From increasing accuracy to optimising tax workflows, to freeing up more time for more value added activities, technology is transforming the accounting and financial services industry for the better.
Technology has immensely influenced the financial services industry, and there’s no denying that it will continue to shape its future trajectory. In fact, experts valued the global financial technology (fintech) market to reach USD$699.50 billion by 2030, registering a yearly growth rate of 20.5% during the forecasted period (2020-2030). This figure illustrates rapid innovation and changes in the finance sector.
As technology rapidly evolves and revolutionizes how people interact, transact and invest, accountants and wealth planners must stay abreast of the latest advancements to survive and deliver excellent customer experience in the digital age. After all, being customer-centric is paramount for financial service providers, and technology is the primary driver for this transformation.
So, what are the most influential tech trends to watch out for in the financial services industry? Here are top picks that’ll shape the future of finance:
How has accounting changed with technology?
When it comes to tax regulations, the only constant is change. Technology is the answer to future proofing your business. In this economic environment, accountants need access to up to date information to provide clear and meaningful advice to clients. Backed by AI and machine learning, accounting technology can help you find the answers to tough questions and support clients with confidence.
Automation is a game changer for all businesses. For accounting firms in particular, the automation of day to day accounting activities can not only save time and money, but can also increase your employee experience.
Cloud based accounting technology is relied upon to complete tasks that are repetitive and tedious to create efficiencies that will free you up to do what you do best – run your business. From the initial data collection, through to the preparation, review and delivery, we understand that a seamless tax workflow is required to create business efficiencies and improve your customer experience.
Automation enables accountants to leave manual work behind, and facilitates the ability to scale, grow and expand offerings. Meaning no more requirement for manual data entry or paper based forms. With AI and machine learning and tax automation, accountants are able to save time and increase accuracy.
Effectively by automating non-billable and perceived low value activities, accountants can shift their focus to proactive, value added activities that are more rewarding and profitable.
Artificial intelligence (AI) has been transforming various industries across the globe, and the financial sector is no exception.
Let’s dig deeper into how finance companies are leveraging AI.
- AI fraud and threats detection: The financial industry has always been the first target of cyber criminals due to its lucrative rewards. A report from Statista reveals that during the designated timeframe (2020-2021), 226 cyber-attack incidents occurred in the financial field. AI-powered tools can help to detect and prevent suspicious activities by scanning millions of transactions in real time.
This financial technology is a valuable tool in protecting customers from fraudulent activities and safeguarding the corporation’s reputation.
- Chatbot solutions: Finance companies want to provide 24/7 customer support, and what better way than to deploy AI chatbots? Using natural language processing (NLP) and machine learning (ML) algorithms, chatbots can quickly and accurately respond to customer inquiries, such as account details and transaction history. Consumers don’t have to worry about requesting a human representative. The AI chatbot can transfer you to a live operator. This feature is a massive relief for overstretched customer support teams.
- AI-driven robo-advisors: This tech is becoming popular among individual and institutional investors by providing portfolio advice, tax optimization strategies, automated portfolio rebalancing, and more. AI-driven robo-advisors use algorithms and data analytics to analyse investment opportunities, make decisions to lower risks, and maximize returns.
- ChatGPT: You may not realise it, but ChatGPT has been gaining attention in the financial sector due to its ability to deliver personalised insights and recommendations for customers. Powered by NLP and ML, this solution can help you analyse financial documents, such as bill statements and account balances, to give customers tailored advice on saving, investing, and managing their finances. Above all, financial companies can use ChatGPT to identify patterns and correlations within their data, enabling them to make sound decisions about financial models.
These are just a few examples of how AI helps the financial services industry. AI can do more than just reduce manual labour and save costs. It can also provide unique insights and help the business grow.
Blockchain technology is one of the buzzwords in the financial services industry. Blockchain-powered distributed ledger systems can offer secure, reliable, and cost-effective solutions for data storage, payments processing, asset tracking, and more.
With blockchain technology, users can make instant cross-border payments without paying hefty transaction fees or worrying about exchange rate fluctuations. Financial institutions can also leverage it to facilitate real-time transactions, increase transaction speed, and simplify settlement.
Here are some features of blockchain-based solutions:
- Encrypted and distributed networks
- Secure data management
- Efficient transactions
This tech is especially beneficial for small and midsize financial institutions, as it eliminates the need to invest a significant amount of money in IT infrastructure. With blockchain solutions, companies can stay competitive and enjoy a range of advantages.
This fintech solution is the trend that allows banks and non-banks to share customers’ data with third-party providers securely. Open banking is based on Application Programming Interfaces (APIs) that enable authorized partners to access financial data with the customer’s permission.
This approach allows them to develop innovative applications and services that benefit customers. For instance, customers can now access their bank data from one dashboard, track spending patterns, and compare account balances across all banks.
Open banking offers a wide range of benefits, including:
- Increased customer retention
- Streamlined payments processing
- Faster and simpler loan applications
- Enhanced customer experience
- Seamless integration with other financial services (money transfer services, credit cards, etc.)
This technology quickly gains traction in financial services, facilitating better customer engagement and smooth processes.
Banks, funds and investment firms, insurance organizations, and other financial institutions handle large amounts of data. This calls for robust data storage and reliable computing power, which cloud computing can provide. According to research, 94% of companies globally have adopted cloud computing. That’s an impressive figure, meaning that cloud computing isn’t just a trend; it’s here to stay.
In addition to providing secure data storage and computing power, cloud computing offers these benefits:
- Flexible resource allocation
- Reduced operational costs
- Enhanced security protocols
- Improved customer data management
- Access to AI-enabled technologies
Cloud computing systems can secure and scalable data storage, eliminating the need to purchase expensive hardware. This technology can run on multiple servers simultaneously, allowing faster data processing, higher availability, and scalability.
How technology will change the way accounting firms operate in the future?
A cyber-first digital modern workplace
The next generation of accounting technology delivers the latest in artificial intelligence, cognitive computing and machine learning technologies. With technology impacting accounting in so many ways, future proofed firms are developing strategies to embrace these accounting technology trends and use them to engage younger generations.
By incorporating technology and adopting more collaborative management practices, accounting firms can gain the edge in attracting talent.
Whilst implementing the latest in technology is not the only way to draw in new hires, it provides a foundation for what prospective employees want – high value work, flexible working arrangements and support for career growth.
The future of the accounting industry is a shift to providing strategic, innovating tax strategy, data analysis and advisory services. From providing strategic business advice, guidance on regulations, accounting firms can strengthen client relationships while showcasing accounting as an innovative and forward thinking industry – a far cry from the once tedious compliance focus on the past.
As you can see, the trend toward digital transformation has been accelerating for years, and it’s likely to become even stronger in the near future.
Explore the options available and find the best fit for your business needs. Don’t forget the cybersecurity aspect. Kaine Mathrick Tech can be a great partner in this venture. Let them be your shield against digital threats so you can stay focused on your business goals.