DCFO Spotlight - Page 3

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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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

Role of CFO evolving in the Post-Pandemic, Inflation-Impacted Business Climate: Tata’s CFO

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Fatihah Ramzi, DigitalCFO Asia | 3 October 2022

Kabir Ahmed Shakir, Chief Financial Officer, Tata Communications

In the post-pandemic environment, the chief financial officer’s position is evolving. Without a doubt, COVID-19 has altered how the finance office operates. The pandemic unveiled a new normal in which business conditions change on a daily basis and the CFO’s office is moving toward a more immediate and proactive emphasis. The standard operating procedure, which included monthly, quarterly, and annual planning processes, has been completely altered.

CFOs must now be completely flexible and able to respond quickly to developments in the company. Ultimately, they must look forward, make predictions about what will happen, and guide their companies in the proper direction. The necessity for the CFO to have visibility of the day-to-day operations of the organization and to assume a strategic role in leading those operations will not go away. In fact, the CFO’s function may be expanding even further in the wake of the post-pandemic boom as businesses rely on their knowledge to maximize their recovery.

To find out more about a CFOs role in the post-pandemic and inflation-impacted business landscape, DigitalCFO Asia spoke with Kabir Ahmed Shakir, Chief Financial Officer, Tata Communications.

Key Challenges For CFOs In The Post-pandemic Landscape

1. Preserving Human Capital 

The pandemic has altered workplace dynamics, with many employees now experiencing telecommuting and working from home for the first time. Changes in the wants and views of employees have coincided with changes in workplace culture. With this development, the organization’s capacity to increase employee retention is also reliant on its capacity to meet changing employee demands, whether through competitive pay or a commitment to a healthy work-life balance.

Be receptive to hearing about the requirements of every one of your employees and exploring how you two may collaborate to meet those needs. Flexibility is essential. Whether it’s implementing work-from-home options or reorganizing internal procedures, it’s critical to modify current working procedures to meet the shifting needs of your team and boost job satisfaction.

“The pandemic has shown us that any job (in the corporate world) can be done from anywhere in the world,” says Kabir Ahmed Shakir, Chief Financial Officer, Tata Communications.

2. Too Much Focus On Long Term Plans 

There has never been a better time for CFOs to position the finance function as a driving force for transformation and a source of competitive advantage. They also highlight a glaring perception gap that needs to be closed if CFOs are to dismantle silos and promote the mindset required to be successful in this role.

Despite CFOs’ beliefs that they are starting to generate financial value through unconventional duties, it is nevertheless evident that the majority of their time is still spent on conventional ideas. When the pandemic has demonstrated that long-term plans are ineffective in the face of challenges and disruptions, many CFOs decide to revert their concentration on them now that the pandemic is settling down.

According to Kabir Ahmed Shakir, Chief Financial Officer, Tata Communications, “CFOs need to be very choiceful on the metrics that matter.”

It is important that CFOs prioritise and focus on the goals and objectives that are important in sustaining the business and ensuring recovery. Out of the 20 metrics that they have on the list, about 2 or 3 are the most important ones and it is crucial that CFOs are able to pinpoint those priorities and start curating plans to achieve them. 

Staying Ahead Of Inflation

Inflation makes planning and investment decisions harder, and at a macro level, it may be associated with recessionary tendencies in an economy, leading to cutbacks in consumer spending. When this happens businesses need to be smarter in where they spend their money as such decisions could cause detrimental losses for the company especially during periods of high inflation. 

In light of an inflation-impacted business climate, Kabir Ahmed Shakir, Chief Financial Officer, Tata Communications, says that “We should continuously look at every cost. If the cost is not adding value to our customers then that cost is simply not a value-add and has to be eliminated.” 

A corporation will need to look for alternative strategies if its existing cost-cutting efforts are insufficiently successful. Despite the fact that businesses may not be able to compete on price, they can still attract customers by providing other added value that they are prepared to pay for. Offering a special experience that your rivals can’t match is one method to create value. Make sure the target market will find it appealing and that it will encourage them to choose your company over competitors.

Managing Growth Ambitions As A CFO

Viruses, emerging technologies, and upstart competitors are just a few examples of disruptions. Change is the unifying denominator among them, and this change can have an impact on a strategy’s foundation and viability. A company’s service objective may not change, but its particular plans for achieving that mission should be changed frequently to take into account new opportunities.

Against the backdrop of any significant disruption – product, supply, distribution, marketing, and infrastructure requirements could all change quickly, making this the optimum time to examine business models and prioritize any required reforms. These developments typically come as a surprise, necessitating quick decision-making with little information.

“CFOs need to start getting comfortable with the uncomfortable. They need to start making decisions with less information and less time,” says Kabir Ahmed Shakir, Chief Financial Officer, Tata Communications.

The organizations that establish this normality at the top will endure in the current environment. If you can read uncertainty in a competitive environment better than your rivals, you will be able to advance your business initiatives. Executives frequently ask for the worst-case scenario in these uncertain times and want to quantify it. This demonstrates a level of preparedness especially when they are able to draw a line and see that the company can afford that worst-case situation. If CFOs want to have their business successfully weathering any disruptive period, simply being aware of their priorities and key strategies to navigate these trying times will get them there. 

The Blueprints Of Finance; Machine Learning & Data Analytics

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Fatihah Ramzi, DigitalCFO Asia | 26 September 2022

Machine learning and data analytics will revolutionize the finance sector over the coming few decades.

Machine learning and data analytics will revolutionize the finance sector over the coming few decades. The capability to automate repetitive processes in this day and age allows finance teams to concentrate on significantly greater duties. Analytics are also essential to finance since they show where organizations are doing well and where they may do better.

Machine Learning

Fundamentally speaking, machine learning is a branch of artificial intelligence that can carry out tasks with little to no assistance from humans. This implies that it can swiftly analyze complex data sets, find trends, and resolve issues in the context of finance. 

Additionally, it can facilitate the development of new goods and services, generate analytical insights, and enable customers to take advantage of more affordable, customized goods. This gives lenders the opportunity to improve the responsiveness and efficiency of the goods and services they offer. But which areas benefit the most significantly?

Fraud and money laundering detection have become considerably more simple and efficient thanks to machine learning. Preserving client trust requires being able to tell customers that the risk of fraud is always assessed and recognized faster than ever. This is made easier by machine learning, which offers real-time analysis of account activities and discovers typical client behavior.

The financial industry, which substantially benefits from the ability to process massive data sets to obtain crucial insights into industry trends and anticipate swings in financial assets, is unsurprisingly one of the main use cases for this new technology. Having said that, the financial sector is discovering a wide range of applications for machine learning, from forecasting cash flow activities to identifying fraud to even enhancing the customer experience. 

Data Analytics

The role of data analytics in finance is expanding. A growing number of companies worldwide are adopting data analytics to enhance internal processes. In order to better understand their customers, they also rely on data analytics. Because of this, organizational leaders, especially Chief Financial Officers (CFOs) can make decisions that will improve corporate results.

Financial analysts or data analysts will work with CFOs to make sure the business understands its raw data and reaps its benefits. Since data analysis is essential to the success of financial institutions, the future of data analytics in finance is secure. After all, more unstructured data will be available for organizational executives to evaluate as the banking sector continues to digitize. They can utilize data analytics to assist them use the data.

In a very short amount of time, data analytics and machine learning has progressively taken over a variety of businesses, and the financial sector is no exception. Finance  companies have finally recognized that in order to maximize benefits, it is essential to fully employ generated data. Additionally, the application of business analytics in the finance sector improves efficiency, offers outstanding solutions, and fosters the development of a customer-focused strategy for the sector. But it also reduces danger and frauds that exist in the financial sector.

The Social Aspect In ESG

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Fatihah Ramzi, DigitalCFO Asia | 26 September 2022

Understanding the “S” in ESG and its key factors.

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, 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 concerns, from immediate to long-term issues:

  • How might the needs of a company’s personnel and its makeup cause issues for the business in the future? Due to a shortage of competent workers or a scandal that harms a company’s brand, labor strikes or customer rallies can have a direct impact on a company’s profitability.
  • What dangers are associated with a product’s potential safety issues or the supply chain politics of a company? Businesses typically experience less unpredictability when they ensure that their goods and services don’t pose any safety issues and/or reduce their supply networks’ susceptibility to geopolitical crises.
  • What upcoming demographic shifts can cause the market to shrink? Long-term changes in customer choices are influenced by intricate social dynamics, such as spikes in online public sentiment, protests, and mass boycotts of certain companies. These can be taken into account by decision-makers as significant predictors of the company’s potential.

Social Factors in Practice

Although the social component of ESG can be divided into numerous components, the following five are typically included.

Relationships

Although it might not seem like it, your company’s interactions with its staff, vendors, and clients can be analyzed quantitatively. Is the  company’s pay, for instance, consistent with those in the sector? How much staff turnover is there, and do employees enjoy their jobs? How do customers and suppliers feel about doing business with you and will they still support the company?

Not only do you want to know if customers have positive feelings about your business for marketing or sentimental reasons. The productivity and retention of employees are impacted by how a company treats its staff. From the standpoint of profitability, contented workers are more efficient, and low turnover is less expensive than frequent new hires. Relationships a business has with its wider social network, such as its clients and suppliers, can also directly benefit its bottom line.

Community Relations and Human Rights

Community relations deal with how your business affects or helps the neighborhood. Local sourcing, philanthropy, and hiring people from within the community are measurable factors. Since corporate activities can have an impact on regional surroundings, the ESG’s environmental component also has some crossover.

Human rights are a fundamental tenet of social evaluation in general. ESG initiatives should closely examine internal procedures and scan the supplier chain for human rights violations. Investors anticipate that a company will use due diligence to prevent supporting organizations with a bad track record on human rights, even though a company cannot be held accountable for every group it partners with. A certain source, usage of a specific product, or operating in a distinct geopolitical region are just a few examples of areas to take into consideration.

Workplace Health and Safety

Management of the environment, health, and safety (EHS) is an important consideration when assessing “S.” EHS is focused in the wellbeing and security of both employees and the environment. Since the epidemic, investor and public scrutiny of EHS has increased significantly. 

The public has denounced companies that seemed to put customers in danger without necessity and applauded others for their vigilance. Moving forward, inspection of EHS procedures at work is expected to stay at a high level. Workers’ compensation applications, workplace injuries, personal protective equipment (PPE) regulations, as well as other health and safety issues unique to your industry can all be measured.

Diversity and Inclusion

Diversity affects a company’s profits directly and is progressively regulated. It is not merely about taking a politically correct stance. Recently there have been a lot of debate diversity policy suggestions. Legislation that was being proposed required a level of disclosure on the leadership’s gender, color, nationality, and veteran status as well as a number of other initiatives to broaden staff diversity. Businesses should develop genuine diversity objectives and strategies and get ready to answer to the public and governmental organizations. 

Enhancing company governance, luring top people, and developing human capital are all critical elements driving long-term competitiveness. Internal policies supporting gender diversity are a sign of a well-managed business that understands the importance of diversity in fostering innovation and raising production, as well as enhancing employee well-being.

Political Ties

Political allegiances and contributions rank among the social evaluation criteria’s most visible and recognisable components. Politically motivated sanctions have a longstanding history and can seriously harm a brand’s reputation. Investors will want to assess the potential political consequences the business may face in the future and understand how the company interacts with political groups, leaders, and laws.

Additionally, investors might wish to confirm that there aren’t any major disputes with their own political views. Politics cannot be performative, like all other ESG components, as they will be evaluated using quantitative metrics and contrasted with the messaging of the company.

The “S” in ESG Matters

Similar to the other ESG components, social metrics and criteria give investors more assurance that the business will not succumb to the dangers present in the sector. Additionally, building goodwill within and outside of the organization and providing investors with a business they can be proud to support have merit. Companies may prevent possible catastrophes and have a beneficial impact by keeping a close eye on how the people in their labor force, community, and industry are being handled.

Megatrends That Are Disrupting Cross-Border Payments

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Fatihah Ramzi, DigitalCFO Asia | 23 September 2022

There will be major changes to the cross-border landscape with the rise of three new megatrends.

The cross-border payments landscape will change as a result of three new megatrends in payments, technology, and risk, which will also open up new business opportunities. Financial institutions must provide their customers faster, more affordable, and more secure cross-border payments if they want to stay competitive. Here are the effects of these trends and some related opportunities.

New Payments

More people are using new payment methods because they provide quicker and more affordable options. The expansion of cross-border transactions, which are anticipated to reach almost $156 trillion in total payment flows, is being aided by fintechs, digital banks, big tech, payment service providers (PSPs), card networks, close-looped networks, and other non-traditional actors.

Rush of new players that offer to address enduring pain points are upending this trillion dollar cross-border payments business. The effects of these developments on future strategy will need to be taken into account by existing banks and money transfer operators (MTOs). Two new specialized player groups have emerged as a result of these changes and the typical pain problems associated with cross-border payments which are delays, exorbitant prices, and a lack of visibility. These companies are technologically empowered money transfer operators and back-end networks.

Latest Technology

Cross-border payment procedures are continually being improved by new innovations, which increase transparency, clarity, and efficiency. To meet consumers’ expectations, financial institutions should give priority to meaningful innovation by using the appropriate technologies and forming the appropriate partnerships.

Artificial intelligence (AI), for instance, boosts operational effectiveness by automating labor-intensive, manual operations like filling in or updating data in certain SWIFT message fields. Additionally, it improves straight-through processing (STP) rates, decreases manual intervention in payment processing, and mitigates fraud.

APIs are a different area of technology that organizations might want to investigate. APIs offer a dynamic and adaptable digital infrastructure that helps companies keep up with innovation-driven changes in things like costs and time-to-market for new products. It gives financial institutions the versatility, openness, and power over the integration of data, enabling their customers to interact and obtain information through the avenues of their choice.

Up And Coming Risks

As the sector continues to evolve, new threats like fraud and cybersecurity will remain persistent. Cross-border payments are complicated by the presence of several participants, authorities, systems, and regulations. Fraudsters will continue to invent complex new techniques and innovate in order to take advantage of this system.

The payments industry has been particularly vulnerable to fraud because of the fragmented nature of the system and the volume’s rapid growth. Automation simplifies cross-border payments’ traditional complexity and increases transparency, lowering the risk of fraud and security breaches. Enhancing cross-border payment services promotes economic expansion and international progress while boosting revenues for forward-thinking businesses. In order to streamline local and international payments, businesses should look for a strong AP automation and payments solution.

Changes in the massive cross-border payments sector present opportunities along the entire value chain, perhaps even incorporating new acquisition tactics. Finding the proper course of action will require a thorough approach that draws on in-depth local market and industry knowledge. However, such a significantly intricate and diverse market also creates obstacles for veterans, newcomers, and investors. Which is why businesses must keep up with the trends, adapt and further innovate on cross-border payments. 

After Digital Adoption, What’s Next?

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Fatihah Ramzi, DigitalCFO Asia | 15 September 2022

Now that the race to digital adoption is calming down, the race towards sustainability is picking up.

Sustainability is becoming a part of daily life in the modern world. How does that relate to companies? As both consumers and employees want a more sustainable way of conducting business, a growing number of firms are exploring ways to lower their carbon footprint. Companies who don’t change will undoubtedly have difficulties in the future. No matter how big, how medium, or how little your company is, embarking towards a greener business should be a top focus.

However, putting the essential adjustments into place calls for a company-wide evaluation and teamwork. It frequently entails making significant investments in education, selecting new suppliers, developing new regulations, and drastically altering a number of procedures. But of course before that, companies need to know what to focus on. Here are the top two focus areas for the race to sustainability.

Reducing Carbon Footprint

When assessing the environmental impact that any action has on the environment, quantifying carbon footprint has become standard practice. It speaks to the volume of carbon dioxide that particular activity contributes to atmospheric emissions. When considering a simple bottle of water purchased by a business, for instance, the carbon footprint would include all emissions of greenhouse gases created from the sourcing of the water, the production of the bottle, and its transportation, as well as all the tasks completed in the water company that are required for that bottle to be produced and distributed to you.

Reduced carbon emissions will delay climate change, protect the environment, and provide opportunities for better use of the planet’s resources. This can be achieved via minimizing a company’s carbon footprint. Organizations can now calculate their overall greenhouse gas emissions using a variety of technologies. Hiring a sustainability consultancy company is a great choice when major change is required because they will not only quantify your carbon emissions but also develop a plan to reduce it, offer additional assistance during the implementation process, seek sustainability accreditations, and provide the necessary training.

Participating In ESG Reporting

An environmental, social, and governance (ESG) report, also known as a sustainability report, is a document that is released by a corporation or organization. It helps the business to be more open about the dangers and chances it confronts. It is a communication tool that is crucial in persuading dubious spectators of the sincerity of the company’s operations.

While corporate ESG data reporting is still largely voluntary in most nations, it is becoming more and more regulated globally. Companies that are proactive and future-oriented recognize how crucial it is to integrate ESG considerations into their mission and business strategy. In their yearly reporting, they willingly provide their ESG statistics. Companies with great ESG performance have shown to have higher investment returns, lower risks, and superior crisis resilience.

Companies will place a lot of emphasis on ESG transparency. In order to reduce investment risk, investors are progressively taking ESG factors into account. Investors can learn how a firm manages risks and produces long-term, sustainable financial returns by looking at ESG performance improvements and reports. However, businesses that fail to do so exhibit a lack of openness, and worried investors may pass them up as possible investments.

If businesses want to remain secure, competitive and long-lasting they will need to start aggressively embarking on the journey to sustainability as it is becoming a criteria worldwide for investment opportunities. Now that the race to digital adoption is calming down, the race towards sustainability is picking up. If businesses intend to be at the forefront of this race, they should start taking on greener initiatives and being transparent about it. 

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