The role of technology and the possibilities of automation within the future of finance are at the forefront of CFOs’ minds as they prioritize digital transformation at their organizations.
This makes it critical for financial leaders to prepare for and understand technology hype cycles and new technology trends, as the next decade in finance will be dominated by a shift towards “autonomous finance,” according to a Gartner report Monday which predicted employees and machines or emerging technologies will work in tandem to transform finance and business practices.
“Collaboration between people and machines is the trend that's going to dominate the next decade,” said Mark McDonald, senior director, research for the Gartner Finance practice in an interview.
Gartner pointed to three broader technology innovations that will drive the technology hype cycle for finance over the next decade — composable applications, decision intelligence, and intelligent applications. Finance leaders should be selective about these themes, the report advised, focusing on the areas that best fit their organizational needs.
The digital talent must-have
Composable applications are targeted solutions — McDonald pointed to a specific accounts receivable solution, for example, versus one that was already included in a businesses’ ERP system — while decision intelligence relies on using data analytics to help the finance function “look at the anatomy of a decision,” he said. Intelligent applications use AI to add in predictive or contextual features, helping businesses parse their transactional data, according to the report.
Each of these three technologies are still emerging within finance. Unlike other business functions that may be moving faster to adopt or integrate new technologies, McDonald said finance “has some unique constraints” to keep in mind when doing so — most notably “validating the integrity of financial statements, being able to answer why decisions are being made.”
“Leaders have a personal responsibility to do this,” he said. “They can't point to a computer when external auditors or regulators come in, ask questions. They need to provide answers and that drives in different levels of granularity and different levels of expectation from the machines that they build in their environments.”
This makes digital talent essential in finance, McDonald said — it’s no longer a “nice to have.” While not everyone within the finance function needs to be a technology expert, finance does need people that “understand how to leverage the technology, how to use it, understand its limitations, understand its capabilities,” he said.
Building data science skill sets into their organizations would be the “most actionable, first step” for CFOs to take in order to take best advantage of these technologies as they emerge. Enabling such skills is “the only way that finance is going to be able to use artificial intelligence and machine learning to a degree that's acceptable to auditors and regulators,” he said.
“Without being able to explain why things are doing what they're doing and having skills to do that, CFOs are going to struggle to make the best use of AI and machine learning,” he said.
Playing to human, machine strengths
The skills that employees will need to have as technology permeates the finance function surround “asking the right questions,” McDonald said — being able to understand which questions to answer with machines, getting the proper data for that question, and deciding how to move forward with the information once available.
When it comes to creating a collaborative connection between employees and technology, the goal is to create an environment “where everybody is working on something that they’re good at,” McDonald said, whereas “right now, a lot of people in finance are working on things that they’re not good at, just shoveling data, crunching numbers and in waddling pools of complex processes.”
“We're building an environment that gives people the freedom to do things people are good at, and that changes the value proposition of finance,” he said.