In today’s technology-driven environment, senior-level financial executives are no strangers to the ever-changing landscape of technology and how it impacts businesses. Each year many top consulting, research, and accounting firms put together a survey that highlights these top emerging technology trends, but each has unique themes that don’t always align. In order to isolate the top emerging trends critical to finance and accounting, members of FEI’s Committee on Finance and Information Technology (“CFIT”) Emerging Technologies Subcommittee completed a review of several such surveys for the leading common elements. This committee’s goals are to address the needs and interests of financial executives as strategic leaders at this intersection of finance and technology.
Based on the outcome of the survey review, CFIT found five emerging technology trends to be the most pervasive and relevant to accounting and finance professionals. These trends are:
- Artificial Intelligence (AI),
- Cloud and Cloud-native,
- Datasphere,
- Automation, and
- Cybersecurity.
Four of these five trends were also at the top of the 2022 survey review, with Datasphere being the newcomer. And for each of the past three years AI has come in in first place.
AI
AI has been around for quite some time, but it is only in recent years that it has become a powerful tool in the financial industry. It is the ability of a computer or a robot to do tasks that are usually done by humans because they require human intelligence and discernment. With the advent of big data, AI has become even more critical in finance, as it can help to process vast amounts of data and provide insights that would otherwise be impossible to obtain.
There are many potential business advantages to leveraging AI. In the Forbes emerging technology article, it was noted that the improvement of interfaces in AI will help businesses use this technology in a wider variety of processes. They note in the article that AI is already being used in retail through improvements to autonomous shopping, delivery, and inventory management processes. Another way that AI is being used in finance is through the development of chatbots and virtual assistants. Since ChatGPT was released in November 2022, it has given other AI tools the publicity to become more mainstream and more commonly used by the public. Other trends in AI mentioned were generative AI, AI in financial reporting, and natural language processing (NLP).
The number of companies that are implementing AI is rapidly increasing. In a 2021 McKinsey Global Survey on the state of AI, 56 percent of respondents said their organizations had adopted AI, up from 50 percent in the 2020 survey. The 2021 survey also indicated that adopting AI can have financial benefits: 27 percent of respondents attributed 5 percent or more of their companies’ EBIT to AI. Companies are developing and adopting more applications for AI, but organizational, technical, ethical, and regulatory issues must be resolved before businesses can realize the technology’s full potential. These concerns were echoed in other surveys as well.
Cloud and Cloud-Native
Like AI, cloud computing has also been around for quite some time. The cloud offers many benefits, including increased agility, scalability, and cost savings. By moving to the cloud, companies of all sizes can access the latest technologies without having to invest in expensive hardware or software. According to McKinsey’s Technology Trends Outlook for 2022, “Ongoing integration of cloud and edge resources will let users extend the cloud’s speed and quality to edge and real-time systems, thereby accelerating innovation, lifting productivity, and creating business value.” Other themes in the emerging technology articles relate to simplifying the cloud, middleware-like cloud solutions, and cybersecurity in the cloud.
Cloud-native is a relatively new concept that is gaining popularity in the financial industry. It refers to applications that are designed specifically to run in the cloud. By using cloud-native applications, companies can take advantage of the cloud's benefits, such as scalability and resiliency, while also benefiting from the latest technology innovations.
With many companies having spent the last few years migrating to various cloud platforms while the technology was still evolving, the next step will be to unify all cloud applications to a comprehensive enterprise view. Current automation initiatives could provide companies an opportunity to evaluate both transformation initiatives at the same time and provide efficiencies when automating a connected enterprise cloud. The cloud is also gaining popularity due to its ability to help lower costs in uncertain economic times and support Environmental, Social, and Governance (ESG) initiatives.
Datasphere
The datasphere refers to the collection of data that is generated by connected devices. Liberty Advisors states that “Innovative companies that treat data as an asset and have a research and development vision are capitalizing on data to unlock insights, drive processes, make better decisions, improve efficiencies, respond faster and uncover opportunities.” Gartner refers to a subcomponent of the datasphere as applied observability which is “the applied use of observable data in a highly orchestrated and integrated approach across business functions, applications and infrastructure and operations (I&O) teams to enable the shortest latency from action to reaction and proactive planning of business decisions. Applied observability allows enterprises to make faster, more accurate future decisions. By applying this systematically, we can reduce the latency for response and optimize business operations in real time.” Connecting data, devices, and analytics will be key to organizations making fast and accurate decisions to drive their businesses in the coming years.
Automation
PwC’s article states that “Automation involves transitioning manual processes into digital ones by integrating automation, robotics and intelligent systems so they operate in unison”. Further, the Hackett group notes that key goals for business executives around automation should be operating agility, the efficiency achieved by intelligent transaction and process automation, and migration to infrastructure that scales easily with demand.
By automating routine manual processes, businesses can reduce costs, increase operating agility, and improve efficiency, which is one reason why the topic of automation continues to be so prominent in finance and accounting departments. As fewer students are going into accounting and finance professions, current financial executives are trying to find ways to use the workforce for more complex and technical tasks. Organizations are now starting to look for the next evolution of automation including hyper-automation and working autonomy which goes beyond individual task automation and focuses on end-to-end process automation.
Cybersecurity
Cybersecurity has transformed from a trend into an ongoing business imperative that is a priority for institutions, but now organizations are focused on gaining agility in the space in order to adapt to expanding technologies. The McKinsey article notes that cybersecurity concerns around data risk could even prevent companies from implementing new technologies such as AI. As other technology moves at a faster pace, companies will need to keep cybersecurity top of mind, or they could expose their companies to unwanted risks.
Conclusion
As technology continues to evolve, these emerging trends will play an increasingly important role in shaping the future of the finance organization. By embracing these trends, financial leaders can assist their organizations stay ahead of the competition and provide their customers and employees with the latest technology innovations. However, with these benefits come new risks, and it is essential that institutions invest in measures to protect themselves and their customers.
The surveys reviewed were from the following companies: Accenture, Deloitte, Ernst & Young, Forbes, Gartner, The Hackett Group, IEEE: Institute of Electrical and Electronics Engineers, Inc., KPMG, Liberty Advisors Group, McKinsey & Company, and PwC.
Jaclyn Beam is an Associate Professional Accounting Fellow at FEI. Bill Overell is the CFO of Overell Solutions. Deniz Appelbaum is Chair and Assistant Professor at Montclair State University. AJ Bernstein is Director of Finance Transformation at Meta. Jason Korpak is Director, Finance Transformation Office (FTO) at Bread Financial. Todd Oulton is VP, Finance, Automation COE at American Express. Vinod Raghavan is Managing Director at Deloitte Consulting LLP.