Digital technology has transformed the finance industry by enhancing the customer experience, improving operational efficiency and reducing overall costs. AI, big data analytics and automation are top trends reshaping the finance industry. There are challenges, however, including regulatory compliance, outdated tech systems, security, the demand for talent and the potential risk of losing connection with personal banking.

Digital banking today has transformed our personal experience with our finances. From mobile payments to AI-driven technology, the finance industry is rapidly changing. The traditional banking system has carved a new path to a more accessible digital banking model. Customers can access their accounts, transfer money and pay their bills from home or via their smart devices. This movement towards digital banking has enhanced the customer experience and improved overall business operations. Digital technology has allowed banks to improve security measures and prevent potential fraud cases. Digital technology will continue shaping the future of finance.
Enhancing the customer experience and business operations

Industry transformation is supported by several factors, including improved customer experience, increased efficiency and reduced costs. The rise of fintech businesses and changing demands of customers have played a critical role in driving digital transformation in finance. Furthermore, regulatory changes and tech advancements have made it easier for finance businesses to adopt digital solutions. The increased use of mobile tech and the Internet has also supported further growth in digital banking.

The shift toward digital technology has transformed traditional finance practices. It has enabled new businesses to emerge, offering a range of advantages to the finance world. It has improved the overall customer experience by providing accessible services for all. Digital technology has also increased operational efficiency for finance businesses by creating quicker transactions and reduced costs.

By recognising the advancements, you can make informed decisions about which finance businesses to work with and which technologies to adopt to manage finances effectively.

Navigating the digital finance scene

The digital finance industry is rapidly evolving, and finance companies must remain in touch with the latest trends to stay competitive. Many benefits have emerged with digital tech, but there are also challenges finance companies face when adopting digital solutions. One of the main challenges is related to regulatory compliance. Finance businesses must meet a range of regulations and standards when implementing digital technology to ensure complete security and privacy of customer data. This process can take time and requires considerable resources.
A secondary challenge is legacy systems, with many conventional banks relying on outdated IT systems incompatible with today’s digital solutions. Upgrading these systems can be expensive and time-consuming, blocking the potential adoption of digital technologies.

Cybersecurity is a major concern when implementing digital technology in finance. Businesses must ensure their systems remain secure and protected from potential cyber-attacks. Furthermore, there is a need for skilled talent capable of managing and maintaining new digital solutions. This requires additional investment in training and development plans to ensure employees have the skills to work effectively with new technologies.

Finally, there is a risk of losing the personal connection in finance as more activities move online. Financial institutions must find ways to balance the accessibility of digital banking with personalised customer service to keep customer loyalty. While there are challenges in adding new digital services, finance companies must discover ways to alleviate these concerns to remain competitive in a digital future.

As finance companies slowly transition from physical branches, it will become more important to balance the convenience of digital banking and the personalisation that people demand. While online banking has become very popular, many people still want personal interactions. To address this, emerging technologies like AR and VR may provide solutions to connect the gap between digital accessibility and personalisation. Utilising emerging technologies may enable us to strike a balance, improving customer satisfaction and loyalty. As finance moves closer towards a digital transformation, it’s critical to remember the value of personalisation. Augmented and virtual reality provide a solution to connect digital and personal services. Incorporating these types of services will create an experience that provides customers with more insights into financial products and services.

We are embarking on a new transformation journey and should embrace the power of tech to deliver a promising future for finance. By using digital technologies, banks can transform how they support their customers. Innovation and digital disruption are vital to generating new opportunities and exceeding customer expectations. Finance companies must keep close to emerging trends and provide more convenient and accessible services to their customers and deliver an enhanced finance experience.

Finance leaders envision a future for the industry that is digital, scalable and data-focused. CFOs must reshape the digital aspect to be capable of attracting and retaining the next wave of talent in finance.

Planning for AI

CFOs have bold plans to enable the future vision of autonomous finance, An AI-driven finance service that delivers data when requested, is scalable, digital and capable of solving complex problems. To support these plans CFOs are transforming business structures, roles and skills to create a place where AI and digital talent can progress. By 2025, 40% of finance roles will be new or significantly altered due to the influence of financial technology.

With over 70% of finance, leaders expected to increase AI staffing, the demand for AI talent will inevitably increase, along with pay expectations and time to hire. CFOs planning to stay ahead of the competition will likely focus on developing digital skills, enhancing their finance IT talent and improving financial data literacy.

With increases in AI and staffing, efficiency will also rise, creating opportunities for finance to influence business strategy, data reporting and compliance. From an accounting perspective, AI models have decreased reconciliation time and have improved error detection. For financial analysis, leading companies are implementing AI to generate cash-flow forecasts. These developments will enable finance teams to allocate their time towards more specialised functions and allow automation to handle more routine tasks. The challenge, however, is the lack of talent. Studies suggest that two of three finance leaders believe the digital skills gap is increasing.

Delivering Core Competencies

A business lacking digital capabilities will keep a finance team from utilising the potential of autonomous finance. Finance can allow teams to work more efficiently, creating valued insights and investing in digital skills. Utilise these technologies requires:

Technological literacy – using digital tech to generate better outcomes for finance and the entire business
Digital Translation – the ability to recognise how digital tech connects with finance and associated processes and systems.
Digital learning and development – the ability to implement new digital learning requirements within a new learning environment.
Digital bias management – understanding and articulating bias in machine learning and managing the risk of this.
Digital ambition – the motivation to embrace technology and implement new ways of working.

A shared belief among finance leaders is that skills in core digital require considerable technology-based skills, knowledge and abilities. Studies suggest that over 60% of finance leaders believe their teams cannot effectively use digital technologies, and only 23% of finance leaders consider their teams proficient with these five digital competencies.

Successful CFOs expand digital skills by educating finance staff on these competencies and ensuring finance leaders display examples of how these competencies look to the team in their organisation.

Nurturing AI talent

Whether a business is upskilling its existing talent or looking to recruit, CFOs must significantly reconsider the finance employee value proposition and the culture to attract and retain the best digital talent. Top AI talent must feel a strong sense of belonging within the finance function. Despite a rise in digital talent within finance, CFOs may consider old assumptions about this talent’s work preferences which can impact the overall success and potential attrition of digital finance talent.

CFOs can nurture the best talent by supporting a work-life balance to avoid potential burnout. According to studies, digital finance talent often prefers to work on their own time. Over 60% of digital finance talent claim to do at least 20% of their work outside of normal core working hours. Successful CFOs will view the benefits of offering flexible hours, including improved engagement and productivity. Furthermore, digital finance talent like collaborating with others, opening the opportunity to increase productivity by combining digital with core finance talent.

Discovering the best data science talent is critical to developing an AI-focused finance business. CFOS must take a ‘build it, and they will come’ strategy, building an organisation defined by innovative analytical tools, valuable data, clear learning opportunities and a structured career pathway.

Applying data skills and governance for leaders and employees is critical for CFOs to make progress with digital transformation plans. With the rising speculation around AI and other technologies, digital transformation remains a priority for CFOs. To make real progress on their digital plans they must position data governance and skills at the top.

Industry professionals believe that getting the data right is vital for their clients. Bad data will directly impact the ability to use new features with AI. If businesses lack data governance or their systems are clustered with duplicate customers and other information, for example, the insights gained from predictive analytics cannot provide much-added value. Understanding data structure basics is critical in this process as it recognises the overall strategy and how it connects with digital transformation.

Digital transformation is dependent on understanding the data

CFOs take on a vital role in driving their digital transformation goals forward. While CTOs or other executives can provide essential insights, accountability goes back to the CFO because such measures are a significant investment into their organisation.

Having a complete understanding of a data governance strategy is crucial for finance leaders. Industry leaders believe that having a CFO, a decision maker at the senior level capable of making those major decisions, will accelerate the digital transformation journey. 

Gaining a broader understanding of data structure and building those necessary skills can enable leaders to be more prepared when exploring new technologies. For example, exploring the potential of AI is becoming a necessity for businesses, especially in the current economic climate.

Uncertainties for our economy mean applying a ‘wait and see’ approach toward digital transformation is no longer viable. Businesses that fail to adopt new systems may not be capable of taking advantage of emerging technologies to navigate further disruption. AI can be integrated with other platforms to aggregate vital information, explore data and find key insights to drive businesses forward.

CFOs and senior leaders are trying to determine what areas to focus on, finding the reports or key performance indicators that will enable them to make the best decisions, move forward, empower their colleagues and retain skilled employees.

Data skills can support talent retention

Applying a data-focused approach can support finance leaders with talent retention, as upskilling in this area can save businesses money and enable them to progress with their digital transformation plans. Businesses are beginning to focus on empowering their workforce to learn new skills. 

While recent studies show job growth is slowing, cost optimisation remains a high priority for CFOs, with headcount and compensation regarded as two areas where financial leaders may look to reduce expenses. According to a study by Grant Thornton, 42% of financial leaders highlighted these areas as a means to reduce costs, with the number of CFOs who stated they are unsure they can meet their labour needs declining to an all-time low.

Upskilling talent not only means businesses avoid hiring new people, but it also helps with employee retention. More millennials and next-gen people want to learn and grow at an organisation, and if they aren’t offered this, they will quickly leave. Investing in their training will strengthen their employees and create a workforce prepared to continue investing in the business.

According to a new report by the independent group Coalition for a Digital Economy (Coadec), the UK open banking industry has reached a crossroads and suppliers require more certainty about its future path. 

Nearly 5,000 people are working in the UK open banking and the industry raised over £880 million last year, so a lack of direction could impact the continued progress of open banking. Coadec’s report believes there is an opportunity for the industry to accelerate to the next level, but could be impacted in other countries in Europe if the wrong decisions are made by regulators.

In 2018, UK banks were required to introduce the Competition and Markets Authority (CMA) open banking regulations, which resulted in the launch of the application programming interfaces (APIs) in finance, providing customers with more control of their accounts.

The end goal was to enhance competition in an industry traditionally controlled by large financial services businesses. Customer banking data is shared by the industry via APIs, with permission from the customer, allowing companies to deliver customised solutions.

Over seven million people in the UK used open banking in 2022 and according to data reported to Open Banking Limited building societies, two million users were added in the last year. While open banking has continued to progress and develop a new sector of financial-based technology, the next stage of open finance can go much further.

Open finance will see companies share data across far more services, like mortgages and loans, and offer new products and solutions from other organisations. 

The Coadec report explains that a multibillion industry is emerging beyond payment account data to create a new era of innovation and competition. Luke Kosky, fintech policy lead at Coadec explains that the growth of open banking has been a success for the UK. The industry has grown to over £4 billion in five years, and with the right support and regulation, the opportunities for open banking are limitless. However, Kosky emphasises that we have reached a defining moment for open banking and the next steps will define future success. 

There is some uncertainty in the sector as companies await a report from the Joint Regulatory Oversight Committee (JROC) which replaced the Open Banking Implementation Entity (OBIE). One request of Coadec is retaining the OBIE past April, believing the OBIE must continue in its current form for the short term to protect the integrity of the open banking industry.