Financial Transformation – Key Trends And Drivers In 2023

6 mins read

1 March 2023

Finance transformation in 2023 will be driven by a range of factors, including digitalization, data and analytics, ESG and sustainability, resilience and risk management.

As we move into 2023, the finance function is undergoing significant transformation. The digital revolution, the pandemic and its aftermath, and the need for businesses to be more agile and data-driven have all accelerated the pace of change. With that said, let’s take a closer look at some of the key trends and drivers behind finance transformation in 2023.

Digitalization And Automation

The finance function has been steadily moving towards digitalization and automation for some time now, but the events of the past few years have accelerated this trend. With remote work and distributed teams becoming the norm, the need for digital tools and systems that enable collaboration, communication and efficiency has become even more pressing.

In 2023, we can expect to see finance departments continuing to adopt new technologies such as AI, machine learning, and robotic process automation (RPA) to streamline processes and reduce costs. The use of cloud-based solutions and software-as-a-service (SaaS) models will also continue to gain momentum, enabling finance teams to access critical data and insights from anywhere, at any time.

Financial institutions will continue to focus on operational efficiency and cost control by automating previous manual and paper-driven processes. But the question is whether financial institutions are able to streamline processes to drive a bigger impact for customers and businesses?

“Financial services companies have traditionally been a target-rich environment for cybercriminals given their ownership of the vast volume of sensitive client and third-party information and of course money. As such, it is pertinent that data privacy and cybersecurity remain top-of-mind consideration in companies’ pursuit of digital transformation. This is achieved by adopting holistic security protection through scalable edge-enabled security solutions that improve both the security and observability of the network and application traffic, as well as the performance and reliability of your applications.

Stephen Cumming, CFO, Edgio

“Against an increasingly competitive landscape where new entrants are offering enhanced digital capabilities, FSI players are currently hampered by aging legacy systems that diminish their ability to meet clients’ evolving needs. As such, the network infrastructure should be a key investment area. This will not only empower the organizations to remain scalable and keep pace with an increasing hostile cyber landscape but also in deploying emerging technologies – such as AI, machine learning, and blockchain.”

Agnes Lim, CFO, Asia Pacific at NTT Ltd

“The best financial institutions harness the power of the entire organization to serve customers and businesses, who desire the same optimal consumer friendly experiences they get in their personal lives. When customer service is orchestrated via smart digital workflows that transcend people, departments and systems, financial institutions are able to deliver speed, convenience and transparency to drive fierce customer loyalty. Breaking down the digital and organizational silos will help drive greater productivity and enable financial institutions to create a model of operational resilience capable of withstanding unforeseen issues, like outages and cyberattacks.”

Wee Luen Chia, Area Vice President and Managing Director, Asia, ServiceNow

Focus On Data And Analytics

As businesses become more data-driven, the finance function is increasingly being called upon to provide strategic insights and analysis. In 2023, we can expect to see finance teams placing even greater emphasis on data and analytics, using new tools and techniques to gain deeper insights into business performance and to forecast future trends.

This will require finance professionals to develop new skills and capabilities, such as data visualization, predictive analytics, and data storytelling. We can also expect to see increased collaboration between finance and other functions, such as marketing and operations, as they work together to leverage data and drive business growth.

ESG And Sustainability

Environmental, social, and governance (ESG) issues have become a top priority for businesses across all sectors, and finance teams are playing an increasingly important role in addressing these challenges. In 2023, we can expect to see finance departments taking a more proactive approach to ESG and sustainability, using data and analytics to identify opportunities for improvement and to monitor progress against targets. This may include the development of new financial instruments and models that support sustainable business practices, as well as the integration of ESG considerations into traditional financial reporting and analysis.

Resilience And Risk Management

The COVID-19 pandemic has highlighted the need for businesses to be more resilient and agile in the face of unexpected challenges. Finance teams will continue to play a critical role in supporting this effort, with a focus on risk management, scenario planning, and stress testing. In 2023, we can expect to see finance departments placing even greater emphasis on risk management and resilience, using new tools and techniques to identify and mitigate potential risks. This may include the development of new risk models and stress tests, as well as the adoption of more advanced analytics and simulation tools.

Talent Development And Upskilling

As the finance function undergoes transformation, it is essential that finance professionals are equipped with the skills and capabilities needed to succeed in the new environment. In 2023, we can expect to see a greater focus on talent development and upskilling, with finance departments investing in training programs and initiatives that enable their teams to acquire new skills and adapt to new ways of working. This may include the development of new career paths and job roles, as well as the adoption of new training methodologies such as gamification and microlearning. It will also require a greater emphasis on diversity and inclusion, as finance departments seek to build teams that reflect the wider range of perspectives and experiences needed to drive innovation and success in the new digital age.

Where Should Finance Leaders Focus Their Digital Transformation Efforts On?

With so many rising trends and priorities that finance leaders need to take note of, where then, should they focus their digital transformation efforts? Let’s take a look at the various perspectives of finance leaders in the market: 

“Investment in key capabilities such as networks and cloud migration will allow institutions to reap a plethora of business operational benefits. However, FSI players are hampered by limited access to relevant technologies, security, and expertise. The inability to streamline processes will translate to lost business and struggles with the increasingly complex business environment. In this regard, a partnership with service providers can help organizations to maintain the infrastructure and to work towards making it future proof.”

Agnes Lim, CFO, Asia Pacific at NTT Ltd

“New technologies, such as edge platforms, can empower financial institutions in overhauling operations. Edge platforms allow financial organizations to bring security to the edge without compromising performance and productivity. These platforms proactively address advanced threats at the edge, providing business analytics and expedites the resolution of operational challenges. With these business intelligence, improved agility, financial organizations can focus on providing superior user experience thus promoting business growth.”

Stephen Cumming, CFO, Edgio

“With the rise in scams, data leaks and unauthorized transactions, people are gradually losing trust in financial services. At Mastercard, security is baked into the foundation of every product and service. Any business in the financial sector today must put data privacy and security at the core of its digital transformation agenda. With privacy-enhancing technologies (PET) and other emerging technologies like distributed AI, companies have a wider range of solutions that improve data utility without compromising on individual privacy or customer experience. Financial services should focus on implementing a combination of these technologies to instill trust in every digital transaction”.

Safdar Khan. Division President, Southeast Asia, Mastercard

In conclusion, finance transformation in 2023 will be driven by a range of factors, including digitalization, data and analytics, ESG and sustainability, resilience and risk management. And depending on the services that businesses provide, they should look closely at their consumers’ needs and measure for themselves where they should invest their digital transformation efforts in. 

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