finance – Oliver Pickup

Which tech has the greatest potential to transform banking?

A whole array of emerging technologies could grant a crucial edge to banks that can apply them successfully. How do their innovation specialists go about finding a winning combination?

In the long shadow of the 2007-08 global financial crisis, concurrent advances in three technologies – smartphones, 4G cellular networks and cloud computing – sparked an explosion of innovation in financial services. Their convergence enabled mobile banking: the sector’s most significant development in generations.

Just over a decade later, the industry is again “on the cusp of another inflexion point”. That’s the belief of Prakash Pattni, MD of digital transformation at IBM Cloud for Financial Services. He predicts that progress in tech including 5G, blockchain, artificial intelligence and quantum computing will trigger “another spurt” of innovation.

“People talk about data being the new oil,” Pattni says. “Well, blockchain is the new oil rig, and AI is the new refinery. The coming together of these things makes it an exciting time to be part of the industry.”

Given that R&D is notoriously costly and success is never guaranteed, how do banks approach experimenting with tech that might just as easily fall by the wayside as revolutionise their industry?

As head of innovation, global functions, at HSBC, Steve Suarez is particularly well qualified to answer this. He believes that the secret to successful innovation is to stay focused on “how to make things cheaper, faster and frictionless for people”. The bank is “constantly scanning the horizon to see how we can apply new technologies. We want to gather data that enables us to personalise banking and give our customers what they need, quickly but also securely.”

The London-based American applies what he calls a “three horizon” approach to innovation. Horizon one concerns “the stuff that we already know well and will incrementally improve things in the short term. Horizon two, which is about two or three years from now, concerns technologies that are fairly new to the industry – blockchain, for instance. We look at how we can provide use cases with these to make the bank better.”

He continues: “And then there is horizon three, which is about the long shots. Right now, they include the metaverse and quantum computing, which could turn out to be a game-changer for financial services.”

The possibility that a horizon-three punt might come off is clearly exciting to Suarez, but he’s careful not to get too preoccupied with the potential benefits of such tech.

“We’re all betting on these technologies to achieve an advantage. There are huge opportunities, but we also need to look at the risks from a security perspective and work out how we might need to structure ourselves,” he says. “As we process 1.5 trillion transactions a day, we understand our great responsibility to protect all customers.”

HSBC’s recent horizon-three R&D activities have included hiring experts in quantum computing and announcing a three-year collaboration with IBM to explore applications for this nascent tech and so ensure its “organisational readiness” to take full advantage of it.

The bank has also bought a plot of virtual real estate in an online gaming space called The Sandbox, marking its first significant foray into the metaverse.

People talk about data being the new oil. Well, blockchain is the new oil rig and AI is the new refinery

The term ‘metaverse’ was coined by sci-fi writer Neal Stephenson in his 1992 novel Snow Crash. He was referring to a digital realm in which humans, avatars and software programs could interact and where property could be purchased. Suarez indicates that HSBC intends to stay loyal to Stephenson’s original meaning.

“We will be building on our plot, putting in virtual stadiums and working out how to better serve our customers,” he says, hinting that the bank might seek to engage with sports and e-sports fans in the metaverse.

Jehangir Byramji is senior innovation manager and fintech lead at Lloyds Banking Group. He also revels in exploring potentially transformative emerging tech and “analysing weak signals from other markets and regions that the bank can use in the future”.

Byramji’s approach is slightly different from that of Suarez, though. He organises the bank’s IT innovation work into three broad categories: data; AI (particularly machine learning); and Web3 (tech based on decentralised systems such as blockchains) and the metaverse.

“On the data pillar, there’s this whole idea of ‘hard’ and ‘soft’ identities. Younger people are more worried about losing their social media profile than their passport,” he says. “They are more likely to embrace machine-to-machine payments. As a bank, you therefore need to think about non-traditional ways of processing their data.”

In this category he also places digital twins – virtual representations of real entities “to help you understand both your own organisation and its customers and clients”.

But Byramji is most enthused by the latest developments in machine learning. “You’re going to see more intelligent agents, just as much in the physical world as in the data realm,” he says, adding that the internet of things will play a key role in this field. “Some of our clients have connected factories or farms – the latest combine harvesters are covered in sensors, for instance – so we’re asking how we can use the data these smart machines gather in an intelligent way and work with clients to better serve them.”

Given the sheer range of possibilities, banks must remain focused on use cases that are most likely to benefit the customer, Byramji stresses. Otherwise, it’s a waste of time, money and effort.

“We’re starting to see quite gimmicky AI, with deep-fake videos and things like that,” he says. “While they are interesting developments, we have to remember our first principle: better serve our customers.”

That said, Byramji can’t help but be fascinated by the longer-term potential offered by Web3.

“Banks are unpicking blockchain technologies more effectively than they did a few years ago. We are starting to understand smart contracts and other capabilities that minimise risk and build trust,” he reports. “With these related technologies, I think we can form relationships with fintech firms, build ecosystems, develop new markets and unlock some exciting opportunities.”

This article was first published in Raconteur’s Future of Banking report in May 2022

Raise the bar with accounts receivable automation to release cash

Thanks to pioneering technology, there is now a golden opportunity for financial controllers to free enormous sums of tied-up working capital. This will empower employees and enable them to drive value and strategy, writes Kevin Kimber, Managing Director, Global AR, BlackLine

The coronavirus crisis has prompted most organisations worldwide to spend big on automating their financial services – but only a tiny fraction have upgraded their accounts receivable processes. Today, with the advanced technology and pioneering tools available, those who fail to automate their AR processes miss a golden opportunity to empower the finance teams and unlock the cash held hostage.

In November 2019, months before the pandemic hit Europe, PricewaterhouseCoopers calculated that a staggering $1.2 trillion of excess working capital was tied up on global balance sheets. While there is clearly a latent opportunity to free this enormous amount of cash, ahead of the coronavirus crisis automating AR operations was not a priority for businesses.

Back then, the reluctance to focus on upgrading AR processes for the digital age was, to an extent, understandable, given the ease of borrowing for businesses. Now, though, organisations realise that optimising these processes has never been more critical. A recent Institute of Finance and Management survey suggests 55% of finance leaders are less than satisfied with how their company’s AR procedures have performed during the recession. And over half (52%) say that too many manual processes are the biggest weakness.

The combination of the lines of credit being significantly compressed and the increased demand to have cash more readily available – to drive innovation, boost agility and strengthen resilience – has elevated the need to embrace AR automation.

Historically, solution vendors possibly didn’t know how best to position the value and business benefits of automating AR processes. It’s so easy to pigeonhole AR automation as a single process primarily about headcount reduction and driving efficiencies. While these points are valid, there is so much more from which to benefit.

Articulating the benefits of automating the AR process

Presenting the point that “if you deploy a technology like ours, you can reduce your headcount from, say, 16 to five people” does not go far enough – there are so many additional advantages now. However, if we reframe the case for AR automation, it becomes so much more compelling.

For example, a large, global B2B manufacturer with a high volume of low-value invoices might offer 30-day payment terms. Each day is worth $150 million, so customers paying 63 days late means $9.5bn late and at risk.

Not only is this woefully inefficient, but there is also friction generated between the increasingly frustrated finance team and the customers whom they are chasing for payment.

Deploying technology like BlackLine enables that cash to be collected and applied much faster, giving access to cash quicker, reducing the need to borrow to cover working capital exposure and tightening customer relationships. Ultimately, through artificial intelligence and machine learning, automating that process will enable businesses to unlock the cash held hostage.

More than that, investment in AR solutions starts a virtuous circle: the business becomes more agile, innovative, and resilient – all essential elements for organisations seeking to thrive in the coming months and years – because the cash is available.

Looking at the broader picture, it’s a fallacy that robots are taking our jobs. On the contrary, they are enhancing and improving them. Humans are empowered to make smarter, data-driven decisions. And at BlackLine, we are transforming the relationship finance teams have with technology.

According to Adobe’s Future of Time study, published in late August, UK business employees waste more than a day a week on low-value tasks that should be automated. So much so that almost two-thirds (59%) of respondents are seeking new jobs with better technology to reclaim work-life balance.

Automation propels finance teams from the back office to driving strategy

Indeed, the reduction of repetitive manual tasks transforms finance departments to be more human and less robotic – they become enablers rather than blockers. Automating the AR process means that risk is easier to manage.

For instance, BlackLine AR Automation solutions put key information at the fingertips of organisations – from live payment data to debtor performance – so teams can quickly identify customer trends and maximise cash and debtor performance metrics.

It also helps to optimise relationships with customers. Access to and analysis of the data provides a markedly better understanding of customer behaviours, allowing the finance team to be more proactive, and helpful, when engaging. For example, how and when are they paying? What levels of credit are they on? With managing existing customers and looking for new customers crucial for growth, deepening these relationships is vital.

Further, when supported by automation and data-hungry AI algorithms, finance teams are propelled from the “back office” to the heart of the business, driving both value and strategy.

Automated solutions, such as BlackLine’s, instantly improve a business’s cash flow, better protect revenue, and boost working capital and customer-centricity. We know what customers need to thrive in the digital age. Armed with our expert help and pioneering tools, they can unlock the cash held hostage while empowering their finance teams. Organisations that prioritise automating AR processes today will win tomorrow.

Small steps to accounts receivable automation – but large rewards

1. Understand that business outcomes are being challenged, unnecessarily. In 2019 PricewaterhouseCoopers estimated that $1.2 trillion of excess working capital was tied up on global balance sheets. A more recent IOFM survey suggests days sales outstanding (DSO) has increased by 59%. Additionally, PYMNTS’s B2B Payments Innovation Readiness Playbook shows businesses that rely on manual AR processes often have a 30% longer average DSO.

2. Most AR processes are not fit for purpose – so say finance leaders. The IOFM survey finds that 55% of respondents are less than satisfied with their AR operation. Over half (52%) report that too many manual processes are the biggest weakness. Further, only 23% have utilised some kind of cash application automation. Notably, the lowest number of days taken to collect debt for those businesses using AR automation is 12.

3. Realise the potential of automating AR processes. Organisations that have upgraded to BlackLine’s AR automation solutions all report huge – and immediate – benefits. “You can reduce your costs by at least 75%,” says the head of credit, Atkins Group. Meanwhile, Veolia’s UK credit manager says the solution “has allowed the credit controllers to focus on collecting cash and managing risk”.

4. BlackLine AR Intelligence delivers real-time insight into customer financial behaviour to mitigate financial risks and improve cash flow and working capital performance. With cash flow vital to every business, AR automation is a future-proofed solution.

This article first appeared in BlackLine’s special report, Optimising the accounts receivable department, published by Raconteur in November 2021

Five ways automation enables finance teams to be more human

As we stride into the fourth industrial revolution, finance teams can work alongside machines to drive strategy and value. And, as the war for talent rages investing in technology is crucial to attract and retain skilled workers

The argument that robots will replace human jobs misses the crucial point that machines empower workers with a pulse. It has been this way for hundreds of years – since the original industrial revolution in the mid-18th century when the Luddites, led by Ned Ludd, a Leicester weaver fearful of change, attacked factories and their owners. However, it soon became obvious man worked much better alongside machine.

Now, as we stride into the fourth industrial revolution, which uses modern smart technology to automate traditional manufacturing and industrial practices, robots are taking over more menial, repetitive tasks. This capability frees up workers to be more human. For finance teams especially, this automation of processes enables them to be more human and drive value and strategy – here follow five ways how.

1. Paper processes are old news

In the finance world, paper has been essential for centuries – but in the digital age, we can speed up processes, and save the trees, argues Nitin Purwar, India-based industry practice director of banking at UiPath. “Within finance, data-intensive and repetitive tasks are commonplace,” he says. “Often further weighed down by legacy systems, paper-based documents and unstructured data, these processes can take up a large proportion of a professional’s day.”

Purwar argues that “this work isn’t what humans are best at and often isn’t what we enjoy doing. By automating these processes, finance professionals can be freed to spend more time on value-added, strategic activities that require judgement and skill, thus enhancing the employee experience all while saving the department time, money and improving the accuracy of processes.”

2. Manual ways of working are highly inefficient – and a turn off for talent

Businesses that embrace automation stand to gain a competitive advantage – not least when it comes to attracting and retaining talent. Adobe’s Future of Time study, published in late August, finds that UK business employees waste more than a day a week on low-value tasks that should be automated. Tellingly, almost two-thirds (59%) of respondents are seeking new jobs with better technology to reclaim work-life balance.

Purwar from UiPath uses an example to explain the benefits of automation in this regard.“One infrastructure solutions firm we work with used to process all invoices manually, printing, signing, scanning and uploading 400,000 invoices a year. Now, a robot affectionately named Archie processes all invoices digitally, freeing up on average 11 minutes per invoice of time that employees can now spend focusing on value-added tasks instead. That amounts to thousands of hours per year saved.”

There is more potential to realise, which is why organisations should double down on automated solution. Kevin Kimber, managing director of global accounts receivable at BlackLine, suggests that while many businesses seek robotic process automation, now “advancements in artificial intelligence and machine learning take what is possible to the next level”.

3. Financial leaders can show their human skills and improve collaboration

Ash Finnegan, digital transformation officer at Conga, which provides commercial operations transformation solutions, points out that the pandemic has forced financial leaders to show their human sides and manage change.

“Out of necessity, most digital transformation journeys have been accelerated, with artificial intelligence being a major focus,” she says. “Financial leaders have invested heavily in AI and wider automation technology, entirely restructuring their back office to deliver their services remotely.”

Neil Murphy, global vice president at ABBYY, a digital intelligence company, posits workers who embrace automation can “work more efficiently, collaborate better, and ease the burden of administration in their day-to-day roles. Deploying AI-powered robots gives this opportunity, gifting finance teams more time to focus on more creative, problem-solving tasks and alleviate the pressure. Now more than ever, it’s time to put the human touch back into the finance.”

4. Automation elevates financial professionals to become trusted advisors

Glen Foster, director of small business and partners at accounting software company Xero, says “time truly is money” for financial professionals. Xero data shows these workers can use up to 30% of their time on manual data entry – equivalent to 1.5 days a week.

By contrast, automation and digital software can free up most of that time. “Cloud accounting tools allow you to automate time-consuming tasks like data entry, bank reconciliation and payments so that you can spend more time advising, analysing data and focusing on growth,” he says.

“Providing advice and insights on financials is more valuable to clients and businesses than manual, repetitive data entry skills. This ultimately sets accountants and finance professionals up as trusted advisors.”

5. Improve relationships with customers – and add value

A FreeAgent survey from 2020 calculated that 81% of accountants have discovered that using automated software has freed up an average of two working hours a week. The same report states that this time saved could generate an additional £68,000 in revenue a year.

John Miller, chief operations officer of Addition, a London-based financial services firm, adds: “Automation has allowed humans to do what they do best: offer advice to the client, knowing that the routine tasks are done robustly and accurately.”

This article first appeared in BlackLine’s special report, Optimising the accounts receivable department, published by Raconteur in November 2021

Brexit and COVID-10 accelerate move to digital

The United Kingdom European Union membership referendum was inevitable when David Cameron won the 2015 general election, having promised such a vote during his campaign. Coincidentally, 2015 was when branchless challenger banks Monzo and Revolut were founded, with Starling launching a year earlier.

While the direction of travel was established five years ago, the combination of Brexit and now COVID-19 has quickened the drive for older financial institutions to transform their business and operating models, because it’s clear: the future is digital.

Technology is enabling fintechs to enter the banking market, and thrive. Experts predict traditional banks will have to partner with tech organisations to keep pace with developments.

A study of 200 UK and European banking executives by Marqeta – an open-API card issuing and processing platform that MasterCard has recently invested in – found that in the wake of the coronavirus pandemic over three-quarters (78 per cent) of banks have been forced to change their future banking strategy.

Some 72 per cent of those surveyed are planning to grow the number of in-branch digital services, and two-thirds will invest more in digital banking and services. Further, nine in 10 respondents (89 per cent) says the COVID-19 situation has “drastically increased” the speed of change in banking from years to months.

Max Chuard, chief executive of Geneva-based banking software fintech Temenos, says: “Uncertainty is a catalyst for innovation. The 2020s were already set to be the decade for digital banking transformation. But now the coronavirus crisis has accelerated this process. It has made the need for advanced banking technologies – like artificial intelligence, cloud and SaaS – even greater.”

Defining moment for the banking industry

The Temenos CEO points to his organisation’s global survey that shows almost half of the respondents (45 per cent) say their strategic response to the rapidly changing banking landscape is to build a “true digital ecosystem”. He adds: “It’s a defining moment for the banking industry, and those who can harness the potential of digital technology will shape the future.”

Michael Plimsoll, industry head of financial services at computer software giant Adobe, thinks the same. “Banks have to ensure they keep pace with digital-first challenger banks, such as Monzo or Starling, to deliver new experiences that both enhance and complement their bricks-and-mortar branches,” he says. “This has included implementing new technologies within apps and websites that enable customers to perform tasks previously exclusive to the branch, like cashing cheques or remote meetings with advisors.”

This need to evolve banking operations provides an opportunity to streamline typically time-intensive tasks, such as setting up an account or applying for a loan, Plimsoll says. “As an example, TSB implemented digital signature technologies using Adobe Sign to allow customers to carry out important processes from their own home, moving over 15,000 account sign-ups that would normally require a trip to the branch,” he adds.

That convenience will be central to winning customers, believes Aaron Archer, chief executive and founder of London-headquartered challenger bank Finndon. “Digital banks will see a major increase in their market share compared to high street banks, due to their lack of flexibility to adapt to market conditions, and customers will be seeking greater opportunities to save.”

He wouldn’t be surprised if big tech firms, including Apple and Google, begin to “offer banking products to their customer base to create a robust ecosystem”. Archer adds: “You will see an increase of mergers and acquisitions between tech firms and traditional banks looking to stay relevant.”

Sophia La Vesconte, a fintech lawyer at Linklaters, agrees. “With increasing digitalisation, we are likely to see a growth in outsourcing arrangements between the financial sector and technology service providers.” However, she warns: “Regulators across the globe are quite concerned about the sector becoming overly dependent on a small number of – unregulated – technology companies.”

This article was first published in Raconteur’s Future of Banking report in November 2020

Is London still king in post-Brexit banking?

The EU referendum may be a distant memory, but as the end of the transition period approaches, global banking hubs are gearing up for a post-Brexit world

Will it be a happy new year for the UK banking sector? When the transition period of Britain’s exit from the European Union ends on January 1, business leaders and bankers alike will tiptoe into a post-Brexit reality. Enmeshed by confusing and in some cases yet-to-be-determined rules, they will be entering a new global banking landscape.

But given that financial institutions inside and outside Europe have been preparing for this day since the EU referendum on June 23, 2016, will things be markedly different?

Whatever happens, British banks and their European counterparts have had enough time to ready themselves for post-Brexit life. Admittedly, some details still need to be finalised, though Bank of England governor Andrew Bailey has been warning the largest UK lenders to plan for a no-deal Brexit since June.

Legally, there will be changes, if only slight to begin with, on a global scale. “As of January 1, banks located in the EU and the UK will have to operate in two separate regulatory and supervisory environments,” says Yves Mersch, a member of the European Central Bank’s executive board. “Providers of financial services between the EU and the UK will no longer enjoy the benefits of the single market.

“Many euro-area banks doing business across the Channel, as well as UK banks operating in the euro area, have made considerable progress in view of this event.” Mersh adds that most are “on track to finish their preparations” this year, but others “have much work to do”.

For the latter, the coronavirus fallout has disrupted post-Brexit plans. “Broadly speaking, the main priority for banks over the past few months has been tackling the multi-faceted consequences of the pandemic,” he says.

No excuse for banks to be unprepared

Indeed, the “C” word has obscured the “B” word since March, and although COVID-19 may provide a reason for the sluggish progress of Brexit negotiations, it is not a just excuse for banks to be ill-equipped. Many big players lined up their moves long ago.

EY calculates that banks and fund managers have committed to moving £1 trillion of assets out of the UK and into the EU because of Brexit. US lender JPMorgan Chase & Co., for

instance, is expected to shift around £180 million in assets to Germany. Further, it has ordered 200 staff to move out of London to other European cities including Paris, Milan, Madrid and Frankfurt, in the expectation that the UK and the EU will not firm up an agreement on financial services.

The UK has always been, and continues to be at least for now, a world leader in financial services

Considering the UK exports more than £26 billion in financial services to the EU, according to the Office for National Statistics, perhaps the global post-Brexit banking landscape may transform quicker if no deal is reached.

However, James Butland, vice president of global banking at cross-border fintech Airwallex, argues the “mass exodus” from London “has not happened to the extent so many were sure it would”. He says: “London remains an attractive place where people want to live and work. Equally, the ecosystem in London is truly global, like New York or Hong Kong, and has always been regarded as a crucial financial hub.

“The UK has always been, and continues to be at least for now, a world leader in financial services, eclipsing many of its EU rivals across the sector. And despite uncertainty around Brexit, one thing is clear: Europe will remain a leader within the global banking industry, mainly due to the strength of the euro as a currency.”

London has critical role to play

But Butland says ”a new leader needs to take London’s crown” within the region. He continues: “The European banking community may start to face geographical fragmentation, as the position to become the epicentre of the eurozone opens up. The race to become the financial capital of the EU seems to be between Paris, Frankfurt, Brussels and Amsterdam, with no winner yet in sight. Wherever this location may be, it should look to London to continue Europe’s legacy as a leader within the global banking economy.”

Alastair Holt, financial regulations partner at global law firm Linklaters, agrees. “Other European cities will not be as influential as London, at least in the short to medium term,” he adds. “London can play a critical role in bridging the East and the West, particularly given the increasing tensions we have seen between the world superpowers in those regions.

“The UK will still be a leading global financial centre, boosted by its language, time zone, the legal system, and the pre-existing ecosystem of financial institutions and suppliers, the vast majority of which will remain in the UK.”

Professor Brian Scott-Quinn, director of banking programmes at Henley Business School, is more cautious and believes the global banking landscape has been fragmented since the 2008 financial crash.

“Just as trading relationships between the major blocs – the United States, Europe and China – have been damaged in recent years, as well as the relationship between the UK and the rest of Europe, so globalisation of banking and finance has been in low gear now since the financial crisis,” he says. “Most UK banks that had plans for internationalisation or for building up their investment banking capabilities have since abandoned such plans.”

Contingency plans needed for uncertain year

Regardless, Holt argues that coronavirus is more of a threat to the banking sector’s future. “COVID-19 is clearly a worry, more so than Brexit,” he says.

Chris Ganje, chief executive and co-founder of Cardiff-based fintech AMPLYFI, which focuses on developing artificial intelligence for banking, expands upon this theme. “The banking sector should have already dealt with Brexit over the past two years with robust models in place to move on,” he says. “The fallout of COVID-19 is a major unknown. For example, any FCA Section 166 notice into how a bank handled crisis-related loan applications could cost it tens of millions of pounds to review.”

Additionally, Alessandro Hatami, co-author of Reinventing Banking and Finance, says it is hard to quantify the effect of Brexit at the moment. And he points out: “The impact of leaving the EU financial passporting scheme, making it harder for UK fintechs to serve European customers from the UK, is also not clear and won’t be until the final deal is negotiated.”

Butland at Airwallex concurs that 2021 will be pivotal in shaping the global banking landscape. “The next 12 months will certainly be interesting, as both the pandemic continues and the repercussions of a potential Brexit deal loom ahead,” he concludes.

“Whatever happens over the coming year, disruption lies ahead. Financial institutions will be making contingency plans for every possible eventuality.”

This article was first published in Raconteur’s Future of Banking report in November 2020

Tech-enabled finance could save your company

When crises hit, organisations always lean heavily on their internal finance specialists to reduce costs, streamline operations and plot a roadmap to recovery, in that order. While lessons should have been learnt after the global economic crash a dozen years ago, and more robust business continuity plans established, it was impossible to predict the speed, scale and severity of the coronavirus pandemic.

Once again, business leaders are looking, desperately, to their finance teams for rapid solutions to colossal challenges. It’s a mighty responsibility, given the amount of uncertainty and an impending global recession.

“During the current crisis, C-suite executives rely on financiers to identify the most cost-effective sources of financing, not only for the survival of the firm in the short run, but also for the growth that follows economic stagnation,” says Dr Nikolaos Antypas, finance lecturer at Henley Business School.

“For most companies, the top-down directive is: survive first, grow later. Since the pandemic started, the role of internal finance has shifted towards turning down or postponing indefinitely any project or cost item with non-existential importance.”

However, unlike in 2008, access to digital technologies, cloud storage and data analysis are enabling faster results, greater agility and collaboration, and better forecasting. If COVID-19 has accelerated digital transformation, the financial function is in the driving seat of that change.

Tech-savvy organisations have major advantage

Laggard organisations that decline to embrace technology will fail. And even industries that have rallied well since lockdown, such as ecommerce and healthcare, should be anticipating more obstacles on the road to recovery.

“The threat of decreasing revenue looms ominously,” warns Antypas, nodding to the tapering of the furlough scheme, which could trigger a sharp rise in unemployment. “No company should be complacent with their current success; their customer base is about to lose its revenue stream and that loss can have devastating ripple effects. Even the most profitable company can suffer if cash flows are not managed efficiently.”

Red Flag Alert, a credit risk management company, has amassed financial data of UK businesses for the last 16 years. The analysis is bleak. “UK industry is facing a mountain of unsustainable debt; it could be as much as £107 billion,” says Mark Halstead, a partner at the Oldham-based firm.

“Technology and data will be critical to companies bouncing back from the pandemic. It will also enable businesses to protect themselves and strive for growth in an economy saddled with record levels of debt.”

Technology and data will enable businesses to protect themselves and strive for growth in an economy saddled with record levels of debt

Organisations that invested in digital technologies and evolved the financial function before the pandemic have an early-adopter advantage. Kaziu Gill, who co-founded London-headquartered LimeGreen Accountancy in 2009, has long promoted accountancy software and other digital tools to his clients, who are mostly small and medium-sized businesses in the creative industries.

“COVID-19 has forced many businesses to change and become leaner and more mobile, but we have managed to continue without any disruption,” he says. “In some cases, we have been more productive.

“We are seeing more businesses exploring how they can grow digitally and the suite of tools that we use complements any organisation’s approach to budget and forecasting.”

Finance functions arm themselves with digital tools

LimeGreen enjoys a partnership with cloud-based accounting software platform Xero. “We offer plug-ins to Xero, like Spotlight, which is a great forecasting tool, and Receipt Bank,” says Gill. “And there are other project management tools that help link the financial function with human resources, such as CakeHR. We have always strived to utilise tech and now financial functions simply have to make that transition to digital. Pieces of paper are no good when you can’t send or receive physical mail during lockdown and with remote working.”

He argues that the recent open banking directive – a government-enforced programme designed to open up banking data, launched in 2018 – strengthens the case for finance departments to embrace digital tools. “It’s the perfect time because every bank in the UK is obligated to open up their application programming interfaces so third-party software companies can use them.”

Xero, for instance, recently launched a short-term cash-flow tool that projects bank balances 30 days into the future, showing the impact of existing bills and invoices, if paid on time. “This capability helps the financial function to scenario plan accurately and make changes to business plans instantly,” explains Donna Torres, Xero’s general manager of global direct sales and operations.

“It’s more important than ever for organisations to have an up-to-date view of their cash flow so they can plan, forecast and make the right decisions about their future. Cloud accounting technology provides a real-time snapshot.”

Empowering finance teams to change business plans

Financial functions that push to arm their organisations with other digital tools, including artificial intelligence-powered document scanning and e-signature, are discovering they can achieve company-wide efficiencies almost overnight.

Mike Plimsoll, industry head of financial services at Adobe, offers a banking example. “Facing increased demand with reduced branch capacity to maintain social distancing, TSB acted quickly to transform a significant amount of offline forms into digital-only interactions, creating an end-to-end journey for its personal and business banking customers,” he says.

“After implementing Adobe Sign, TSB managed over 80,000 customer interactions in the first eight weeks, saving the need for up to 15,000 potential branch visits.”

Plimsoll posits that by switching their processes and establishing digital technologies, finance teams have been able to “keep the business moving and react quickly to the shifting landscape and help steer a course through the uncertainty”.

Adopting a shorter planning window is paramount for business continuity and recovery, says Thomas Sutter of Oracle NetSuite’s Global Solutions Centre of Excellence. “Most businesses operate on a 12-month budget cycle and manage strategictra plans with longer timeframes, but at this time the focus must shift to immediate priorities,” he says.

“Now more than ever, establishing a clear framework of visibility and control will streamline and protect cash flow in the short term, keep customers happy, and reveal new and innovative options business leaders have available to drive the business forward in the future. Finance leaders and their teams will be at the heart of these strategic moves.”

Finance departments may have had more responsibility thrust upon them when COVID-19 hit, but it seems their role will only grow in importance in the coming months and years. Technology is both empowering and enabling their new lofty status.

This article was originally published in Raconteur’s Business Continuity and Growth report in August 2020