We are entering the fourth industrial revolution, also known as ‘Industry 4.0’. Demographic shifts, combined with globalisation and the rapid development of digital technologies, will bring significant changes to the way each of us live and work.
In a 4.0 world, smart technologies will redefine industry and business models. Consumers will have significantly more purchasing power over what and how they buy. Automation will continue to displace manual work, whilst also creating new jobs and sectors. The ability to join up and analyse vast amounts of data will generate extraordinary insights into ourselves, our organisations and our societies.
The finance function will be no exception to these forces for change. CFO’s will need to respond, both in terms of supporting business in the face of disruption and ensuring the finance function is fit for a 4.0 world. However, with the erosion of trust in institutions and businesses we are witnessing today, purpose, trust and transparency will become central to the way organisations interact with their stakeholders.
In this increasingly complex world, particularly in reporting, how does finance stay relevant and trusted by those who rely on what it does?
Impact of new technologies
In the same way that digital technologies are disrupting many company business models, they will also present new opportunities to transform finance. Analytic technologies are already enabling some companies to extract and process huge volumes of data from both inside and outside the organisation, delivering new and better insights – including into areas such as culture, which were once though impossible to measure. These technologies will enable the CFO and the finance function to add significantly more value to the business at speeds much faster than today. This will be in real time, at a greatly reduced cost, with higher levels of automated control and lower levels of risk.
Artificial intelligence (AI) will also be a game changer. New AI systems are capable of digesting and making sense of large data sets and much more efficiently than humans. They are able to recognise patterns and to learn and adapt to new situations, whether that’s a new tax regulation or accounting rule. Blockchain too, whilst in its infancy, has the potential to challenge many of today’s accepted norms of how we do business.
These technologies, whilst at various stages of development, have already moved from the realms of science fiction to the real world. Yet much of their true potential and possible applications are still to be fully realised. What we can be certain of is that they are likely to have a transformational impact on the finance function over the coming years.