies, and talent, and is capable of taking on an expanded role.
  • Identifying and tracking metrics that affect business performance, many of which likely exist in upstream non-financial data systems, and justifying why finance needs this information.
  • Focusing on productivity and business insights: Where are low-value reports being generated? What information do we lack today that we would like to have?
  • Taking the opportunity to apply new ways of working and new models - it is not enough to revert to pre-pandemic practices.
  • Thoroughly reviewing available financial technology: What really needs customization? Ready-made solutions exist for nearly every need.
  • Defining a financial data model that supports both transactional processes and reporting requirements, as well as analytics.
  • Seeking and developing talent with excellent financial knowledge and the ability to optimize innovative and emerging technologies.

The digital innovations that influenced our thinking about financial trends a few years ago have accelerated, and everything suggests that this will continue. The position of finance in an uncertain future remains open, but the path forward is becoming clearer.

Sources:

Deloitte: Crunch time series for CFOs: Finance 2025 revisited, 2021-2024, https://www.deloitte.com/global/en/services/financial-advisory/perspectives/future-finance-trends-2025.html 

Gartner: What Is Autonomous Finance? 2022, https://www.gartner.com/en/finance/topics/autonomous-finance?utm_campaign=RM_GB_2023_FINL_NPP_IA1_TOPPRIORITIES 

Gartner: Top 5 Finance Trends and Priorities for CFOs in 2024, 2023, https://www.gartner.com/en/finance/trends/finance-top-priorities-for-cfos 

Gartner: The 2024 Finance Leadership Vision: Top 5 Priorities, 2024, https://www.gartner.com/en/webinar/567346/1278850 

Images: Gartner, Deloitte

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