Digital challenges for finance
Finance as an industry is increasingly relying on technology. Infact, that day isn’t far where technology runs the show when it comes to certain services/functions, however we must spare a thought towards consequences and what happens if it fails us. From cybersecurity threats, regulatory compliance, confidentiality of data etc. Let’s read through in detail what challenges technology and it’s adoption may pose to the finance industry.
1. Cybersecurity - Cyberattacks are one of the biggest challenges the world faces when it comes to digitalisation, for finance as an industry this challenge is much more severe. Hackers are constantly devising new techniques and methods of hacking into systems and servers despite advanced security systems. This is a huge risk for the finance industry. Any failure to respond to a potential threat or an absence of proactive action towards a cyberattack can be catastrophic. Not only are the internal IT systems and data at risk but also the data of their customers. Such events may result in regulatory penalties, lost revenue, disruption to day to day business operations and a dent on the company reputation as well. Maintaining data security too isn’t a simple job, it not only is expensive but also requires specialised knowledge and expertise. However, through constant awareness of the latest threats, audits of existing security measures and updation of these measures, we can manage cybersecurity risk.
2. Digital transformational roadblocks - Despite the emergence of path breaking technology backed by extensive research, senior executives are still not fully convinced of its scope. They don’t invest enough and continue to believe that legacy IT systems will help them get through. Apart from this, transformation teams, consultants, business leaders and all other stakeholders must agree upon a digital transformation plan with clear objectives, timelines and expected results. Unfortunately, this requires huge amounts of investment, internal buy-ins and specialised expertise which can all be very expensive yet yield very poor results. As a result, digital officers must stand for what they believe is right or else work best within their limitations. The earlier we get rid of the misconception that technology is not here to replace us but work with us, is when finance as industry would’ve evolved.
3. Regulatory compliance - Finance is full of sensitive information and with sensitive information comes regulatory compliance. Regulatory compliances are in place to protect consumers, however for businesses operating with state of the art technology and dealing with sensitive financial information, it can be cumbersome and complex. Large MNCs, banks and other financial institutions must adhere to the strict regulatory compliances. Technology can help these organisations cope through regulatory compliances, for instance machine learning algorithms are helping prevent money laundering and fraud at a large number of organisations. Previously, reviewing such data was an employee intensive task and would take days if not weeks. However, as legislation evolves to keep with the pace of technology and secure consumer’s best interests, it increases the burden on digital and cybersecurity officers, as they need to go through complex legislation and ensure compliance.
4. Big data - Big data in the financial world is a double-edged sword. It allows companies, banks and institutions access to data that they’ve never had before. This allows them to better their products/services and customise it according to their target market. However, it comes with it’s own unique risk. Customers are increasingly being critical of the use of their data by companies and are steering away from the ones that use it citing privacy concerns. Additionally, leveraging big data and making the most of it can be a daunting task for companies and requires data specialists, analytical tools and security for the data.
All said and done, technology is surely redefining the way we’re living our lives. The finance industry will be no exception to this despite the above challenges. For an industry that is rapidly evolving, its future workforce and those working within the finance industry must upskill and/or reskill themselves. As finance as a function too evolves from a support function to a strategic function, there is an absolute need for finance professionals and those interested in pursuing a career in finance to develop a broader range of skills. Let’s read to find out more what skills are needed to succeed as a successful professional in the finance industry