DCFO Spotlight - Page 2

Regulatory Challenges Businesses Faced In 2022

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Fatihah Ramzi, DigitalCFO Asia | 29 November 2022

The three most significant problems that organizations have encountered in the year.

The difficulties faced by business owners never cease. To keep their businesses afloat and relevant to the situation of the market, they are always forced to come up with new strategies. The difficulties facing entrepreneurs in 2022 are considerably larger. Despite the pandemic’s slow economic recovery, it will take some time for businesses to fully bounce back. Numerous organizations continue to face challenges, including those related to recruitment, finances, and digital transformation.

However, business entrepreneurs have always been renowned for their tenacity and ability to consistently find solutions to any problems that arise. This is true whether we’re discussing businesses that are just getting started or ones that have been operating for a while. But what are some of the most urgent issues that entrepreneurs will deal with in 2022? In this post, we’ll take a look at the three most significant problems that organizations have encountered in the year.

1. Fairness & Inclusion 

Many businesses are being forced to increase their commitments to corporate social responsibility with an emphasis on equality and justice for underserved communities as a result of pressure from activist investors, the general public, and their own employees. Over the past two years, fairness issues have gone beyond DEI.

Through the use of regulations intended to eliminate unfair advantages in personnel decisions, businesses have historically attempted to promote fairness. To prevent hiring managers from judging candidates based on their supposed gender or race, recruiters, for instance, remove the prospects’ photographs from their resumes. To prevent employees from being paid more or less than their coworkers at the same level, a business may also establish stringent pay bands.

These regulations can reduce unfairness, but they are insufficient to produce a very fair working environment. And when employers paid more attention to where workers felt injustice occurred, they discovered that hiring, promotion, and pay accounted for only 25% of this view. The majority of these encounters take place during regular work hours. Organizations require new ideas, not simply rules, to handle these increasingly ubiquitous fairness concerns. Instead of eliminating unjust advantages, they ought to look for ways to lessen disadvantages so that most or all of the workforce benefits.

2. Climate & Sustainability

Simply put, many species won’t live through the 21st century if businesses do not behave responsibly as members of the global community. According to Environmental Sustainability, the rate of species extinction due to human activity now is hundreds of times higher than it was originally.

Given that corporations account for the majority of global emissions, sustainability has thus become a crucial problem for them. This is why companies will inevitably foster a dying planet if they do not contribute to the solution. The “Race to Zero” campaign, which aims to take strict and urgent action to halve global emissions by 2030 and deliver a healthier, fairer zero carbon world in time, has forced many businesses to make organizational changes in 2022 to implement effective sustainability strategy and initiatives.

In the long term, investors, clients, and consumers may be less eager to support businesses that do not make sustainable decisions in their processes. Sustainability must be prioritized if the company hopes to stay relevant in the long run.

3. Fraud & Financial Crimes 

As the globe recovered from COVID-19, criminals adapted and took advantage of possibilities. In 2022, supply chains are still disrupted, fraud is rising, ransomware assaults are commonplace, and digital payment systems are still under constant attack. The year also saw an increase in the amount of data breaches.

Among the most frequent outside offenders are hacker groups and organized crime networks. In the past two years, their activity significantly increased. With objectives, rewards, and bonus schemes, organized crime organizations are evolving to become more specialized and professional. Additionally, malicious actors are banding together, which raises the frequency and level of sophistication of attacks. Specialists in data breach, false ID creation, attack methods, and other complex areas may connect, coordinate, and transact inside a developing criminal economy thanks to chat rooms, the dark web, and cryptocurrency.

The use of new technology by businesses is widespread. Digital platforms like social media, services (like ridesharing or accommodation), and e-commerce provide hazards for fraud and economic crime that most businesses are only now starting to recognize. Four out of five businesses that experienced fraud in the past two years have a connection to the digital platforms they use. Undoubtedly, the pandemic increased vulnerability as organizations expedited the shift to digital operations; as a result, 2022 was a year in which many firms placed a high priority on cyber security activities.

In 2023, it is likely that these issues will still persist, but there will also be a new set of priorities. This is a result of the ongoing worldwide economic situation. The effects of high inflation and geopolitical concerns would be further issues of focus in 2023. In the face of unfavorable uncertainty, it is preferable for firms to maintain their flexibility and adaptability. Businesses should make continual infrastructure investments as 2022 draws to a close.

Wrap In Finance: 2022’s High Inflation Environment

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Fatihah Ramzi, DigitalCFO Asia | 28 November 2022

In 2022, there has been a noticeable tightening of global financial conditions, which is in part an intended result of policy normalization.

The COVID-19 epidemic, Russia’s ongoing war with Ukraine, and other geopolitical and economic uncertainties have caused disruptions in the markets as well as persistently high inflation, a problem the world economy has not encountered in decades. Since inflationary pressures were reduced after the global financial crisis, central banks maintained interest rates very low for several years, and investors grew acclimated to a low-volatility environment.

Economic growth was aided by the consequent loosening of financial conditions, but it also encouraged risk-taking and the development of financial vulnerabilities. In order to prevent inflationary pressures from becoming entrenched and inflation expectations from de-anchoring, monetary authorities in developed economies are speeding up the pace of policy normalization now that inflation is reaching multi-decade highs. Despite significant regional variations, policymakers in developing markets have continued to tighten policy in response to rising inflation and currency pressures since they began raising interest rates in 2021.

In 2022, there has been a noticeable tightening of global financial conditions, which is in part an intended result of policy normalization. As a result, several emerging and frontier market nations with worse macroeconomic fundamentals have seen capital outflows. There is a risk of a disorderly tightening of global financial conditions, which might be exacerbated by vulnerabilities created over time. The global economy is confronting a number of issues, and authorities are continuing to normalize policy to manage excessive inflation.

In the current macro-financial context, which is unfamiliar to many policymakers and market participants, there is a focus on some of the most important conjunctural and structural vulnerabilities in advanced economies and developing markets. In April 2022, the outlook for the world economy significantly deteriorated.

The possibility of higher-than-expected inflationary pressures, a worse-than-expected slowdown in China due to COVID-19 outbreaks, lockdowns, and further deterioration in the real estate market, as well as additional fallout from Russia’s invasion of Ukraine, are just a few of the downside risks that have materialized. The outcome has been a worsening of the global economic slump and persistently rising inflation.

Many Frontier Markets Faced Defaults & Difficult Restructuring

Frontier markets in 2022 face difficulties as a result of weakening fundamentals, tightening financial conditions, and a high level of sensitivity to commodity price volatility. Since 2010, the median debt-to-GDP ratio for frontier markets has almost doubled, however 2022 saw a little reduction. Government debt interest costs have risen steadily throughout the year, putting more strain on liquidity and raising the possibility of unfavorable policy outcomes like crowding out of public investment.

To reduce local refinancing costs and regain access to global markets, credible medium-term fiscal consolidation plans are essential. Despite the midyear decline brought on by escalating recessionary fears, commodities prices—particularly for metals and oil—remain higher than they were before the outbreak. The macroeconomic outlook for importers has been further dimmed by this, yet many frontier markets export commodities and have profited from increased prices.

By raising the policy trade-offs – higher inflation calls for tighter monetary policy, but aiding the most vulnerable would require additional fiscal space or expenditure reprioritization – the rise in global food prices, on the other hand, is escalating vulnerabilities in frontier markets. Defaults could occur in a situation with weak fundamentals and low investor risk appetite.

In the event that frontier markets go into default, a growing number of complex creditors and holes in the global framework for dealing with sovereign debt could result in protracted debt negotiations involving a wide range of creditors, further delaying market access and driving up the cost of financial distress. A protracted period of high borrowing rates could result in increased policy uncertainty and a debt overhang for years to come, even in the event of an actual default.

Policy Recommendations

Policymakers all around the world have continued to normalize monetary policy despite inflation reaching levels not seen in decades and price pressures expanding beyond those associated with food and energy prices. In many nations, especially in advanced economies, the rate of tightening is intensifying in terms of frequency and size. Some central banks have started to shrink their balance sheets as they get closer to normalization.

To bring back price stability, financial conditions must be tightened. Monetary policy can decrease domestic demand to alleviate widespread demand-related inflationary pressures, but it cannot resolve lingering pandemic-related constraints in global supply chains and disruptions in commodity markets owing to the crisis in Ukraine. A necessary condition for long-term and inclusive economic growth is price stability. The upside risks to the inflation forecast suggest that central banks should continue to normalize monetary policy in order to prevent the emergence of persistent inflationary pressures.

They must take decisive action to return inflation to the target level while preventing any de-anchoring of inflation expectations that would jeopardize the credibility they have worked so hard to establish over the years. Policymakers should take note of historical lessons: going too slowly to control inflation and restore price stability necessitates a costlier tightening in the future as well as more difficult and disruptive economic adjustments. Lessons can be learned from the US monetary policy’s historical experience in the 1970s and early 1980s.

It is important for central banks to keep this experience in their sights as they navigate the difficult road ahead. With policy rates moving away from the effective lower bound that has prevailed in many countries since the global financial crisis, policymakers should rethink the modalities and objectives of the forward guidance they provide. The high uncertainty clouding the economic and inflation outlook hampers the ability of central banks to provide explicit and precise guidance about the future path of monetary policy. 

But in order to maintain credibility, it is essential that they are transparent about their policy function, including the goals, intertemporal trade-offs, and procedures needed to bring inflation down to target. To guarantee orderly market reaction and prevent excessive volatility, clear communication about the need to further normalize policy in line with the evolving inflation forecast is also crucial.

With higher interest rates and normalization, businesses can expect inflation to go back to normal levels in 2023. Having survived a high inflationary year, businesses should give themselves a pat on the back and welcome the incoming year with open arms. Although other challenges and disruptions may come their way, it is evident that businesses of today must be fit to survive a highly volatile climate. 

The function and responsibilities of Treasury go beyond only managing cash today

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Photo by DigitalCFO Asia, during the DigitalCFO Asia Roundtable with Kyriba on 22nd November 2022

The pandemic has already substantially impacted the Treasury and business in general. Many challenges arose from the realities of a treasury staff being able to work remotely, but they weren’t the only ones; it also necessitated a reevaluation of treasury strategy and a study of how things need to be done in this contemporary setting.

Regarding fintech, corporate treasurers have had a difficult year as they deal with new problems, including cash flow, liquidity, and currency volatility. Treasury has duties beyond just managing cash, but providing the CFO with accurate and timely information can be challenging without the right tools and controls. During the DigitalCFO Asia Executive Roundtable – Accelerating Insights, Action and Growth with Digital Treasury Transformation in collaboration with Kyriba on 22nd November 2023, CFOs and finance leaders had an insightful discussion while sharing their treasury process challenges.

Corporate treasurers have experienced a challenging year pertaining to fintech as they deal with new issues related to cash flow, liquidity, and currency volatility. During the roundtable discussion with Shalini Shukla, Consulting Editor at DigitalCFO Asia and Eugene Chua, Head of Treasury, DTOne, they uncover the top 3 Challenges facing the Fintech industry:

  • Cash Visibility
    • Flying Blind: No single source of truth, minimal automation, no connectivity to banks, and concerns for audit and regulatory requirements eclipsed the challenges of posting errors to the wrong accounts. As banks were added, more fees added up.
  • Risks & Fraud Prevention
    • Operational Risk: $40M at risk per month with burdened by manual processes and required one Treasury team FTE to manage cash positions and consolidate transactions; including manual consolidation of 3,000+ transactions per month from emails, and spreadsheets.
  • Payment Automation
    • Massive Growth: DTOne accelerated growth to $620.3M in 2021 from $273.9M in 2017, adding 11 new product offerings. Banking presence consequently increased from 9 countries to 14 countries. Treasury now manages 122 bank accounts with 27 unique banking partners.

In a survey conducted during the session, we found that instant payments are still one of the main priorities and challenges faced by CFOs and the treasury department. Payment networks, commercial banks, and central banks compete to make payments even faster. This is all very beneficial because timing delays in payments and the information they bring with them wreak havoc on cash predictions and liquidity reserves in addition to introducing risk and uncertainty.

Understanding the attendees’ standpoint during the roundtable discussion, we can see below that most organizations are still in the starting phase of finance transformation while some are already in the ongoing and mature phases.

Steps to take in streamlining treasury operations to improve automation and mitigate operational and regulatory risk

  • Full audit to determine the impacts of accelerated growth against the already high operational risk resulting from legacy processes and systems within the finance structure.
  • Appoint a Treasury team to manage the specialized and strategic functions around cash, liquidity and bank transactions during a rapid growth stage.
  • Set up a small 4-person treasury team to solve The Big Problem, and deliver more value-added services.
  • Take an API-first approach to bank connectivity – demonstrating the best practice and innovation that solved the major problems of scalability, financial controls and strategic liquidity management for the company today and in years to come. (Bank connectivity and consolidation of accounts’ views enabled the team to negotiate a uniform fee schedule across a single banking group despite the account location. With a complete and real-time view of cash, DTOne converted idle cash to investment opportunity – yielding $450,000 per year.)

The treasury team’s responsibility is to gather and produce data for budgeting and cash flow statements, among other things. With the use of Kyriba, the team is not only able to grow as the Company does as needed, but the workflow is also more effective and fewer avoidable human errors are made. In essence, the launch of Kyriba will enable the Treasury team to scale up its network of banking partners and accounts to maintain pace with the expansion of DTOne and stay one step ahead of the competition.

Financial Inclusion – The Key To Preventing Financial Crime

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Fatihah Ramzi, DigitalCFO Asia | 21 November 2022

DigitalCFO Asia spoke with Leslie Bailey, Vice President Of Financial Crime Compliance, LexisNexis® Risk Solutions to understand the key role of financial inclusion in preventing financial crime.

The financial services industry is changing rapidly—market trends come and go, yet threats are constantly evolving. To stay ahead, financial services organizations require innovative technologies that offer a holistic view of the customer, optimize resources, and mitigate risk. 

LexisNexis® Risk Solutions released its 2022 Financial Transparency and Inclusion Report, which shed light on the commitment of financial institutions to financial transparency and inclusion, the hurdles and compliance challenges of achieving the twin goals. The report revealed that institutions in APAC generally expressed greater support for financial inclusion, with Singapore achieving 98% of financial inclusion rate. 

To find out more about how financial inclusion plays a part in staying ahead of financial crime, DigitalCFO Asia spoke with Leslie Bailey, Vice President Of Financial Crime Compliance, LexisNexis® Risk Solutions. 

Lack Of Financial Transparency Affecting Business’ Ability To Stay Ahead Of Financial Crime

If companies want to succeed today, they must understand how important financial transparency regulations are. With the need for transparency extending from individuals to institutions and mounting demand on businesses to be honest with stakeholders including investors, employees, suppliers, governments, and customers, transparency has acquired a whole new meaning.

In addition to exposing hidden social and economic inequities, the epidemic sparked concerns about how businesses will address climate change in the race to NetZero. In response, businesses in the private sector will need to prove to investors that they can strengthen their resilience to crises in the future and to the general public that they are dedicated to long-term, sustainable value creation and a carbon-neutral economy.

Companies need to comprehend the nature and function of banking partnerships. This includes the capacity to confirm people’s identities and the ownership stakes they have in other businesses. The accuracy of that information must be regularly checked. There is a narrow window for evil actors to infiltrate the financial world undetected due to the speed at which information changes.

“Data and updates should be real time and accurate to help businesses stay ahead of financial crime,” says Leslie Bailey, Vice President Of Financial Crime Compliance, LexisNexis® Risk Solutions.

Steps Companies Can Take To Improve Their Ability In Identifying Customers And Their Risk Profiles

When onboarding new clients, a customer risk assessment is essential. It makes sure that high-risk persons are located and that the proper cyber security precautions are implemented. A customer risk assessment should take into account a number of criteria in order to comprehend the dangers that each client poses. These include confirming a customer’s identification, taking into account how to interact with them (the products and services they use, the kinds of transactions they do, and how frequently), and taking into account the locations the customer is connected to.

Finding the risks to which a company may be exposed during a business relationship or a one-time transaction is the assessment’s primary goal. A customer risk assessment ought to be thorough the more complicated this interaction is. Businesses will be better able to choose the appropriate level of customer due diligence (CDD) if they are well-informed. A customer’s behavior should be periodically reviewed, especially if it departs from their risk profile. Businesses should avoid entering into business relationships or should end such relationships if they are unable to apply the proper amount of CDD.

“To better identify true risks, companies can look at combining physical data, which has been the  traditional method of customer identification, with digital insights or information,” says Leslie Bailey, Vice President Of Financial Crime Compliance, LexisNexis® Risk Solutions.

This way companies open the aperture on the networks of associated individuals and entities and offer themselves the opportunity to better identify risks. 

The Primary Cause Of Businesses Not Being Able To Achieve Their Financial Inclusion Objectives

“Organizations need the buy-in of their executive leadership and a commitment to financial  inclusion,” says Leslie Bailey, Vice President Of Financial Crime Compliance, LexisNexis® Risk Solutions.

That means that an organization may have to expand its risk appetite in some  circumstances to promote the desired level of inclusion. Beyond that, access to data on  individuals who may not have a traditional history inhibits financial inclusion in some ways. For  example, consumers or small businesses may have a thin credit file. This limited information  pushes financial institutions to balance their desire to be inclusive with meeting their regulatory requirements.  

If APAC Continues To Not See An Urgency To Make Digital Financial Inclusion A Top Priority, What Will Happen To Businesses In The Next 5 Years? 

Digital adaptation is non-negotiable for financial businesses; certain APAC markets have led the  way in adapting. The time is now for APAC businesses to seize the opportunity that this presents to ensure that what was once viewed as an alternative method becomes standard  practice. 

Significant consideration of how to integrate digital insights into processes that help strengthen transparency around existing customers widens the doorway for those who may not have otherwise had access. As a result, businesses expand their own potential to contribute to  a more inclusive society as well as capture more share of the market and evolve their business  as the world evolves.

Vulnerabilities That Companies Face In The Digital Age

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Fatihah Ramzi, DigitalCFO Asia | 16 November 2022

Every company faces ongoing threats from a wide range of sources and there are simply too many threats in the world to adequately thwart them all.

A weakness, mistake, flaw, or bug is referred to as a vulnerability when it compromises the accessibility, privacy, and authenticity of data stored within a data system. Because they can be used to infiltrate the systems on which they dwell in, hardware, software, and firmware vulnerabilities are sought after by adversaries. 

Researchers and others with a stake in cybersecurity are encouraged to report vulnerabilities as soon as they are identified and shared with the affected vendor because vulnerabilities can only be fixed once it is known.Every system that has not been updated will continue to face ongoing threats and remain susceptible to getting compromised.

The associated hazards brought on by vulnerabilities can be addressed more effectively when more suppliers, security groups, and individual researchers participate in the vulnerability identification and remediation process. These vulnerabilities have a wide range of potential effects; some (with little to no impact) are merely bothersome, while others are severe enough to have disastrous effects on the company’s systems, their employees and their clients.

Security Vulnerabilities

While innumerable new threats are created every day, many of them rely on outdated security flaws to function. One of the biggest dangers a corporation can face is failing to fix those vulnerabilities after they are detected because so many malwares attempt to repeatedly exploit the same few flaws.

In order to avoid losing the 5–10 minutes of productive time required to execute the update, it’s all too usual for businesses—or even simply individual users on a network—to ignore the “update available” warnings that appear in some programmes. Most users find updating to be a pain. It is a “nuisance,” but one that might later save a company a staggering amount of time, resources, and lost revenue.

The simple solution is to keep a regular updated schedule—a day of the week when your IT team examines for the most recent security patches for the software used by the organization and ensure they are applied to all of its systems.

Admin Account Privileges

Limiting program users’ access privileges is one of the simplest principles of mitigating software vulnerabilities. The less data/resources a user can access, the less harm a compromised user account can cause.

However, a lot of companies don’t manage user account access privileges, which means that practically every user on the network has “Superuser” or administrator-level access. Admin-level user accounts can sometimes be created by non-privileged users due to security configuration flaws in some computer systems.

Managing computer security vulnerabilities requires making sure that user account access is limited to only what is required for each user to perform their job. Additionally, it’s crucial to make sure that newly-created accounts cannot have admin-level access to stop less privileged users from just creating more privileged accounts.

Phishing Attacks

In a phishing attack, the attacker tries to persuade a victim, usually an organization’s employee, to download malware or to divulge important information and account passwords. The most typical way that this attack is launched is through an email that pretends to be from a vendor of your business or from a high-ranking employee.

Saying something like, “This is Mark from IT, your user account displays suspicious behavior. Please click this link to reset and protect your password,” is an example of an attacker’s line of attack. Such emails frequently contain links that take users to websites where they can install malware that will compromise the system. Other phishing scams may request user account details from victims in order to resolve a problem.

This tactic’s main objective is to use an organization’s employee to get around one or more security measures and gain easier access to data.

There are several ways to defend against this attack strategy, including:

  • Tools to identify email viruses by scanning email attachments for malicious software that could damage your network.
  • Multi-factor authentication (MFA). It is more difficult for cybercriminals to take control of user accounts using just the login and password when you use various authentication methods (such as biometrics, one-use texted codes, and physical tokens) to grant users access to the network.
  • Cybersecurity awareness training for employees. A knowledgeable employee is less likely to fall victim to phishing scams than one who is unfamiliar with fundamental cybersecurity procedures. Employees who receive cybersecurity awareness training are better equipped to recognize and resist phishing scams.
  • A defense-in-depth strategy for network security adds additional layers of security between each of the network’s constituent components. By doing this, additional layers of security will exist between the compromised asset and the rest of the network in the event that attackers manage to get beyond the network’s outermost protections.

Every company faces ongoing threats from a wide range of sources. No company is 100% protected from an assault, not even the largest Fortune 500 firms or SMEs. There are simply too many threats in the world to adequately thwart them all. Malicious actors may take advantage of network weaknesses and cybersecurity issues to steal data from businesses or harm them. As businesses continue to go digital, it’s critical that they keep informed on the vulnerabilities that they currently face.

Keeping up with the “S” in the ESG

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Fatihah Ramzi, DigitalCFO Asia | 11 November 2022

Wilson Ang, Partner, Head of Asia Regulatory Compliance and Investigations, Norton Rose Fulbright

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How can a business manage its interactions with its employees, the society in which it conducts business, and the political landscape? The “S” in ESG investing, the social component of sustainable investing, stands for this fundamental query. The financial performance of a corporation can be impacted by a variety of social issues, from short- to long-term difficulties. The company’s strengths and limitations in coping with social trends, labor, and politics are social aspects to take into account while making sustainable investment decisions. Concentrating on these issues can boost business success and corporate responsibility.

To gain a better understanding of the “S” component in ESG, DigitalCFO Asia spoke with Wilson Ang, Partner, Head of Asia Regulatory Compliance and Investigations, Norton Rose Fulbright.

The Current Trends In Social Factors That Are Greatly Affecting Businesses

ESG is an umbrella term that was coined by the United Nations in 2005 and relates to investments that go beyond typical short-term financial considerations. The concepts are focused on long-term, responsible value investing, and they cover environmental, social and governance issues. G, for governance, has always been top-of-mind for business and the E for environment is gaining prominence in recent years. 

“However, the social factor in ESG, or the ‘S’ component, tends to be a bit more difficult to grapple with as it spans across a wide spectrum of concerns,” says Wilson Ang, Partner, Head of Asia Regulatory Compliance and Investigations, Norton Rose Fulbright.

Some of these concerns can be quite egregious and may have criminal implications. Others that are less obvious, like workplace harassment, discrimination, and lack of engagement, are also important. CFOs need to be aware of the social issues that can have an impact on the company’s bottom line or potentially help to raise the top line, as there are financial advantages to getting this right. 

The range of social factors impacting a company is dependent on the types of business it engages in. On one hand, there are very serious social concerns that threaten basic, fundamental human freedom, which we should protect. These include human rights issues, modern slavery, forced labor and debt bondage. Other social concerns, such as workplace bullying, intimidation, sexual harassment and racial or religious discrimination, undermine human dignity that should be respected. 

“The protection and preservation of human diversity are also crucial in ensuring the equality of opportunities. Related workplace social factors include talent engagement and retention, learning and development programs, and ensuring responsible data use and protection. While these are historically perceived as “softer” social issues, they are increasingly taking center stage and will have teeth when they are eventually enshrined in legislation,” says Wilson Ang, Partner, Head of Asia Regulatory Compliance and Investigations, Norton Rose Fulbright. 

For instance, Singapore’s Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) previously issued guidelines on driving fair and progressive employment practices and anti-discriminatory practices. This will soon gain the effect of law and be enshrined in legislation, thus opening doors for more quality opportunities. 

Ensuring A Safe And Equitable Workplace

The COVID-19 pandemic has exacerbated several social concerns that had already been in existence. Lockdowns, travel restrictions, vaccinations and even contact tracing have affected individuals physically, mentally, and emotionally. It also disproportionately affected migrant workers and brought several underlying social issues to light. 

People who were not able to work from home due to their existing environment and circumstances were disproportionately affected in terms of their livelihoods and income. Those who were able to work remotely also had to adjust to the new environment and faced pressures trying to prove that they are equally productive while working from home. There have also been stories of employees being intimidated or bullied online with increased remote working.

In addition, the pandemic and economic downturn have resulted in a number of retrenchment exercises; supply chain disruptions have also caused severe economic pressures. These have all contributed to a rise in anxiety and stress among employees.  

So what can companies do to ensure a safe and equitable workplace? 

“There is a clear need for companies to stay ahead of the evolving work environment and changing regulations. While a lot of the new working arrangements were implemented to meet business needs during the pandemic, there is value for companies to retain and institute those policies that help to foster greater equality opportunities. For example, work-from-home arrangements can benefit working parents, who might be able to better care for their children,” says Wilson Ang, Partner, Head of Asia Regulatory Compliance and Investigations, Norton Rose Fulbright. 

Priorities Of Socially Conscious Companies

The shift to a hybrid work environment needs to be an ongoing conversation that companies have with their employees. The majority of the workforce has become used to working from home, and most would wish to retain and continue enjoying the flexibility and benefits of remote working. At the same time, employers who see the benefits of in-person team gatherings and collaborations may hold the view that working in an office outweighs a work-from-home arrangement.  

If return-to-office policies are implemented too quickly without consultation with broader teams, this might result in a mismatch of expectations and potentially impact team morale and confidence. Moving forward, organizations are expected to adopt a calibrated hybrid approach that balances out the expectations of the workforce with flexible working arrangements.  

“The social factor in ESG is fundamentally really about caring; caring about your employees and caring about the workplace environment that they are in,” says Wilson Ang, Partner, Head of Asia Regulatory Compliance and Investigations, Norton Rose Fulbright. 

Promoting Ethical Business In Daily Internal and External Interactions

When it comes to the promotion of ethical businesses and being socially conscious, companies need to first conduct a materiality assessment. This assessment can be conducted along 2 axes and will help businesses to form a view on the issues that are material to them. The first axis focuses on the importance of the issue internally, such as to business operations and employees. The second axis focuses on the importance of the issue externally, including stakeholders, investors, local communities, and customers. 

Depending on where the issues are plotted against the axes, companies are then able to identify overlapping, material factors that are critical to both their business and stakeholders. 

The outcome of this materiality assessment will form part of a company’s strategic governance. Any company will benefit from knowing the material factors that they need to focus on and prioritize, as there are just too many things under the sun. This will help them to better develop strategies that are ethically sound and socially conscious. 

“All cases from a social perspective, such as workplace discrimination, bullying, intimidation and harassment issues, will increasingly take center stage as we gradually return to the office and bring along an increased focus on mental wellness. Organizations need to take these issues seriously and should have in place a trusted and open channel for employees to speak up, and businesses need to address them promptly and appropriately. This will help to protect the diversity of thought, expression, conscience and religion,” Wilson Ang, Partner, Head of Asia Regulatory Compliance and Investigations, Norton Rose Fulbright. 

There will also be a greater focus on supply chain diligence given the spotlight on labor violations. In other words, modern slavery, forced labor, debt bondage, and more are issues that businesses need to be increasingly aware of and have policies for. These issues are especially prevalent in Asia, fueled by widespread poverty, migration, weak governance, and the abuse of cultural practices.

“That’s something that businesses in this part of the world need to be conscious of. Not just in their immediate employment workforce, but also the individuals and the companies that they work with up and down the supply chain,” says Wilson Ang, Partner, Head of Asia Regulatory Compliance and Investigations, Norton Rose Fulbright. 

Leveraging the Social Criteria in ESG to Attract and Retain Employees

The pandemic has led to the global workforce doing a lot of rethinking and internalizing the role that they play in a company. Many are now questioning the real value and impact of their work and some have even expressed the desire to do more than just drive bottom line growth. 

“I think a certain degree of trust has broken down and employees are looking for a purpose beyond profit,” says Wilson Ang, Partner, Regulatory Compliance and Investigations, Norton Rose Fulbright. 

These issues have led to what is known as the great resignation. In the aftermath of the pandemic, the great resignation has been followed by the great regret. People who shifted or quit their jobs and moved somewhere else, felt that the grass is not always greener on the other side. 

The great resignation is much like playing musical chairs with unsatisfactory jobs, and this is where the pandemic provides a good opportunity for companies to take stock, and give their employees room to search for purpose in their work so that they do not drift from one job to another.  

For employers trying to include social criteria into their ESG strategy, there should be meaningful workforce engagement opportunities for employees to be given a voice in major decisions and be treated as an important internal stakeholder. This allows them to have some involvement in crafting their own career path in conjunction with the broader corporate strategy. There must also be some investment in employees by providing training and upskilling them. As the saying goes, train them so well that they can go anywhere they want, but treat them so well that they want to stay. These are definitely opportunities not to be missed. 

Winning The War: Why CFOs Are A Secret Weapon In Transformational Talent Strategy

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Stephen Koss | 9 November 2022

Stephen Koss, EY Asia-Pacific Workforce Advisory Leader.

“Few organizations have 100% of the skills they need. But they are paying for 100% of the skills they have. This is why the CFO must take a bigger role in talent management strategy,” says EY Asia-Pacific Workforce Advisory Leader Stephen Koss.

People are the driving force behind productivity and financial performance, and in most organizations they are the largest single component of operating costs. And yet few chief financial officers take an active role in talent management. This must change.

Most companies are struggling to source the right skills. Advancing technology and automation had exposed huge skills gaps pre-COVID-19. But the pandemic put the pedal to the metal, accelerating demand for tech skills, recalibrating the world of work, and fueling the Great Resignation. Unsurprisingly, 70% of respondents to EY 2022 Tech Horizon report told us the pandemic has increased the competition for skilled workers. The World Economic Forum estimates that 150 million new technology jobs will be created over the next five years. By 2030, 77% of jobs will require digital skills.

The post-pandemic global scramble for talent is now reshaping how businesses structure their day-to-day operations. Everything from where work gets done to who does it is on the table for discussion – and the CFO must be central to that discussion.

It is easy to see why some CFOs have been reluctant to step into the skills space. It’s understandable that number crunchers, accustomed with dealing with black and white facts, like to leave the subtle nuances of people management to the HR department.

But today’s CFO fulfills more than a finance function. The best CFOs are forward-looking leaders who understand the business big picture as well as the day-to-day operating detail. A strong grasp of the talent domain mission hence becomes critical.

The Talent Ecosystem Emerges

A new kind of worker has emerged from the pandemic with a crystal-clear view of their career aspirations, and where and how they want to work. EY 2021 Work Reimagined Employee Survey found that 54% of employees would consider quitting if not allowed a flexible working environment, for instance.

Gig working, contracting and hybrid work environments can be a competitive advantage in the war for talent. When combined with automation, upskilling and managed services, a talent ecosystem approach can create a ‘mosaic’ of employment types that matches skills and aspirations to work environments. 

Instead of one-size fits all, a talent ecosystem can create previously unimagined levels of flexibility. But that comes with complexity that cannot be untangled without multiple business leaders working together.  

Take one inspiring example from an Australian company which undertook talent mapping analysis to uncover untapped talent. The process found software engineers were drawn to the lifestyle location of the Gold Coast. In response, a new Gold Coast tech hub was established within easy reach of six universities to draw in recent graduates and experienced engineers looking for lifestyle. The solution depended on seamless collaboration between leaders across the business, especially the finance and human resources teams.

Shift To Skills-based Hiring

The rise of remote work, the emergence of platform companies and the gig economy have also driven a shift to skills-based hiring. Skills are the currency we use to understand the value that people bring to an organization. When that organization doesn’t have the right skills, it is not extracting the full value from the workforce – and people aren’t able to live up to their potential. Today’s CFO is on the hunt to eliminate that value gap.

But do you have the insight you need to make informed decisions? What are the critical skills clusters for your business? What skills are best for vertical or lateral moves? What skills could catapult people into new roles? These questions aren’t just for the HR department.

New diagnostic and data analytics tools are emerging to help CFOs answer these questions. EY teams have developed an AI-powered solution called Skills Foundry to support this process. The Skills Foundry features a live heat map to help business decision-makers understand the supply and demand dynamics of skills in their organization. There’s a content aggregator to train teams at speed and scale, as well as a secure digital record of employees’ skills and experiences so the right person can be deployed to the right opportunity.

Real financial value can be realized by gaining visibility of your current skills. However, most businesses do not have an accurate and up-to-date inventory of their people skills. This is like running a full warehouse of mystery stock. The number of financial analysts in your department is not as important as whether those people have the skills to tackle the tasks on the horizon. With an understanding of the skills on the books and those that are missing, as well as the hot skills that will be hard to reach and those declining in demand, your business can develop a fully funded targeted talent strategy based on data, not guess work.

It may sound like a contradiction when we are diving deep into the world of digital and data, automation and artificial intelligence, but humans must be at the center of every business transformation. In fact, EY teams’ recent research collaboration with the University of Oxford’s Saïd Business School has found that focusing on human factors can increase the likelihood of transformation success by 2.6 times. CFOs are ultimately responsible for securing the funds for any talent acquisition strategy. It therefore makes sense for the CFO to be attuned to the vast array of human capital management challenges, from talent pipeline to productivity tools, office location to offshoring.

But ultimately the role of every CFO is to measure and manage value. People are every organization’s biggest asset and value generator. If human capital is at the heart of your enterprise then you, as CFO, must take a lead role in talent management to uncover new value.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

SWIFT Is About To Become Swifter: But Are You Ready For Mandatory ISO 20022?

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Sumeet Puri | 8 November 2022

Sumeet Puri, Chief Technology Solutions Officer, Solace.

SWIFT is almost the de facto standard for international funds transfers, so its mandatory adoption of the ISO 20022 standard for cross-border payments in March 2023 will have a profound effect on banks and financial services institutions. The ISO standard has the potential to completely transform cross-border payment processes, which have traditionally been saddled with delays, high costs, and opacity due to a lack of standardization and a reliance on legacy systems. 

Sumeet Puri, Chief Technology Solutions Officer, Solace, explains how event-driven architecture (EDA) can fast track banking and financial services technology change to meet these ISO regulatory requirements, and at the same time open up new opportunities and capitalize on future industry changes.

Fast Track The Adoption Of The ISO Standard & Open Up A Wealth Of Business Opportunities Using Event-driven Architecture

In recent years, digital payments rapidly have become the de facto method for Asia’s financial services ecosystem. In part due to the COVID-19 pandemic, most of the Asia’s population have increasingly adopted digital payments and cut back on the use of cash. In fact, a recent Mastercard study revealed that 88% of Asia Pacific consumers have used technologies such as digital wallets, QR codes, and other innovative payment methods in the last 12 months – significantly higher than their North American or European counterparts. 

The region is also the largest contributor to the global payments revenue, generating over $900 billion in 2019, nearly half the global total. Banks, longstanding service providers, and fintech innovators all rely heavily on the existing digital payments ecosystem for cross-border activity, connected commerce, and a burgeoning cashless economy. 

Underpinning this adoption of digital payments is SWIFT, the world’s leading provider of secure financial messaging services and the primary method of international funds transfers. Used by a vast network of banks to exchange messages relating to money transfer instructions, SWIFT messages direct the transfer of nearly $5 trillion worldwide each day.

The widespread and mandatory adoption of the ISO 20022 standard by SWIFT will allow for improved payment transaction data quality and greater interoperability between international payment schemes, revolutionizing the way cross-border payments are transacted and managed, while reducing resource burden, simplifying processes, and allowing faster payment reconciliation.

In 2021, an average of 42 million payments and securities transactions were processed using its FIN (financial information) message service per day – underscoring SWIFT as the platform of choice for financial institutions worldwide and demonstrating its relevance to the future growth of the digital economy. So, with SWIFT making the adoption of ISO 20022 mandatory in March 2023, it is critical that financial institutions in Asia overhaul the way they send payment instruction messages. While many financial institutions are already in various degrees of adoption – some in planning, others deep in execution – fundamentally, this is no small undertaking.

Transforming Cross-border Payment Processes – The Timelines

All banks are on the countdown clock to make sure their message interface at least supports the receipt of ISO 20022-compliant messages. The migration of SWIFT and a range of Real-Time Gross Settlement (RTGS) systems will broadly take place over three years from November 2022 to November 2025.

SWIFT won’t completely retire existing message formats (MT and MX) or the FIN number system until 2025, but the new ISO 20022-based CBPR+ system became an option for early adopters in August and is generally available in November.

Banks struggle to keep pace with digital-first competition

Fintech start-ups have the advantage of being much younger and founded in the digital age. Their systems are often created in the cloud and have a modern architecture that gives them the agility to adapt to market trends and regulation, the flexibility to innovate, and the opportunity to maximize the customer experience – especially across digital touchpoints.

In contrast, the legacy nature of older banking institution IT systems means they generally encounter difficulties at the best of times when trying to adapt, particularly in terms of scalability, flexibility, reliability, and complexity. Banks still have numerous manual touch points when handling payments data, such as trying to reconcile missing data or incorrect data.

Multiple steps happen in each and every payment that can further complicate and stretch legacy architecture. First, there is the question of funding – without this we’re going nowhere. Does the institution have the money? Is the money there in the savings account? When you’re funding from a credit card account, can the funding occur within the credit limits? Then, currency validation happens, further complicated when tax considerations are raised. Finally, we’re through to clearing & settlement – where the exchange actually happens.

The Questions That Must Be Answered Before You Start

A recent EY report zeros in on the technology change required to meet ISO 20022 standards: “Setting up the right technology and infrastructure to benefit from this will be a key measure of success, as it is likely to bring notable cost savings. We expect banks to be increasingly focusing on this throughout 2022.”

There is a real opportunity here for banking organizations to build a tech stack that offers many more benefits and a richer environment than simply meeting ISO 20022 requirements.

Every bank has a different journey ahead based on their technical debt and their strategy. Software architects face decisions when moving forward with their infrastructure – do they build their own tech stack to meet ISO 20022 and further modernize their payment process, or do they look to third-party vendors, and/or opt for complex integrations?

For the software architect there are more questions:  Are they going to use cloud for certain workloads, while staying on premise for others? Are they going to need real-time analytics, insights, and fraud management? How are they going to deal with bursts, lowering value and cost, and increasing volumes of transactions?

The Future Of Modernized Payments And Banking – All Roads Lead To EDA And An Event Mesh

This is where an event-driven architecture (EDA) and an event mesh can address not just the immediate need to comply with new ISO 20022 standards, but the pressing need to modernize banking and payments as a whole. Event-driven architecture is a design pattern that has been adopted by digital leaders across industries reliant on real-time data dissemination, such as capital markets, retail and aviation.

The core of EDA is the business “event”, where something occurs – for instance, as payment transaction – that drives the immediate distribution of information about that event so systems and people across the enterprise can react to it. The fundamental building block of EDA is the event broker – an intermediary that routes data between systems that publish event information and those that subscribe to this information.

Events are published on “topics”, which are like addresses on courier boxes. They consist of a noun, verb and some meta data. For example, ‘payment’ being the noun, ‘settled’ being the verb, and ‘SGD, Internet Banking, Hong Kong’ being the meta data, collectively giving us a topic like ‘pay/settled/sgd/ib/hk.’ Once published, events can be subscribed to by various applications, for example, ‘pay/settled/>’ will generate all payments which have been settled, while ‘pay/*/sgd/ib/>’ will give you all internet banking payments in Singapore. These event topics can then be mapped to the meta data in the ISO2022 standard for easy event routing.

Now, enter the event mesh. This is a network of event brokers that dynamically distributes information about events from one application to any other application, no matter where they’re deployed – cloud, private cloud, public cloud, or any combination. This non-restrictive approach provides banks and financial institutions with the flexibility to consume whatever events they want, with no complex integrations. Even if they want to consume these events in a cloud or at another site – the event mesh takes care of making the right event stream available wherever they want.

Not Just Payment Processing: EDA Comes With Tech And Business Benefits – And Traceability

An event mesh built with a network of event brokers dynamically routes events across the payment ecosystem for faster and more efficient transaction completions. Yes, there are technical benefits – such as the ability to unlock legacy assets; leverage best-of-breed technologies; prepare for open banking; and simplify governance. 

The business benefits are equally significant – reducing cost per transaction; accelerating payments; sharing institutional knowledge; and streamlining partnerships so that banks can offer products through other businesses and payment providers without causing IT headaches.

There are also noteworthy traceability and end-to-end observability benefits across a payment ecosystem underpinned by EDA. Embedding distributed tracing into an event mesh emits trace events in OpenTelemetry format so banks can collect, visualize and analyze them in any compatible tool, empowering them to not only confirm that a given message was published, but easily understand exactly when and by whom, where it went, down to individual hops, who received it and when…or why not.

Recent research validates a growing appetite in financial services for event-driven architecture. Specifically, the study shows that financial services was the most advanced sector exploring EDA, with more than a quarter, (27%), of financial services companies having a central team promoting EDA within the organization and looking at using the technology platform to better detect and react to opportunities or threats in a timely manner.

Move With The Constant Evolution Of Banking And Financial Services

A mandated ISO 20022 standard underlines the importance of being able to move information quickly and efficiently inside and outside of banking organizations – and highlights how changes are required in banking tech stacks to accommodate this. Migrating towards EDA is a proven approach to help Asian banks and financial services companies not only deliver on ISO 20022, but position themselves to adopt and manage new and shifting industry standards for the foreseeable future.

Automation In The Post-pandemic Landscape: Challenges, Results & Recommendations

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Fatihah Ramzi, DigitalCFO Asia | 25 October 2022

Charlie Cheah, Director, Sales & Services, Asia, Esker

As the world economy battles to recover from the pandemic and businesses look for resilience and a return to stability and growth, automation is now regarded through a new lens. Since remote and hybrid work are set to stay, they pose new challenges for workplace digital literacy. Other advantages of automation include improved document visibility for businesses, a smaller carbon impact, and more productivity.

To find out more about automation in the post-pandemic landscape, DigitalCFO Asia spoke with Charlie Cheah, Director, Sales & Services, Asia, Esker to get further insights on the challenges as well as results of automating one’s organization. 

Automation Solutions That Are On The Uptrend In Today’s Market

A procure-to-pay (P2P) system was formerly quite popular in Asia. However, when the world entered the post-pandemic setting, the scene changed. The industry is noticing an increase in inquiries and demands for O2C automation software that uses robotic process automation (RPA) and artificial intelligence (AI) to expedite the order-to-cash cycle and enable faster accounts receivable turnover. E-invoicing in Accounts Payable (AP) and Accounts Receivable (AR) is an intriguing new trend.

New regulations and adoption timetables in both B2G and B2B are pushing the adoption of e-invoicing in the APAC area. In the global market, this is no longer a novelty but rather a reality that forces businesses to reinvent and modernize themselves in order to meet the expanding demands and standards for tax compliance.

For the time being, only Commonwealth agencies in Australia are required to use e-Invoicing effective from July 1, 2022. Nevertheless,  Australia is getting ready to introduce e-Invoicing in the B2B market. It has started a public consultation on business adoption of e-Invoicing for this reason. The Business eInvoicing Right (BER) initiative’s goal is to increase the adoption of e-Invoicing among businesses. With several Asian countries (Indonesia, Japan, Taiwan, and South Korea) already making e-invoicing mandatory and others moving in that direction, this could encourage further nations in the APAC region to follow suit.

Immediate Results Of Automation

1. Visibility 

Once a solution is live, teams can use it to develop and maintain a single source of truth for any given workstream, project, or process. This is one of the most noticeable immediate results. The employees now have access to the data they require to finish their work on time or even earlier thanks to the solution. Documents do not easily disappear because of this visibility, and staff can keep track of who last worked on them, where their progress is right now, and their status.

2. Lower Carbon Footprint 

Another immediate effect would be that everything is now digital and paperless. Businesses use a lot of paper every day, whether it be memoranda, tax paperwork, reports, spreadsheets, or reports. By substituting digital papers for physical ones, business automation enables them to save money and cut down on waste. 

The content is kept safely via the cloud and is available from anywhere with any device, so it not only saves paper but also really makes it easier for everyone in the organization to access and use the information. Businesses can reduce their paper usage, which advances the sustainability mission by requiring fewer trees to be cut. The carbon footprint of the company will be reduced as a result.

3. Increase Productivity

Employees in an automated setting have more time, freedom, and resources to devote to strategy, research, and technology rather than physical labor. This results in a significantly greater percentage of employee productivity. Because automation eliminates so many pointless time-consuming chores, workers are better able to concentrate on jobs that bring value, which leads to improved productivity at work.

Challenges In Supporting A Hybrid Work Model

1. Effective Change Management

“Working remotely or having a hybrid work model is actually doable despite a lot of scepticism,” says Charlie Cheah, Director, Sales & Services, Asia, Esker. 

Employers still anticipate their workers to return to the workplace in the post-pandemic environment. It is merely a result of a refusal to let go of the established workplace culture from pre-COVID times. Because hybrid work arrangements give employees more freedom and would be beneficial to their well-being, most businesses in the post-pandemic landscape choose to continue with them. 

Senior employers, however, hold a different opinion. Despite the effectiveness of remote work during the epidemic, several businesses still have plans to encourage employees to fully return to the office. Hence why Charlie Cheah, Director, Sales & Services, Asia, Esker, believes that effective change management is key to getting people, especially the senior management, to accept a hybrid working model.

2. Supporting Digital Literacy

Being able to send an email or type using a word processing application was once considered to be proof of digital literacy. Knowledge employees, who might utilize particular software at work and need to be proficient in how to use it accordingly, were mostly required to have this talent. But the expression has substantially changed. Today, being digitally literate means possessing the abilities necessary to succeed in a culture where internet platforms and mobile devices, among others, are used more frequently for communication and information access.

Digital literacy is becoming a mindset, not just a practical requirement. Employees are expected to quickly acquire any technology that comes with their employment in the modern workplace, as well as adjust to always evolving tools and methodologies. Additionally, it is expected that employees will strategically leverage technology, from utilizing personal mobile devices to utilizing collaborative workflow programs.

Companies who do not promote digital literacy training in the workplace may find that a large number of their employees are submitting their resignations because they are overwhelmed and frustrated trying to keep up with the most recent technology or business software. Because of this, giving staff digital literacy training will aid in their adjustment to a hybrid workplace.

Positive-sum Growth In Supporting Long Term Growth

Esker believes that positive sum-growth creates a condition where everyone in the company ecosystem benefits. The outdated “when I win, you lose” mentality is ineffective in today’s competitive economic environment. Companies can lay the groundwork for long-term growth by automating their customer service and financial operations. With Esker’s positive sum-growth approach, businesses may become more sustainable and contribute to the fight against global warming by automating their processes to use less paper and produce less carbon.

Automation will help businesses increase employee satisfaction and motivation because content workers contribute to a successful business. Esker’s technology makes it simpler to draw great people to your business and keep them there. Additionally, businesses will see a gain in value overall. Companies will be the one thing every client wants — a firm that’s simple to do business with — by filling the gaps in their process that might sour relationships with the O2C solution portfolio.

Recommendations When Starting On An Automation Project

1. Have The Right People Involved

“First and foremost, you need to select the team that’s going to deliver your automation project,” says Charlie Cheah, Director, Sales & Services, Asia, Esker.

The project does involve automated technology, but you need the right people to use them and move the project along. Choose a central, cross-functional team to lead the initiative. Although the business can lead a process-driven initiative, you will also require assistance from IT and Operations. The most effective individuals at bringing about change and transformation are those in the IT, operations, and business process specialist roles. By having these people onboard, the company can experience a smoother transition in automating their processes. 

2. Budget 

“Do not compromise on budget,” says Charlie Cheah, Director, Sales & Services, Asia, Esker.

It’s crucial to comprehend the full financial impact of an automation project. Make sure the service provider is open and honest about any fees related to the automation project. This is done so that project selection can be prioritized to optimize value. Leaders can then figure out which projects give the most advantage from a time and processing perspective. 

Leaders will also be better able to appreciate the benefits of relieving staff members of mundane work so they can concentrate on jobs that call for original thought and problem-solving. Calculating the productivity and economic benefits of an automation project will require knowledge about the cost in terms of both time saved and compute resources.

3. Management Support

“Do not just talk the walk but walk the talk as well,” says Charlie Cheah, Director, Sales & Services, Asia, Esker.

What does that mean exactly? There are a lot of leaders out there, according to Charlie, who do not genuinely use automation and digitisation for themselves. On a corporate level, the corporation does automate, but on a personal level, they still choose conventional techniques like filing and paper documents. Essentially, executives need to set an example by automating and digitizing their own work operations. It is ideal for senior executives to set similar goals for themselves if the company’s goals include going paperless.

4. Measurable Benchmark

Clearly defining what success looks like before starting an automation project is the most crucial stage. This is a crucial indicator where the business should be able to quantify, identify, and comprehend the economic benefit of automation with ease. For instance, an insurance business might seek to raise operational first pass rates or claim automation rates from 55% to 75% during the given year. This specific example makes it easier for teams to understand how to gauge the benefits of the automation project right away, keeping them on task and laser-focused on their intended objective.

Adopting And Growing A Data-driven Strategy

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Fatihah Ramzi, DigitalCFO Asia | 14 October 2022

Technology, people, and process must be combined in equal parts to create a data-driven company.

In order to present customers with a tailored omnichannel experience -networked interfaces, integrated processes for automation and autonomous operations, and a data-driven culture are all required. Collaboration is also required at every level of an organization in a successful digital ecosystem.

Technology, people, and process must be combined in equal parts to create a data-driven company, and executives must view data as a strategic asset. A data-driven organization is one that is built on a solid data foundation, including a contemporary, cloud-based data infrastructure in addition to a culture and procedure intended for long-term planning. In this article we will address the role that people and culture have in implementing and developing a data-driven strategy.

Driving The Right Mindset

Enterprises frequently struggle to define their vision and take concrete next steps because they are unsure of the issues they want to address. Analyzing the “why” can help you come up with a better “what” and build the best “how,” according to a data-driven strategy. Here are some strategies for helping people and organizations recognize a vast array of possibilities:

Top-down and all-around education.  Fostering a data-driven culture starts at the top management echelon and filters down. At every stage of the decision-making process, the executives must be outspoken proponents of the data-first philosophy and must also be observed by other employees that they themselves consume useful insights from reliable data. In order to share knowledge and adapt to market demands, it is critical to foster a culture of openness and controlled access to corporate data not only within a company but also down the entire value chain.

Use analytics for staff as well as customers. The world is one where most people work online. Which is why it is so important for executives to encourage automation strongly and use analytics to spot operational bottlenecks. As a result, employees can profit right away from spending time on developing their skills and growing personally.

Spend money on specialized learning. Your company should make an investment in staff skill development to stay up with the continually changing nature of technology. Employees that have been trained to develop pet projects using technologies like cloud computing, big data, mobile computing, process mining, AI/ML, and analytics will be more confident to take on live projects and make the necessary contribution.

To access data more quickly, organizations should break down silos. The most frequent challenge businesses experience is getting the correct data at the right time. For collaboration and data democratization to be possible, departmental lines need to become less distinct. Nowadays, quick access to contextual information is essential while making decisions.

To increase data trust, spend money on the correct technologies. Making informed decisions is aided by comprehension and data lineage tracking. Purchasing an analytics catalog, which offers a unified view of all enterprise-wide analytics and data assets and assists in verifying the authenticity of data, is one approach to accomplish this.

Start making thoughtful decisions. Alternative approaches to an issue might exist. Utilize advanced analytics to predict potential outcomes and response times while weighing various tradeoffs. It is crucial to comprehend why a solution is superior and how it contradicts a core tenet.

Having The Right Partners For A Data-Driven Ecosystem

You must embrace a “we” mentality when creating a data-driven culture as it is a shared journey. To influence organizational future direction, comprehend, assess, and create KPIs for strategic objectives. You should then be able to create a universe of solution providers who might profit from working with you. Pay attention to businesses that follow a repeatable, scalable, and reliable business model. Businesses that have complementary synergies and technological fit operate well in an ecosystem. Determine if:

• The potential solution provider has the capital to contribute to the alliance.

• The partners share your desire to become a data-driven organization.

• Their overall market addressable expands your growth prospects.

• They make investments in the organization’s internal growth and learning.

Understanding that a strong data-driven digital ecosystem entails strategies focused on providing exceptional customer experience and prioritizing investments that enable company resilience with the newest technology as well as enhance employee-partner-customer growth is crucial. Such an ecosystem will support an organization’s effective digital transformation by bridging the gap drivers.

The State Of Digital Agility For Finance Leaders In APAC

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Fatihah Ramzi, DigitalCFO Asia | 6 October 2022

Lee Thong Tan, CFO Practice Lead, Asia at Workday

Any organization attempting a digital transformation should focus on digital agility. But as we go into the post-pandemic era, how can businesses empower their staff to innovate at the right pace in tandem with the demands of the company? How can businesses make sure they continue to be digitally agile? How can businesses improve their decision-making processes and ensure a more flexible process?

To address these questions, DigitalCFO Asia spoke with Lee Thong Tan, CFO Practice Lead, Asia at Workday. In this article he shared his insights backed up by studies conducted by Workday as well as his advice on how businesses can pick up their enterprise agility.

Digital Transformation Journey In The Post-pandemic Landscape

The pandemic has undoubtedly accelerated technology adoption across the Asia Pacific (APAC) region, with some markets advancing in digital transformation at a faster pace than the rest. Against this backdrop, Workday recently commissioned a study with IDC to understand the extent to which APAC organisations have progressed in digital agility since the pandemic. Digital agility is defined as the ability of an organisation to rapidly adapt to business disruptions by leveraging digital capabilities to not only restore business operations but also capitalise on the changed conditions. 

According to Workday-IDC’s latest Digital Agility Index, more Asia Pacific companies are adopting technologies to become agile in a post-pandemic world, with 38% of APAC companies in the advanced stages of digital agility. This reflects an 18-percentage point increase when compared to 2020, marking considerable progress across the region.

That said, progress in digital agility is uneven across the region, with a widening gap between leading and lagging enterprises. 

Agility leaders have a holistic view of their employees for workforce planning and talent development that is also aligned to finance in cost accounting and budgeting activities,” says Lee Thong Tan, CFO Practice Lead, Asia at Workday.

 In other words, enterprise-wide functional integration and collaboration between the offices of the CFO, CHRO and CIO is a key enabler for success for businesses embarking on their digital transformation journey.

Reasons Some Companies Are Still Lagging Behind In Digital Agility

The study revealed that more than half (62%) of APAC companies still lag in digital agility. For these organisations, technology adoption is often driven by functional and line-of-business requirements as necessitated by immediate needs such as for ecommerce, safety measures, and remote work during the pandemic. Such a tactical, functional approach to digital transformation inadvertently limits enterprise agility.

For example, the study revealed that only 23% of APAC organisations surveyed currently have a data-driven cost optimisation strategy which allows them to leverage enterprise-wide and ecosystem data, so they can proactively identify opportunities to optimise costs and increase profitability. Further, 37% of APAC companies still manage their costs based only on historical financial data and reports. This means they are often impacted by price increases before any cost management initiatives can be implemented, and when market prices are no longer as favourable. These figures highlight a stark need for organisations to rethink their approach to closing digital agility gaps, so they can emerge stronger in a post-pandemic world.

In addition, some companies may have adopted a “lift-and-shift” approach, migrating processes, reports and rules to the cloud, with minimal streamlining or improvement. With such an approach, companies miss out on the opportunity to move away from legacy, outdated systems to transform and optimise operational processes for greater efficiency. 

“By simplifying system architecture alongside the move to cloud, business leaders can boost digital agility and gain increased flexibility to support the business as it evolves and scales,” says Lee Thong Tan, CFO Practice Lead, Asia at Workday.

CFOs In Remaining Agile, Flexible And Adaptable In The Decision-making Processes

Against macroeconomic headwinds and as inflationary pressures continue to rise globally, CFOs will need to be better placed to promulgate data-driven cost optimisation features. The role of the CFO needs to evolve from being the custodian of finance and capital allocation to becoming the arbiter of improved enterprise decision making. 

“To remain agile, flexible and adaptable in their decision-making processes, CFOs must develop capabilities to perform continuous scenario planning and leverage data to better detect, if not pre-empt, disruptions and understand their impact on the organisation,” says Lee Thong Tan, CFO Practice Lead, Asia at Workday.

CFOs can build stronger enterprise resilience by moving away from functional, line-of-business needs, towards more strategic, high-level thinking. This means developing a business plan that is underpinned by technological solutions that are incorporated enterprise-wide and work in synergy with one another. Importantly, CFOs need to work closely with other C-suites within the organisation, such as the CHRO and CIO, to integrate cross-functional digital transformation initiatives so that any technology is implemented across the organisation effectively, regardless of function, and that silos are eliminated.

Apart from investing in technology, CFOs also need to invest in the right skillsets to future-proof their workforce for today’s digital-first world. Disruptive skills such as in Artificial Intelligence and Machine Learning technologies, as well as data analytics will become increasingly important. Through the automation of accounting, reporting and financial planning and analysis (FP&A) processes, finance professionals can greatly streamline workflows and become more efficient and agile in their tasks. Further, the power of real-time data and analytics will drive smarter decision-making and sustainable business growth.

The Role Of Digital Literacy In A Business’s Digital Agility

Digital literacy definitely has a key part to play in an organisation’s digital agility. With the acceleration of technology adoption over the last two years, many companies run the risk of simply implementing one application after another, without fully understanding the uses and core needs of the organisation. In such a scenario where the systems and infrastructure are overly complicated, employees struggle to understand and use technology tools, workflows become sluggish, and digital agility of the organisation is impeded.

That is why, having in place a simple-to-use, intuitive technological interface is crucial in an organisation’s digital transformation journey. Further, with hybrid working becoming a norm, having tools that enable mobile working and greater flexibility will be key in supporting employees as they work from anywhere. 

“Alongside the adoption of new innovations, organisations need to equip their employees with the right digital skills and knowledge to close the digital agility gap,” says Lee Thong Tan, CFO Practice Lead, Asia at Workday.

With the proper skills and education, and the adoption of digital, agile processes, employees are in turn more empowered to perform the best in their roles and chart their own career within the organisation, thus leading to greater agility and positive business outcomes.

Mitigating current talent crunch issues in the finance sector

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man in black long sleeve shirt sitting on a chair

Qinthara Fasya, DigitalCFO Asia | 3 October 2022

man in black long sleeve shirt sitting on a chair
Photo by Artem Podrez on Pexels.com

Jobs for tech, data, and science-related positions have been advertised on websites like Indeed 120% more frequently in Singapore than they were before to the outbreak. However, only a small portion of these posts are being filled because of a skill shortage in the nation. A Goldman Sachs 10,000 Small Businesses Voices survey found that hiring and keeping suitable staff is a challenge for 45% of small businesses.

For CFOs and their financial teams, the pandemic brought about new patterns and difficulties. Finance transformation now looks different than it did yesterday, thanks to disruptive technologies and senior talent offshore. DigitalCFO Asia spoke with See Yang Foo, the Managing Director and Country Head of PERSOLKELLY Singapore on how leaders can mitigate the current talent crunch issues within the finance sector in Singapore.

Talent Crunch Situation in Singapore

Singapore is experiencing a serious talent crunch as businesses adapt to the easing of pandemic measures. After having to rethink their workforce strategies after the pandemic, businesses have increasingly turned to contingent workers to meet their talent needs.

The widening local talent gap and ongoing competition for talent in Singapore have always been key challenges for local employers. In fact, talent shortage in Singapore has recently hit a 15-year high, with 64% of employers struggling to hire.

According to PERSOLKELLY’s APAC Workforce Insights Report, up to 85% of employers in the region face challenges building their workforce. This is exceptionally relevant for Singapore, where employers cited “Lack of Talents Locally” as their biggest challenge in building a workforce. This problem is further exacerbated by the global mobility restrictions caused by border closures amid the pandemic.

However, in Singapore’s financial sector, we foresee bright prospects considering how strongly it had performed during the pandemic. In the fintech sector, more job opportunities have been opening up, with new roles such as sustainable finance entering the scene.

Many of the new permanent roles that will be created in the financial sector in 2022 will likely be roles in financial technology to keep up with the trend of growing fintech in Singapore and integrated digital payment services across the region.

While the financial sector grows, companies will need to be more open to global talents on top of growing the local workforce, suggests See Yang.

Challenges when it comes to the Talent Shortage in the finance industry

bank banking banknotes business

There is a shortage in talent in the finance industry and finance roles, and there is a strong demand for labour in the banking and financial services sector as  institutions put in more efforts to scale up their businesses within the digital financial services space.

In addition, with the rise in FinTech, many are transitioning to such roles. Fintech companies and startups offer alternatives. American Banker reports that bankers are increasingly attracted to them because of their innovative capabilities and focus.

Main issues in Employment Retention and Talent Search

Considering the talent crunch in Singapore and the greater constraints on global mobility due to the pandemic, employers are also looking at hiring remote talents abroad to narrow this talent gap in Singapore. In the last year, employers in Singapore are also more open to hiring remote talents abroad, in comparison to the regional average.

Despite their openness to hiring remote talents abroad, employers in Singapore have expressed that they’re not equipped to do so. The top challenges listed include the increased difficulty in performance management, operational concerns due to time zone differences, language & cultural barriers, and the lack of an office to support operations.

These roadblocks can be difficult to overcome, but employers need not grapple with these on their own, there are external talent solution providers that can support organisations in mitigating these challenges, such as PERSOLKELLY’s Regional Talent Solutions — where talents working remotely can be recruited, hired and managed on the organisation’s behalf.

By tapping on the solution providers’ robust infrastructure to monitor and manage employees’ well-being and performance across the region, employers can easily resolve one of the key limitations of managing a remote team.

Flexible Workforce Solution (FWS)

The pandemic has already accelerated many changes to workforce structures. Remote working and the rise of contract jobs rank among some of the most defining changes. Business leaders will need to evolve and adapt their human resource (HR) strategies to ensure that their staff adjust well to these changes and remain engaged in their work.

Apart from the widening talent crunch, employers in Singapore are also challenged to remain adaptable simultaneously. According to our report, 50% of employers stated that they’ll continue to offer hybrid work arrangements, especially as more employees express their preference for a hybrid work model.

While many employers recognize that a flexible model featuring a mixture of home and office work is more likely to help retain and attract talent, some still find it challenging to adapt to new working models. This is largely because they are not sure how to track and monitor the performance of their employees working from home or operating remotely overseas.

A way to overcome this is by investing in the right tools and training that can help track and monitor the performance of employees. Some examples include timesheet reports where employers can have greater visibility over employees’ hours and productivity. Other methods include having more regular catchup with employees and setting clearer KPIs for career progression

As companies continue to adapt to the flexible work model, they can also tap on highly skilled talent for short-term projects, to stay fluid in their manpower operations and remain agile in meeting ever-changing consumer demands. Support from these temporary talent sourcing solutions helps employers not only access the right talent for their evolving operational needs but also empowers them to monitor and manage their employees’ wellbeing and performance in a remote setting – by connecting them with the right tools and professional services

The Availability of Fresh Graduates – Yay or Nay?

One of the toughest challenges that business leaders face amid the talent crunch would be attracting and retaining talent. One of the most common solutions to this is to hire and nurture fresh graduates.

With more fresh graduates looking to enter the workforce each year, it creates a bigger talent pool for businesses to choose candidates from. This allows for more opportunities for selecting top talent, which in turn helps the talent crunch.

photography of people graduating
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