Finance and Accounting Trends We Might See in 2020
We are all witness to the sweeping changes that rapid technological growth has brought in the world of enterprise. Experienced finance and accounting professionals have witnessed the transformation themselves, and most of them predict that IT’s role is only bound to increase in the global environment.
Even now, tech enthusiasts are urging entrepreneurs to digitize their operations and to record their financial transactions in a paperless manner. Ignoring all the significant changes in the business environment is only going to harm your business in the future. When rapid transformation affects consumer demand, you and your company will not have the strategic depth to adapt, leading to failure.
According to PWC global, the technological change in the financial traditions is the most creative force and also the most destructive force in the industry. Adapting to the current times will secure your future and rescue your business while ignoring them can be catastrophic.
Given the variety of reports and software available, predicting financial trends and growth is not challenging. However, it is difficult to find out the exogenous and internal factors that will affect the growth. These factors are beyond the control of the owner, political instability, or an unfavorable change in the financial markets that can negatively impact businesses.
This is why businesses must be aware of the possible changes the future might have in store for them. Preparing for the future allows a company to create multiple strategies according to the possible scenarios that can confront them. By following and adapting to the trends, you as an entrepreneur are changing adversity into your advantage.
Given the significance of predicting future trends and their effect globally, we have made a list of some trends that we might witness in 2020. Following the compilation of the core points, we have compiled a comprehensive guideline that businesses should follow to adapt to these trends.
1. Automation, and more automation
Going by the financial standards and recent global developments, it is safe to assume that the automation cycle will continue and might even accelerate aggressively in the latter part of the year.
Although the benefits of automation are great for companies that adopted the measure, some industries are reluctant to embrace it. The reluctance comes from the fear of the unknown in small businesses. The lack of skills to automate practices is another reason why many small business owners are hesitant in automating their practices.
Artificial Intelligence and machine learning are not here to push human intellect out of the window and make it redundant. These trends and practices are meant to promote efficiency in the business environment, as they provide the user with real-time information from a great number of sources.
With time the algorithms behind such automation will continue to get even more powerful and efficient at compiling information. The accumulation and submission of the big data in real-time will further improve reducing costs of doing business and yielding positive results for the company.
While computers and AI improve efficiency in a business, they are only great transnational machines. It is the human mind that is only equipped with the capacity to interpret data and to use common sense.
Technology will give us access to better data. Still, it is the accountants that have to ensure the proper application of the information.
2. New Drivers of the Business Model
In the past new businesses found it challenging to break into the financial services industry. However, this is not the case anymore. With the advent of FinTech, disruptors are finding a way to penetrate the industry.
Disruptors are fast-moving companies that generally focus on a particular innovative technology. These companies are often startups that provide creative ways for almost everything, including mobile payments and insurance.
These companies have been in the past successful in attacking several profitable elements of the financial services value chain. The strategy has been damaging to the aspects of the financial sector that are known for subsidizing the essential but less profitable service offerings.
According to research, respondents felt that they were under threat of losing their business to standalone FinTech companies. Another aspect that will continue to be in favor of FinTech is the global investments that have tripled in 2014, reaching more than $12 billion.
Banks and other financial bodies have noticed an upward surge in their annual spending on IT services. FinTech companies provide most of these services and going by the numbers and economic environment; it seems the trend will continue in 2020 too.
3. Blockchain Breakthroughs
Most companies do not interpret the real meaning of blockchain in a manner that is favorable for the business. This single ledger technology allows users from different sources to access the same information in real-time.
This means that both owners and lenders can access the business profile of a company. If you make a change, all stakeholders will notice it in front of them.
The advent of blockchain has revolutionized the service industry; transactions that traditionally took hours or day to complete will now take minutes or seconds. A change made by one party will allow everyone with access to notice the difference and validate or approve it. The real-time nature of this technology also provides users with greater security and improved transparency.
Given the tight scrutiny over financial channels regarding the risk of money laundering and terror financing, blockchain technology will continue being a dominant force. Auditing, compliance, and reconciliation will see a considerable change as the process and procedures of observing anomalies in the financial sector will become easier.
4. Customer Intelligence
With the advent of social media and the availability of better interactive tools, it has become easier for businesses to determine the likes and dislikes of their customers. Trends in social media are also a good indicator of what the average consumer expects from a company. The knowledge a business has over the aspects the customers value most is called customer intelligence.
Like in the past five years, in 2020, better customer intelligence is going to be the need of the hour for most businesses. Gone are the days when customer intelligence was based on some results off a survey or hastily arranged focus groups. These endeavors were never enough to provide an accurate picture of a business.
Today technology has ensured that businesses take into account customer intelligence when discussing financial trends for the coming year. The access to data that companies have today is growing exponentially as companies of today are aware of what their customers want from them.
5. The Risk of Cyber Security
The movement of data from paper to the computer as convenient as it may sound comes with its risks and dangers. Financial executives and spearheads around the world are already familiar with challenges the financial world has to deal with in terms of financial security.
CEOs and owners of businesses are becoming increasingly concerned about the threat the cyber-threats face. Researches and reports reveal that today, even more, CEOs have joined the cyber-security bandwagon voicing their concerns. The insecurity over cyber-security has risen in the current year. It is expected to stay the same for the year 2020 too. The following reasons highlight why we think cyber-security is not going to improve in 2020, either.
- The increasing use of third-party vendors.
- The presence of sophisticated technologies that are rapidly evolving.
- Cross-border data exchanges
- Rapid growth in the use of mobile technologies and the rise in the phenomena of the Internet of Things
- Cross-border security threats have increased too, as hackers act as proxies to promote a state’s agenda and propaganda.
Until or unless collective efforts and guidelines are not made to combat the problem, cyber terrorism will continue plaguing the business world.
These are some of the major financial trends that we think will dominate the year 2020. To tackle the threats and opportunities mentioned above, we have made a list of measures you can take to ensure financial stability in 2020:
1. Cut Costs by Adopting AI
One of the significant reasons why FinTech has been successful in penetrating the global financial system is because they don’t carry the burden of operating costs. Today businesses carry a huge burden of IT operating costs that stem and relays to other departments affecting the total cost of doing business.
While we don’t suggest completely overhauling the IT department of your business, you should be prepared for a world where change is constant. Given the cost of doing something different, it is a better idea to bring about a change while continuing to support the core mainframe systems.
Automate certain operations and look to invoke the ideas of the best mind n the business to ensure that the move is a successful one. Look for functions that require the most financial assistance because we believe that companies are unnecessary are spending up twice as much as they need on IT.
2. Build Technology to Find Out More about Your Customer Needs
As stated earlier, customer intelligence and the ability to act in real-time to the needs and demands of the consumer is an essential element of a successful business. Customer intelligence is one of the significant factors that are affecting the financial services industry today.
As the focus on customer intelligence grows, many of the attributes that drive the brands of today can become less significant in the future. As it is visible today, the new operating model for most businesses will be customer-context centered. This means that in the future, the companies will change the methods of interaction with their customers depending on the context of exchange.
Businesses today need to communicate and interact with the customer with the help of a multi-channel contextualized interaction. A smart balance of humans and machines, aid in recording the preferences of the customers and then deciding policies based on the replies.
3. Pay Attention to Cyber-Security
One of the significant threats that businesses of today face is in the form of cyber-security. As mentioned earlier, there is a growing concern amongst CEOs and top executives regarding the security of crucial business data. Although this is a good sign, the ever-increasing number of cases of cyber attacks suggests that the matter is beyond the point of just showing mere concern.
The number of attacks in recent years suggests that the traditional approach is no longer working, and companies need to look at new cyber-security models. Companies and business owners need to understand that just like the models you choose to prevent these attacks, the security risks have also evolved over the years.
Therefore, in the future, a better secure business is going to be the one that makes change constant and eradicates all barriers to cyber security.
The financial trends in 2020 will also depend on other exogenous factors that are beyond the control of business owners and executives. It is essential to deal with these trends immediately and be prepared for what the coming year holds for you.
Create a strategy that takes into consideration all the factors mentioned above. Ensuring that the business is strong enough to deal with all kinds of financial trends and problems is essential for its success. This is why all companies must have the capacity to adapt.