Fintech is a hot topic worldwide and being discussed by the likes of Donald Trump and IBM. But why are these innovations now moving from IT desks to boardrooms? We reveal the pieces of technology revolutionising the way you do business, whatever the size and shape of your organisation.
As a seasoned finance professional, you’re probably familiar with having your eyes down on a spreadsheet. If you started your career decades ago, you may have assumed this is how your role would play out until retirement. But finance professionals can no longer afford to think like that. If you manage a fleet, for example, the dynamics of your drivers’ behaviour are perhaps being measured by telematics technology and little black boxes.
And wearable tech is often a tool to boost engagement through smart watches, mobile apps and pedometers. Are your employees taking enough steps to maintain healthy activity levels? Do they have healthy biometric readings?
And you couldn’t miss how tech-savvy those just beginning their careers are in terms of social media – aggressively marketing themselves and their personal brand on Twitter and LinkedIn.
Like it or not, fintech is here to stay, which means the role of the FD may never be the same again. With this in mind, we’ve rounded up five of the top technologies creeping onto boardroom agendas worldwide.
BLOCKCHAIN: THE NEXT GENERATION OF DIGITAL CURRENCY
The term “bitcoin” is probably nothing new to you and this technology has hit the headlines more than once in recent years. But the world of digital currency is rapidly moving on. “Bitcoin” is out as a buzzword du jour and “blockchain” is in. Blockchain is a public ledger of all bitcoin transactions ever conducted. And it is constantly growing – whenever a new transaction is completed, it is added to the set of blockchain transactions. The process is often described as the “transfer of trust on a trustless world”.
WHY SHOULD FDS CARE?
Blockchain is one of the main drivers of change that has come out of fintech from the perspective of cryptocurrencies. Many within the industry predict blockchain could, in fact, revolutionise finance.
Blockchain stores information on a global network that cannot be tampered with. It’s this technology that banks feel has the potential to act as a gamechanger in areas such as remittances and securities exchanges.
“Bitcoin was a significant breakthrough – but it’s not the whole story,” says blockchain and distributed ledger subject matter expert at Barclays, Simon Taylor, in the report Blockhain: understanding the potential.
“The technologies around bitcoin have the potential to transform many different processes and companies should be discussing these developments at the board level and asking how this technology could help them and whether they should be investing in it,” he argues.
THE IOT CROWD
The Internet of Things (IOT) is another buzzword in the fintech space.
HOW DOES IT WORK?
The technology connects devices over the internet, allowing them to communicate with human beings and other devices. The analogy that gains most attention is the smart fridge. When the IOT is in your home, your fridge will send a text alerting you the day your milk passes the best before date.
WHY SHOULD FDS CARE?
According to the research from Mckinsey’s Global report, The Internet of Things: Mapping the value beyond the hype, the IOT could generate up to £8.36 trillion, which would be equivalent to approximately 11 per cent of the world economy.
But there is a still a way to go before business are able to capture the full value of the IOT. McKinsey cites the example of an oil rig that has 30,000 sensors – in this scenario; typically just 1 per cent of the data from those sensors would be examined.
When it comes to the IOT, experts seem to agree on one point: interoperability (which allows different technologies and software to exchange information and communicate) is the key.
In a series of exclusive video interviews with Director of Finance, head of customer engagement at accounting and software company, BluQube, Nicky Wilkins says: “Assess the cost impact of a person keying in that information – assess the cost impact of that process being five or 10 days.”
Perhaps the ultimate proof of the fintech revolution and the blurring of lines between finance and science fiction lies in the evolution of the artificial intelligence (AI) phenomenon.
WHY SHOULD FDS CARE?
In one of the most published examples of robotics in fintech, Enfield council has employed a robotic employee to deal with front-line customer service enquiries.
Following budget cuts and job losses, the council has announced that the AI device will address queries “as a human would” and also has the capacity to monitor thousands of employees simultaneously.
The robotic device, known as Amelia, has been previously used the public sector, with one survey suggesting this approach is 60 per cent cheaper than a human employee.
In another famous case, wealth management firm Charles Schwab introduced a service in which clients’ money would be managed by an algorithm. Rather than a person, investment decisions would be driven by lines of code typed into a computer.
BIG DATA: BIG DEAL?
We all know the stats… every day, we create 2.5 quintillion bytes of data and 90 per cent of the data in the world today has been created in the past two years, cries IBM.
WHY SHOULD FDS (STILL) CARE?
Whatever your views on its efficacy, big data is clearly still relevant as evidenced when it became a point of debate in the US presidential election. When quizzed on the use of analytics and big data metrics, Donald Trump said: “I’ve always felt it was overrated. Obama got the votes much more so than his data-processing machine and I think the same is true with me.”
Political posturing aside: the analysis of big data has the potential to identify trends within customer behaviour, with the possibility of increasing segmenting and tracking consumer engagement.
Whether your business has a straightforward website or just a social media presence, you’ll receive information that will allow you to monitor your customers’ behaviour and gain insights in what drives their purchasing decisions.
AHEAD IN THE CLOUD
Cloud computing is nothing new. But one of the most interesting aspects of the debate is the implications for FDs and the role of the finance function. If accountants no longer rely on spreadsheets to get their job done, they can use their energies to partner with other functions of the business and become more involved in strategic direction.
IS IT SAFE?
Head of product marketing for accounting in the UK and Ireland at Sage, Michael Office, says: “There is a fear of high-profile data loss, which is not necessarily related to the cloud. One of the biggest issues was when child benefit files went missing from HMRC. But this was probably in the infancy of cloud data.”
Many within the industry argue there has been a disproportionate focus on cloud security breaches. According to data from Sage, just 16 per cent of data attacks originate from external threats, while 47 per cent are caused by staff incidents.
We’ll feature more insights from Office in a future issue of Director of Finance in which we probe the issues of cybersecurity and the future of cloud computing.
Another pertinent question in the debate is the emergence of the ethical hacker – a computer and networking expert who systematically attempts to penetrate a computer system or network on behalf of its owners to identify security vulnerabilities that a malicious hacker could potentially exploit. Keep your eyes open for future issues of the magazine for an in-depth interview with an ethical hacker.