Accounting for change: Why finance should lead technology adoption
It’s difficult to discuss digital transformation without mentioning sales and marketing. Both business units are usually at the forefront of tech adoption due to their entrenchment in the customer-driven change market, while finance is sometimes left to swim on its own. However, if businesses want to achieve true digital transformation and remain competitive it’s imperative that finance and accounting keep pace.
Both departments are always looking for ways to improve key metrics, from cash flow to days sales outstanding (DSO). The good news for finance leaders is that emerging financial technology trends are making tech adoption easier to manage.
Here are four fintech trends paving the way for business leaders to make a true digital transformation:
New funding sources, quicker access to cash
Easy access to cash is good news for any business owner. In the past, small businesses, in particular, haven’t had many options for funding. They could either find a lender and suffer through a long, drawn-out loan process, or sell part of the company to a venture capital firm. But new developments in fintech have created more funding sources. For example, lending-as-a-service (LaaS) platforms offer same-day funding, giving business owners near-instant access to cash. This instant flow, as well as the low overhead cost, provides the resources required to expand quickly to meet customers’ needs.
Easier ways to pay (and to get paid)
Improved payment processing saves both finance leaders and customers time, which will ultimately increase both productivity and customer satisfaction. A new class of online payment vendors offers fast, secure, digital solutions with features like biometric facial recognition that speeds up the payment process—and make consumers feel more confident that their data is secure.
Digital solutions can also open an entirely new customer base, specifically those who do not use credit cards or who prefer digital options. Consumers increasingly shop online because of convenience and the ability to compare prices. Business leaders should pay heed to this trend. More payment options equal a happy customer (and potentially more revenue).
An easier way to check credit
For businesses that must check their customers’ credit, the FICO credit score is still widely used. However, new systems are being created that provide a better overall look at a customers creditworthiness. Algorithms use data from social profiles and behavior patterns exhibited online to analyze credit scores and create a more efficient process. Although this moves away from traditional financial metrics, it can give businesses a more accurate view of a customer’s financial health. As a bonus, consumers who understand that their credit will not undergo another check will be elated.
A new level of security
In the past few years, several major companies were subject to data breaches due to security vulnerabilities. Consumers are more interested than ever in their security and how businesses are treating their pertinent information.
It’s important for companies to communicate regularly to customers that cybersecurity and privacy are a top priority, writes PwC analyst Matthew Lieberman in Forbes. Amid the drumbeat of data breaches, finance leaders must put strict data governance protections in place and continually earn customers’ trust, he says.
Emerging technologies, including blockchain and the Internet of Things, promise to give finance leaders new security tools. Firms are beginning to develop systems using these technologies to authenticate consumers for payment, reduce fraud, and introduce new security protocols. Security is a crucial part of people’s decision process—according to The 2017 State of Consumer Privacy and Trust Survey, 69 percent of consumers are concerned about security and privacy with Internet of Things (IoT) devices—and it must be a critical part of a company’s digital transformation.
Consumers are intelligent and are currently choosing carefully what they purchase. The entire customer experience must be based on their needs, not just the marketing and sales segment. Your business can remain up to speed and competitive by allowing your finance department to lead technology adoption and your digital transformation. Your security, payment processing, credit processing and funding all hang in the balance.
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