In previous years private equity may have held back the financial industry in terms of the uptake of new technology and automation. As more data becomes available, the requirements for reporting and transparency have increased and businesses are continuing to diversify their investment plans, and realising that having strong expertise in analytics is a necessity.

Technology has become such a significant part of every industry, including the finance sector. In regards to the growing role of data and technology, industry specialists have emphasised the shifting position of the chief financial officer (CFO) within private equity firms. Technology and innovation have become critical across the industry in general. The CFO is becoming pivotal, a highly valuable asset within a business is data. This role has more responsibility concerning how to utilise data and apply the benefits to a business.

Portfolio Analytics and technology and key functions CFOs highlighted as required to shift from standard to strategic planning. The EY 2020 survey discovered that 70% intend to increase time spent on portfolio analytics and a further 69% plan to spend more time on technology.
CFOs are leveraging technology to manage routine tasks in their business. In the future, we’re likely to see CFOs continue working strategically, focusing on analysing data across the entire business.

Deal and portfolio executives are becoming increasingly popular so CFOs are taking on more responsibility and moving beyond finance into several new areas, such as data protection, resilience, digital strategy and ESG.

In a report named Delivering Value from Data, data-driven decision making has become a critical element of business as data-focused leaders have displayed the effective use of data to leverage new opportunities, disrupt markets and generate a competitive advantage.
The increase in fund sizes and expansion of portfolios in regards to funding size and location has spurred a need to utilise technology to manage these changes. Companies that can leverage data, utilise predictions and decisions, will be positioned to create a more competitive advantage.

The desire to increase the benefits of technology is also being experienced with institutional investors. As wealth and pension funds get bigger, more complex and competitive, their capacity to use technology is paramount. The availability and quality of data are becoming crucial, assisting funds in making better investment choices in today’s rapidly transforming global market.

Anything that makes funds more efficient at selecting the best investments is a major competitive advantage, and this is where data comes into play. Being agile and responsive is key and being capable of adapting and managing the pace of data demand.

This increase in data, analytics and technology is influencing hiring strategies and developing a finance workforce that includes relevant data analytics and technology skills. The conventional workforce of private equity is accustomed to standard systems like Excel but today employees need training on new tools as the technology landscape continues to transform.

The skill sets needed for the talent pool are much more technology-focused, with higher data analytics experience. CFOs are now focusing on how, in this competitive market, you’re not just competing against other private equity firms, but actually against other industries, like technology. So with this in mind, it’s critical to remain focused on attracting and retaining the best talent. Private equity CFOs recognise the need for them to accelerate the pool of talent within the business, especially as data analytics takes on a more important role in an organisation.

David Alich, director of analytics and technology at PwC recently gave his view on the future in a panel discussion. Alich believes the investment will continue to increase in data and analytics technology solutions. He anticipates that every fund will have its analytics and data experts or data science teams who focus on high-value projects and implementing analytical solutions into portfolio businesses.

Data quality is regarded as one of the biggest threats to reputation according to finance leaders. Data quality has become one of the biggest issues requiring attention according to senior finance leaders. As businesses continue to look towards data to enhance performance, the risks and challenges related to poor data have become even more important.

Focusing on increasing the quality of data can create many positives. In the latest IBM 2021 Global C-Suite Study, 70% of senior finance leaders believe that implementing company-wide data standards is a key priority in supporting their business with consolidating systems, cost reductions and scaling effectively.

CEOs are requesting finance leaders to take further responsibility in terms of standardisation, integrations and other associated services. Representatives of the board are demanding more insights, real-time reporting and analytics. These insights are unreliable and have limited use if not based on reliable and consistent information. It can, however, be challenging as raw data is generally quite messy and CFOs can find it difficult to maintain consistency and keep the information clean.

Many larger businesses have approached data quality by hiring a chief data officer (CDO), but in smaller businesses, CFOs generally take on the CDO role themselves.

CEOs understand that positioning the CDO in other functions can create bias in the way data is collected and interpreted, but CFOs are viewed as independent. They are generally regarded as the key to financial data accuracy and are appropriate for controlling other internal and external data.

As organisations become more reliant on data, the effects of poor data on decisions and overall performance will become more serious. More often than not, businesses will invest great sums of money into cleaning, integrating and managing data that may not even really matter to their organisation. Many CFOs often regard the cleaning and management of data sources as an additional burden. The reality is, the insights can be very important to making critical business decisions and have the ability to transform the role and finance function of CFOs.
With a solid platform of cloud-based data, CFOs can transform services in the finance industry by implementing automation in accounts receivable, accounts payable, reconciliation and report, enabling them more time for other valuable duties.

Sarah Ghosh, director of Onyx AI believes that the roles of CFOs were expanding partly due to advanced data analytics and machine learning technologies offer new ways to discover value in the data and delivering new business insights. Applying these technologies effectively requires a big focus on data quality.

Approximately 70% of businesses have made major decisions with inaccurate financial data, according to a survey by software company BlackLine. A further 55% of finance leaders stated they aren’t confident that they are capable of identifying financial errors before generating reports. It, therefore, comes as no surprise that there have been several stories about the detrimental impacts of misinterpretation of information.

External data from outside the finance departments can be even less reliable, with many senior leaders stating aside from cybersecurity, poor data is now the biggest issue to the future of boards and management. This pressure has accelerated even further during the pandemic. One particular pressure on finance leaders has been the rising demand for data by a combination of management, other markets and regulators. In some cases, regulators have utilised data to interpret themselves, which can result in varied results. In this industry, accuracy has become a critical element.

Businesses of various sizes are attempting to manage a range of systems that do not necessarily communicate with one another, which can make data management a big challenge. Generating quality requires effort to assess, validate and reconcile data, and the ability to correct errors.

Thankfully, cloud systems provide more flexibility and integration solutions that generate new insights from both structured and unstructured data.

Combining cloud with analytics tools can simplify data consolidation and cleaning, instead of applying the conventional means of spreadsheets. To manage these tools, the CFO may not necessarily require new skills but must be capable of understanding the variety of skills they may need to incorporate into their finance team. In an ideal situation, this would be a data scientist or analyst with strong business experience. The need to find people with these skills is critical and is causing challenges, due to the lack of such talent being available.
CFOs are exploring how to deliver an optimal mix of expertise and solutions to establish data governance and management teams with a clear framework for monitoring and support. A deeper understanding of these structures will allow to CFO to create teams and allocate the necessary budget to generate improvements and efficient returns, without requiring the need for more detailed technical knowledge.
Applying the data quality role enables businesses to have the chance to increase their technological, analytical and presentation skills. If they can implement all of this successfully, CFOs can confidently lead their businesses into the future.

Data represents a key element of success in the finance industry. Recent studies suggest that 60% of finance leaders consider the leveraging of data science and analytics for clearer insights and enhanced decision making as top priorities for this year.

The ability to use data analytics and big data to create a competitive advantage and to improve the operations and management of strategies plans are considered top factors for senior-level executives across the world.

Data analytics can be applied in three particular areas. In regards to planning, data analytics can be utilised for efficient risk management, data testing and statistical sampling. Data analytics can also improve the delivery of audits, generating rapid and efficient monitoring of particular controls, detecting possible cases of fraud and recognising any trends suggesting future risk.

Based on the findings from Protiviti’s latest finance trends survey, security, privacy and data analysis are considered top priorities. All three are connected with data, with data analytics regarded as very important by over 60% of CFOs surveyed.

Data is viewed as a very important area because it supports the generating of useful commercials insights, the ability to increase sales and improve the overall management and decision-making process. It also enhances the internal operations of the finance area, with over 50% of respondents regarding data analytics as a vital element of process improvement. Applying data analytics effectively, however, requires several factors to be put in place.

One key factor that senior finance leaders are struggling to cope with is the quality of data. As with most other industries, the analytical and reporting that is delivered by finance depends on the overall quality and completeness of the data used. Data governance is a vital part of this process. Finance leaders need to ensure they implement a strong data governance system and understand data ownership in the business.
The quality of data can also be improved by dedicated data management, an area that can require considerable time and expense. Once implemented and ready, however, finance leaders will be capable of gaining a much deeper understanding of various functions associated with profitability and risk. Without quality data, the results from any data and analytical processes will not necessarily hold as much reliability and value to the business. This is particularly true with the continued growth of AI and Machine Learning, meaning data quality will become even more important to businesses soon.

Data security

In a time of rising cybersecurity threats and new data legislation, businesses need to keep a close check on data safety. If any financial data is leaked, businesses could face considerable financial and reputational damages. This is why security and data in finance are regarded as a top priority by finance leaders. Over 70% of CFOs and VPs listed this as the most important factor.

For larger financial organisations, the stakes are much higher. The volume, complexity and sensitivity of their data reach another level and with more businesses moving to the cloud, the range of security risks continues to increase.

Other demands pointed out by finance leaders are the changing demands of customers, managing regulatory changes, the movement to the cloud and new tax requirements. One particular area that is often covered in the robotics process automation (RPA) market, yet many finance leaders are taking a fairly cautious approach to RPA. Only around 20% of CFOs and finance leaders regard RPA to be a top priority for the next year.

Tony Abel, the MD of Protiviti explains that many businesses are still collecting more information on how to leverage tools like RPA. Growing financial concerns and the demand for improving efficiency mean the use of RPA and other innovative technologies will increase over time.

One of the key benefits of RPA is that it can be deployed relatively easily and perform repetitive tasks across various systems. For many financial businesses, RPA could be effectively used in the accounts payable area, for processing invoices, payment verification and account reconciliation.

The latest developments in Oracle Cloud HCM will allow HR teams to deliver personalised, AI-driven processes to support their employees.

Oracle has revealed a new platform that will provide a more streamlined employee experience in the Oracle Fusion Cloud Human Capital Management (HCM).

Oracle Journeys support businesses by delivering a one-stop platform for employees as they continue to focus on various aspects of work and tasks. The new services allow HR teams to develop and deliver detailed steps to guide employees through several events such as onboarding, returning to the workplace, launching a new service or developing their career.

Chris Leone, the senior VP of development at Oracle Cloud HCM explains that as our homes have become our offices over the past year, we have become more used to how technology can improve our lives as consumers and employees are looking for that same experience at work.

As offices begin to reopen, it will be important to enable consistent and positive experiences for the office and remote workers. Organisations will need to provide support throughout an employees entire career. Leone explains that Oracle Journeys will help HR provide value that expands beyond conventional HR processes by offering unique experiences for their employees.

Oracle journeys will guide employees through activities and particular milestone and offer access to resources needed across the entire business. It will make it simpler for employees to take action as they navigate through different events. The new features in Oracle Journeys allow HR leaders to go beyond the standard HR workflows and create personalised, step-by-step support for any task. By offering quick access to AI-powered services tailored to each individual, the solutions support employees in saving time and improving overall productivity.

Global HR analyst Josh Bersin highlights that employee experience is an essential, multi-disciplinary challenge and the needs of employees differ greatly. Businesses need simple, customised services to create, measure and integrate employees digital lives. 

Businesses that make a concerted effort to improve tasks with positive experiences for their team will yield the benefits of higher levels of satisfaction, engagement and productivity.

Customers can manage their path in the HCM systems. This allows businesses to better manage and grow their workforce in difficult times, but also allows HR to become an innovative part of the entire organisation. The demands and expectations of employees have changed considerably. Right now, our workforce requires bespoke support and motivation. Oracle Cloud HCM offers an individual HR platform that enables better management and the ability to meet changing expectations. Utilising this solution we ensure businesses are ready to deliver a positive employee experience, no matter what changes we may see in the workforce in the future.

CFOs can often take a cautious approach to accept new technologies but data and analytics professionals can support them with really understanding the benefits of implementing these solutions into their business.

According to a study by Gartner, after a significantly disruptive year, CFOs seem to be prepared to invest in projects that enable the implementation of new analytics and automation technologies. There are two key reasons for this transformation:

-Looking specifically at finance, where analytics information on certain metrics is valuable, there is a demand for more innovative analytics to enhance performance.
-RPA technology is an automotive solution that eliminates manual tasks that can’t be integrated. Repetitive tasks can be a problem for finance, where a mix of various systems can be difficult to integrate.

While reports suggest that analytics and services like RPA are regarded as top priorities, there is also a level of the hesitancy of CFOs to invest in these new technologies. In the same survey by Gartner, nearly 80% of CFOs stated that they had some doubt they would reach their goals in advanced analytics and over 50% showed concern with reaching goals by implementing RPA.

These figures are a little concerning for the IT industry. The feelings in the finance department can influence other sections of a business. CFOs also hold a lot of control over which IT projects to implement and what tools to use in a business.

What are the key steps IT leaders can take to ensure that CFOs are supportive of analytics and other innovative digital projects?

Clear project success

Creating short term projects that have clear, achievable goals and returns on investment will demonstrate success and build confidence for the long-term implementation of new services.

Understand strengths and weaknesses of users

In terms of finance, the team require more analytics but it is relatively easy to get overwhelmed with all the information and lose sight of the bigger picture. For example, users can explore financial results, but yet still lack a clear understanding of key elements that influence the bottom line.

The customer service team may utilise analytics to explore which customers are satisfied. This is useful in determining customer attrition and predicting which groups are likely to be long-term customers. Similarly, manufacturing teams can use analytics to understand equipment downtime before it may happen, which maintains productivity and reduce expensive periods of downtime.

There are two examples of how analytics can influence financial health and highlight areas that may be overlooked. If IT teams can utilise these solutions with finance, CFOs would understand the real value and be more likely to accept these projects.

RPA isn’t the only technique available to reduce repetitive work

RPA isn’t the only way of eliminating repetitive work but represent one of the clearest ways for finance to understand the benefits of applying automation to its workload. Automation and eliminating repetitive work can happen in multiple areas of a business by applying automation technologies that differ from RPA.

This is somewhere where IT teams can present clear defined business cases, with an explanation of the technology and the resulting ROI from applying these solutions.

Why is this important?

The ultimate goal is to ensure the CFO is connected with how big data, analytics and automation can be applied in the company to generate better results and revenue. While there is always a level of risk and uncertainty with new projects, having the CFO and other business units in support and invested in the success of the project is a big step in enabling a successful implementation.

Embedded wealth management enables customers to increase their wealth and provide fintech with a new channel to communicate and engage with their customers.

When Uber announced it was introducing a bank back in 2019, the technology and finance industry became very excited. Uber Money provided users access to their earnings in real-time and access to their card. It represented a great opportunity for the strictly regulated finance world. Uber was a blueprint and many other technology companies are exploring the move into financial services. Embedded finance has become a very popular area for both fintech and new investors.

The concept is that technology companies can provide financial services with their standard offering, whether this is payments, lending or insurance. Another embedded financial service is based around wealth management. Challenger banks are showing significant interest in wealth management, providing users with options to invest their money more freely. Challenger banks are taking the lead in providing customers with a simple service and favourable options for saving.

There is a growing need for businesses to engage with their customers in a way that provides value beyond the conventional services, while at the same time offering benefits for the challenger banks. In the previous year, businesses looking to integrate investment features were faced with several barriers to overcome. These challenges reduced the options of wealth management to larger financial institutions. Today’s embedded solutions have made wealth management more widely available.

Wealth management has benefits for both fintech and their customers. Users can increase their wealth through simple investments and this enables fintech with new ways to engage and communicate with their customers. Embedded investments provide a stable way of growing income while providing a genuine reason to communicate with clients.

The outlook for the industry is looking positive. Businesses are experiencing stronger growth and interest in all traditional fintech areas and analysts predict that more customers will actively look for user-friendly services to make their investments.