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Finance automation in the financial services sector

Pierre-Louis Seguin

If any one of us were asked to draw up a shortlist of data-driven business sectors, financial services would be a top choice. It’s a world in which information is the stock in trade, and in which as a result the finance function has even greater significance than usual.

And so, if any one of us were asked to compile a second list – of sectors actively applying intelligent technologies such as robotic process automation (RPA), artificial intelligence (AI) and machine learning to the finance function – once again, we’d probably mention financial services. Organizations in this sector have so much to gain, right? Finance automation tools are the key to providing faster and higher-quality services to the rest of the business.

On this second question, it seems we’d be wrong. In our recent industry report, “Reimagining finance for the digital age – Financial Services sector, (1)” we found financial services companies have so far been slower than those in other sectors to explore finance automation. Just 23% of financial services executives said that a transformation strategy for automation had been agreed for the finance function at their firm. This was a smaller proportion than in any other sector surveyed.

What’s more, businesses in this sector were less likely to be among the group we identified as “Masters” – organizations leading the way in automation and artificial intelligence (AI). In almost all the processes covered in the research (including, for example, journal entry and reconciliations), financial services firms have made less progress than the other sectors surveyed.

The big question

These findings prompt an obvious and immediate question, contained in one three-letter word: why? Why should a sector that on the face of it has so much to gain be so far behind expectations?

The answer seems to be that for many financial services businesses, the benefits of automation aren’t fully recognized: only 54% of financial services companies expected automation to have a high impact on the finance function’s workloads and jobs profile, and only 38% of respondents in the sector believed automation’s rewards outweighed the perceived risks.

And what were those perceived risks? Key among them were:

  • The possibility of a security breach: the survey reported that fear of a cyber attack was holding back 69% of firms in the sector from implementation.
  • 60% of firms in the sector pointed to the culture of fear around job losses that is often caused by automation.
  • 57% worried that implementation of new technologies would cause disruption and delay.

Practical challenges identified by the survey included:

  • The need to understand the broad range of tools and approaches, which 22% of respondents ranked as their first or second biggest challenge.
  • Budget constraints and skills shortages.
  • The burden of legacy infrastructure, often as a result of the mergers and acquisitions culture for which the sector is known.

Problems can be addressed by aligning automation efforts to strategic priorities and also via a program of internal communication throughout the finance function. Also, an approach to tackling practical challenges is to engage the services of a knowledgeable and experienced service provider to assist in areas such as planning, implementation and security.

The good news

It’s not all bad news. Many financial services companies reported excellent progress in finance automation in areas that were priorities for their organizations – including improving compliance and regulatory performance, reducing cost and securing greater process efficiency.

But these are short-term tactical gains. Finance automation really comes into its own when it can deliver actionable insight via accurate forecasting and continuous monitoring and analysis, and although there has been skepticism, the tide seems to be turning. The sector survey showed that, at an organizational level, 53% expected automation to free up resources for higher-value activities – which will be necessary for finance to play a more strategic role – while 54% and 55% respectively expected fundamental improvements in business-insight generation and informed decision-making. What’s more, 68% of financial services respondents agreed that finance needs to play a leading role in driving automation throughout the business, and 72% said that finance was ahead of other functions on this issue.

This is probably why the pace of automation implementation looks set to increase. Within three years, at least a quarter of financial services firms in the survey who were not currently at near or full automation expected to have reached that level for almost all their finance function processes.

Financial services leaders must now follow through on these commitments and overcome perceived barriers to implementation.

Key lessons learned

What are the main conclusions financial services organizations can draw from the experiences of their peers?

The survey summarizes them as follows:

  • Aligning automation investment with strategic priorities will give financial services organizations a way to overcome risk concerns
  • Their vision for automation must be strategic as well as operational
  • They will have to address skills shortages
  • Leaders must seize the initiative

If finance sector organizations address these issues, who knows? They may realize their own ambitions as well as our general expectations…

Read the Reimagining finance for the digital age – Financial Services Sector” report.

Read the full Reimagining finance for the digital age report.

To learn more about how Capgemini’s Finance Powered by Intelligent Automation solution can deliver enhanced value to your finance function, contact:

Pierre-Louis Seguin is a senior executive with over 28 years of business leadership positions in major listed corporations, serving the finance industry. Through his extensive experience in integrating businesses, Pierre-Louis helps global leaders to expand geographically, organically, and through M&A, pursuing innovative growth plans.

(1) The survey of 500 senior finance executives, conducted in January and February 2018 by Capgemini and Longitude, included 100 executives working in the financial sector (51 in Europe and 49 in North America). The conclusions from that wider research are presented in Reimagining finance for the digital age: