The future of finance is multidisciplinary, and the most powerful ideas are born from cooperation. Last spring, we collaborated with PE Accounting, an innovative Swedish provider of automated accounting services and a team of great people who are truly passionate about technology and are on the forefronts of their transforming field. Our discussions inspired this blog post, which we believe is still on-point in terms of the emerging trends in accounting and therefore we decided to re-share in 2021.
The accountant of the future
Although there are multiple different factors contributing to the continuous evolution of roles within the corporate financial departments, we believe that technological innovation is likely to manifest itself both as a catalyst and as a response to other exogenous triggers. Therefore, the skill set of tomorrow’s financial department employee is likely to combine expertise in finance, economics, statistics and computer science. Despite the rise of artificial intelligence, we do not think that technology would replace human labour in the short-to-medium term. However, it is very likely to expand the breadth of human capabilities and efficiency by unparalleled availability of high-quality data-driven decision-support.
Predictive analytics and financial functions
We anticipate that the overarching regulatory trend of increased transparency (which is particularly prominent within the financial industry but surely extends itself to other sectors of the economy) would constitute a significant data challenge for the financial functions. Therefore, it is likely that the accountants of the future would be prompted to operate advanced technological tools to prepare, analyse, alter, summarize and predict considerable quantities of financial and text data. We have already seen some creative manifestations of this trend in our work. For instance, one of our clients, a corporate pension consultancy, leverages our predictive analytics to overcome the common data challenges and automate the complex calculations of corporate pensions, allowing their highly qualified staff to concentrate on less monotonous work requiring a higher degree of professional judgement.
From recording to analysing and interpreting
The pandemic is likely to influence the corporate financial functions to look into automating as many processes as possible in order to reassign their human resources to more strategic, value-adding tasks. As a result, the emphasis of their work could shift from recording, summarising and reporting to analysing and interpreting financial data. For example, the manual process of managing payables and receivables within the organisation could be empowered by powerful stochastic simulations of these balance sheet items e.g. including default and late-payment risks. These predictions would equip the financial professionals with premium liquidity management insights within seconds, which could ensure that any arising liquidity issues would be met with well-informed and timely action.
Machine learning as a standard part of the university curriculum
The rise of the remote economy is likely to foster more trust in automated systems and therefore accelerate the widespread digitalisation trend. As artificial intelligence and advanced statistics gradually become a vital part of the financial major curriculums, the entrance of millennials and digital-native Generation Z into the workforce is likely to popularise the application of machine learning methods in the typical workflow of accounting departments.
The rise of sustainability reporting
Another exogenous trend likely to impact the accounting function is climate change, highlighting the importance of Corporate Sustainability and Responsibility (CSR) performance as a measure of the entity’s contribution to its stakeholders. It is likely that the role of accounting departments would be broadened to analyse, summarise, report and control the entities’ performance within the material CSR factors. As of today, there are no standardised benchmarks within this field, so this sector is still emerging and, in our view, has a huge potential to be a focus for the accounting profession of the future.
It is common to perceive technological progress with a degree of caution, and it is fair to an extent - there are historical examples of the entire industries succumbing to creative destruction. However, we believe that albeit the changes, the financial departments would not disappear just yet. Kidbrooke has a long history of leading large transformational projects within the financial services industry. In most cases automation eliminates repetitive, monotonous tasks from the daily routines of the employees, leaving more capacity for jobs requiring creativity, problem-solving, emotional intelligence and professional judgement. Given the breadth of use of the financial data and its significance for strategic decision-making, it is very unlikely that the need for qualified financial professionals would cease any time soon.