The past year or so has been anything but normal, hasn’t it? Uncertainty prevailed for the most part and continues to prevail as we continue to try and navigate amidst one of the worst humanitarian crises the world has ever seen. The crisis has had an unprecedented and an unimaginable impact on finance as a whole. Governments, large organisations, small organisations, institutions, families and individuals too have had a lot of address and rethink in terms of finance. The impact of COVID-19 on the world economy, livelihoods of people has been severe.
The good news however is, as we move further into 2021, we are increasingly seeing the light at the end of the tunnel. Nations across the world are racing to vaccinate their citizens against the virus and plans are being put together by vaccine manufacturers to ramp up production. Cross border cooperation to coordinate logistics and setting up of storage facilities for the vaccines are all being worked upon as you read this.
While this is surely the beginning of the end of the pandemic, it’s impact will certainly change the way a lot of things are done. Infact, pandemics and recessions are known to alter human behaviour. One such alteration was the shift to remote working, a global survey by Gartner of CFOs and finance leaders in late March 2020, concluded that 52% of respondents want to move at least 10% of their previously on-site workforce to permanently remote positions post-pandemic.
Furthermore, the pandemic has reinstated the importance of a digital economy and how digital tools can be leveraged to reduce the havoc the pandemic is causing.
However, before we move into the future of finance. We must understand what finance means.
Finance can be defined in many ways, however the general definition of finance means management and creation of money.
Way before the pandemic got a grip of the world, finance as a function and as an industry was undergoing a great deal of transformation. The transformation was mostly driven by technology such as artificial intelligence, automation, blockchain, analytics with regards to business intelligence and many more. While such transformation requires extended periods of time, training of personnel and integration, the pandemic forced everyone to adapt overnight. For industries such as banking and insurance, these technologies have resulted in substantial reduction in operating costs and overheads thereby resulting in healthier balance sheets. On the other hand, finance functions such as accounting are further being automated with CFOs , finance leaders and CEOs increasingly realise long term cost-benefits. The adaptation of such technologies will ensure that finance as a function in any organisation will evolve into a strategic function with a larger focus towards future forecasting versus the current historic reporting and day to day accounting.
Digital technologies will ensure finance as a function evolves, however, it comes with its own set of challenges. Finance leaders need to understand the huge cost of such technologies and compare it with the benefits, successful integration and compatibility with existing systems. The risk associated with digital transformation is huge, finance leaders along with their risk, compliance and technology counterparts will have to consider and frame appropriate risk management strategies to mitigate risk for their respective digital transformation priorities.
All in all, these are exciting times for finance as an industry and as a function as it stands at the cusp of a major evolution. Let’s find out what the future will look across the various areas of finance in the short and long term future.