The finance and accounting industry was one of the first to embrace information and communication technologies, resulting in innovations such as credit cards, ATMs, automation of back-office operations, and online banking. Since the adoption of the internet in the 1990s, technology has been developed to allow for online shopping, cloud storage, offshoring employees, better tracking and reporting capabilities, and the ability to quickly and easily turn data into actionable insights. In the coming years, the tech industry is expected to disrupt financial services just as Uber has done for the taxi industry. Here’s a look at how finance can keep up.
The growing popularity of peer-to-peer payment services such as Venmo, Apple Pay/Wallet, and Snapcash means that consumers will likely keep their money within these alternative lending platforms, shrinking bank balance sheets and reducing interactions between customers and their banks. The growth of crowdfunding is also expected to shift funds from traditional wealth management to other platforms. As a result, financial institutions will need to develop more personalised wealth management solutions in order to compete, and they should plan to deliver the majority of these services online.
Banking processes, such as loan applications, are ripe for disruption by the tech industry since consumer expectations for speed and efficiency are rising, but these processes remain slow and outdated. In order to avoid IT players taking over these functions, the finance and accounting industry will need to keep pace with technical development and leverage that tech to create services for the growing population of Australian retirees, many of whom have saved insufficient funds and will need alternative income streams.
Given that real-time payments are becoming the norm, portions of the workforce may shift in favour of freelancers, as workers can be paid in smaller increments, potentially weekly or daily. Though freelancers pose less of an upfront cost to businesses, this model of employment can lead to increased turnover and lower-quality work, which ultimately costs a company more. Sticking with the traditional employment model but allowing for flexibility and/or telecommuting will lead to a more reliable, knowledgeable, and motivated work force.
As IT sets its sights on the finance industries, we could see IT and finance departments sharing some functions, or working together to execute finance processes more efficiently. Within and outside the finance and accounting industry, the most essential talent will be statisticians, data scientists, and economists. Foreigners are now vastly outnumbering Australians in accounting degree enrollment, and many of those individuals return home after completing their studies rather than trying to find a job here in Australia. While experienced professionals in accountancy support, financial planning, and credit controllers will remain in-demand, less-skilled functions in accounts payable, accounts receivable, and inventory management will likely be automated rather than offshored. Rather than eliminating jobs, though, automation will likely displace finance professionals to more skilled roles in planning and forecasting. This is a good thing for companies, as we are currently seeing a shortage of data scientists.
The rise of IT in the finance and accounting industry can present exciting growth opportunities for firms and employees alike. Hiring staff with strong technology skills, creating opportunities for finance and IT staff to collaborate on projects, and attending industry conferences are all ways to keep abreast of emerging technology. And, rather than competing with promising startups, large firms should consider partnering with or even acquiring these startups, which attract top talent and have a unique view on market opportunities. Firms can also shift their focus toward disruptive growth strategies, such as leveraging peer-to-peer payment capabilities for existing services (e.g. easily transferring money between bank accounts), and targeting previously untapped markets (such as newly retired Australians, as mentioned above).
Finance and IT have been closely intertwined for quite some time now, and the industries will continue to grow together and challenge each other to innovate over the coming years. Rather than competing with tech-oriented solutions, we should embrace and implement those solutions where appropriate.