The accounting and finance experts have spent an entire year grappling to meet new challenges head-on. While some businesses struggled to make ends meet because of declining demand, others were on the verge of bankruptcy. Additionally, 2020 witnessed a sudden acceleration in digital services. People switched to remote trading while the mobile transactions spiked but unfortunately, the innovators weren’t ready for this transition.
However, in 2021, the finance industry is ready to execute long-term strategies. The emerging trends in finance are providing an opportunity for organizations to upscale operations and maintain profitability. The financial institutions are thinking about how to improve their technical setup, opening doors to automation. Likewise, companies are integrating digital payment solutions and AI-powered devices to elevate operations.
If you are not up to date with the latest tech innovations, have a look below. Here are five emerging trends and insights of the financial services industry in 2021.
1. Automated Accounting
Do you manually record transactions? In 2021, it is time to bid goodbye to old-school accounting practices and welcome automation. The new automated technologies can perform repetitive tasks with precision and accuracy. Accounting software can send invoices, calculate taxes, and prepare financial statements automatically. In turn, you can dedicate time to value-added tasks that require careful analysis. However, dealing with automation is not everyone’s cup of tea.
In addition to being tech-friendly, you need an understanding of accounting practices to ensure automation is providing effective results. You can take a few short courses to familiarize yourself with the accounting world. Still, it is always better to pursue higher education. You can complete an online macc program to understand accounting automation inside out. Remember, automation is here to stay because of its countless benefits. Hence, it should be an integral part of innovation strategy while moving forward.
2. Robotics & Artificial Intelligence (AI)
Surprisingly, companies can use robotics and AI to address key pressure points, reduce costs, and mitigate risks. Let us explain how. The AI-powered devices leverage natural language processing, logical reasoning, navigation, and physical sensors to manage finances. It can oversee clients’ information to evaluate default risk. For instance, if the customer’s credit score is declining, the AI servers will alert the finance manager immediately.
Similarly, the AI-enabled Robo advisors are fostering investment decisions. They are well-versed with financial markets, share prices, and investment dynamics. Likewise, they can understand customers’ investment objectives and prepare customized portfolios. For instance, if you want to put a lot of money at stake, the Robo advisor will unfold low-risk investments.
Moreover, the advisors can make investment decisions on your behalf. If you want to buy petroleum stock when the market is crashing, inform the advisor. As soon as the market crashes, the Robo-advisor will buy the stock at the lowest price. Since these are AI-enabled Robo advisors, they can anticipate rapid gains and losses, saving investors from market fluctuations.
3. Blockchain Technologies
Today, entrepreneurs are doing business globally. They can order raw material from abroad and engage in cross-country trade – all thanks to increased digitalization. These practices can allow entrepreneurs to tap into new markets, but the banking industry is creating substantial obstacles. They have hefty bank charges, taxes, and transactional costs, making it impossible to trade. Fortunately, blockchain technologies are allowing people to switch to a decentralized ledger.
It provides a peer-to-peer platform where people can receive and send payments without any financial intermediary. Blockchains act as a single shared medium for the network of participants. Its transparency and convenience make it easier for businesses to reach agreements. Additionally, blockchain provides effective data management solutions. It creates a digital ledger of all transactions spread across different computer networks. Thus, accountants won’t have to record anything manually.
4. Rising Need for Cybersecurity
Customers trust financial service providers such as banks, brokerage firms, and credit unions with confidential information. From account details, income information to contact details – financial institutes have tons of confidence data. The high value of this sensitive information makes the finance sector an attractive target for cybercriminals. These inherent risks are increasing pressure to improve security protocols and implement cybersecurity measures. To enable a secure digital transformation, below are some of the best practices to improve cybersecurity.
- Secure Data: As data security is crucial for organizations, they can classify data by its sensitivity. It will ensure compliance with regulatory requirements while mitigating the risk of data breaches.
- Monitor Third-Party Risk: Conducting third-party risk assessments can help in identifying gaps in vendor security. You can recognize the potential risks and take appropriate action to mitigate them.
- Two-Factor Authentication: Biometric authentication is one of the leading trends in FinTech. Employees and managers will have to scan their fingerprints to access confidential data, closing doors for unauthorized users.
5. Shift to Digital Payments
These days, people prefer cashless transactions. In stores, they prefer swiping their credit and debit cards instead of finding change for cash payments. Likewise, people opt for PayPal, Apple Wallet, and Venmo when shopping online. The rapid shift towards digital payments is changing the financial landscape for accountants. They no longer have to prepare cash flow statements; instead, they must reconcile bank statements with business transactions.
Moreover, accountants have to integrate digital payment methods on eCommerce platforms. You have to ensure customers can pay through wallets, Venmo, Payoneer, and other popular payment solutions. In addition to eliminating manual invoice processing, digital payments can curtail accountancy labor costs. Besides this, you can allow customers to pay through cryptos. Even though you can exchange the coins for cash through a regulatory medium, this new payment solution can help you win over competitors.
The financial sector continues to witness countless changes in today’s ever-evolving landscape. AI-powered devices are taking over manual processes, allowing accountants to focus on core business operations. Similarly, the evolution of blockchain technologies is helping businesses reduce costs and increase ROI through cross-country trade. Also, the transition to digital payment solutions allows enterprises to upscale customer service. These new trends will help entrepreneurs improve revenue and profitability.