Calming concerns amongst accelerating changes in finance: from AI to politics

Executive summary

AI is not going to replace the CFO. However, CFOs who use AI will replace those who do not. This is not a prediction produced from carefully crafted ChatGPT prompts; it is the sentiment of CFOs across the UK – financial leaders themselves are recognising that AI is already changing the rules of the game and providing a decisive competitive edge.

In December 2023, Aurum Solutions, next-generation reconciliation software specialists, therefore surveyed 100 CFOs and senior finance professionals about digital acceleration, the impact of AI, and the changing political landscape in the UK. By partnering with the international market research agency, OnePoll, concerns, perspectives, and expectations on these topics from within the Fintech sector all became clear. 

This report takes a more in-depth look into the findings of the survey, exploring topics such as job security, opportunities versus risks, precursors to growth, and more. Ultimately, this report does more than collect the feedback of financial leaders in the UK, it also deep dives into the reasons behind it, and more importantly, what implications it could have in the future.

Now might be a pivotal point in time for businesses and their financial guardians but this does not mean that new challenges and technologies will refuse to emerge. Understand the disruptions and solutions that others in your profession are imminently awaiting and prepare to move forward with a plan that will support your operations.

Methodology

Between the 28th November 2023 and December 6th 2023, OnePoll surveyed 100 financial professionals from the UK on behalf of Aurum Solutions in relation to contemporary concerns they held in relation to the financial sector.

Of the survey cohort, 80 were a Finance Manager, Payroll Manager, Accounts Payable Accountant, or a Financial Accountant. The other 20 were a Chief Financial Officer, Group Head of Finance, Finance Controller, Finance Director, or a VP of Finance.

Digital acceleration fears

Ever since noughts and ones appeared on early binary computers, digitalisation has percolated from industry to industry and then process to process, promising increased efficiency, faster speeds, better documentation, easier compatibility, and more. In a sector dominated by ever-growing numbers of digits from infinite sources, it is therefore not surprising that digitalisation is conducive to finance.

However, although digitalisation’s promise of rapidly increasing speeds is viewed as a benefit due to its ability to surpass any human efforts, this very outcome can also be cause for concern. For instance, the numbers which real-time payments produce would never be possible to reconcile via manual, human efforts. Digitalisation breeds a reliance on digitalisation.

By no stretch would financial professionals ever wish to revert to a pre-digital era but with 80% of CFOs and senior finance professionals expressing varying levels of apprehension about the swift pace of digital acceleration, it seems as though there is a growing concern over the fact that the pandora’s box of digitalisation cannot be closed. After all, digitalisation is progressive. As such, even though it feels like technology is operating at peak speeds already, with the likes of Aurum reconciling millions of transactions in seconds and UpLiftAI by Primer simulating payment routing in 25 milliseconds (on average), it is completely reasonable for such innovations to become even faster in the future. This might sound impressive on paper, but where does it end?

Will data pile up into insurmountable amounts? Will humans become completely obsolete? Will unknown figures of data end up conducting themselves in our absence?

Digital transformation is easy, people transformation is not!‍

Prof. Loredna Padurean, Association Dean & Faculty Director for Action Learning, Digital Transformation

Whilst the results of digital acceleration itself might be the root of concern for some, there is also an argument to say that people themselves are where the problem lies. As already mentioned, digitalisation accelerates by nature. This feat has been exponential, to the extent that education systems have been unable to keep up and equip multiple generations for the workplace that they are now experiencing. For example, nearly 40% of Japanese companies hire people over 70 years old and predictions currently believe that for those born in 1970 or afterwards in the UK, they too will have to work until 70 before they can claim their pensions.

At no fault of their own, these individuals were educated with an absence of technology which is now ubiquitous. Despite this, it is more than likely that their work activities demand the utilisation of software, digital collaboration tools, AI, and more. Inducing more digital acceleration on such a workforce is therefore likely to be seen as a great challenge to overcome.

Although worries exist, accepting them is not an option, even if 42% of finance leaders indicate that they are “very concerned” over digital acceleration. In fact, 81% of UK business leaders are of the opinion that not updating finance processes will see firms fall behind competitors, place unnecessary stress on workers, and suffer from inaccurate reporting. As a result, digitally accelerating – even if it is perceived as scary – must be done.

Given that people are aware of the benefits of digital acceleration, it is likely that concern surrounding it is borne out of being unable to successfully achieve it to the same extent as competitors. This concern must feel especially ominous and inescapable due to the fact that nearly all firms are digitally seeking to digitally advance – 77% of UK business leaders wish for robot help when it comes to fundamental finance tasks such as approvals, budgeting and forecasting, reporting and compliance, and risk management. Establishing a foundation primed for digital acceleration is therefore essential. For instance, investment in back-office operations such as reconciliation must be equally advanced, flexible and expansive as the front-end developments that will drive larger volumes of transactions to ensure that the latter can be adopted without complications which could give competitors an advantage.

Ultimately, by its very nature, digital acceleration will continue to improve, and leaders are unable to decline its offer of support. Evidence of this can be found in how AI – a novel technology only a couple of years ago – has already been eagerly adopted by 85% of financial service companies. Consequently, digital acceleration is a matter of “if you can’t beat them, join them”.  

Key takeaways

• Digitalisation breeds a reliance on digitalisation
• Even if it is perceived as scary, digital acceleration must be committed to
• 77% of UK business leaders wish for robot help with fundamental finance tasks

Too quick, too slick, too good to be true?

Despite digital acceleration therefore being something which does cause trepidation amongst financial leaders, the general consensus is that it must still be embraced. However, 34% view digital acceleration as an opportunity only if it is approached cautiously. Evidently, investing in digital acceleration, or more of it, isn’t an easy decision for most.

Such caution shouldn’t be frowned upon. As mentioned, digital acceleration purposefully results in things taking place at rates faster than humans can typically keep up with. Firms therefore can’t afford for digital acceleration to go wrong. Moreover, digital acceleration typically comes with a price tag, raising the stakes even higher. This is something which the Post Office can strongly attest to – their world-leading IT project alongside Fujitsu going wrong led to cover-ups, scandals, and masses of losses, both financially and personally.  

Evidently, digital acceleration requires a high level of consideration to ensure that it delivers the benefits it promises rather than inflicting damaging consequences. However, at the same time, 25% of financial leaders emphasise its immediate importance in gaining a competitive edge. Digital acceleration therefore continues to cause more contradictions amongst professionals.

With competitive advantage being more precious than ever in a world with fewer resources available, economies with reduced spending, and talent staying at firms for shorter periods, it is therefore not surprising that some companies will prioritise unlocking digital acceleration at speed, rather than exercising caution. Often, this results in them adopting out-of-the-box solutions. Yet, whilst such methods yield immediate results, 13% of financial professionals believe they have reached a saturation point in terms of digital acceleration delivering benefits for them – a clear pitfall of rigid one-purpose solutions. Contrary to the true meaning of digital acceleration these solutions therefore do not enable continuous improvement.  

Another approach which firms take when seeking immediate gratification is that of shortening their hunt for digital partners and looking inwards for a solution. On paper, in-house solutions do reduce time at the beginning of a project; however, in the long term, it can result in many delays. For starters, whilst developers typically exhibit a high degree of versatility, there is no guarantee that they have the expertise to craft a solution that they weren’t initially hired for. Redirecting their time away from their primary role can therefore quickly snowball into a significant number of hours being lost, having a detrimental effect on their principal work and that of their colleagues. Plus, a lack of expertise can also result in messy workarounds arising within code which inevitably cause time-consuming problems further down the line.

In addition, in-house solutions are incorrectly perceived as “one-and-done” projects. As a result, they rarely receive the attention and upkeep they warrant. In contrast, firms whose business is to deliver a specific digital tool will always be dedicated to improving their offering. Consequently, in-house solutions very quickly become outdated, seeing firms in fact stagnate, or “digitally decelerate” in comparison to their peers. This last point is reflected by the Payment Association’s ‘State of the Industry’ survey, highlighting that legacy infrastructure was the biggest barrier to growing business, stunting all the promise of digital acceleration.

Overall, digital acceleration is a volatile yet highly sought-after initiative which some might believe is too good to be true. Whilst caution must always be exercised considering the large ramifications that can ensue should it go wrong, unsurprisingly, moving quickly is a core component of getting the most out of digital acceleration. Maintaining perfect balance whilst moving forward at speed might seem elusive; however, when seasoned expertise (to appease cautious minds) paired with next-gen innovation (to beat competition) is leant upon, these ambitions and their benefits can all be attained.

Key takeaways

• Digital acceleration delivers a competitive edge for firms
• Standardised digital developments that don't offer flexibility stunt digital acceleration
• In-house digital solutions are prone to causing firms to "digitally decelerate"

Facilitating the evolution of finance professionals

The success of digital acceleration is arguably most prevalent in the field of AI. Its very existence is a testament to the progress of digitalisation, and its ability to develop itself is even greater evidence. Yet the latter phenomenon creates a very different relationship with digital acceleration because the caution that was sought in the previous chapter arguably becomes less attainable when human influence is reduced and replaced by machine autonomy.

This is not going unnoticed, with 63% of CFOs expressing worry over AI’s potential impact on job roles within finance departments. Evidently, the common narrative of machine disruption and replacement of people is present in the financial field too. Plus, with 84% of financial leaders claiming to have a high level of understanding about AI in financial services, their judgement is seemingly founded upon informed knowledge.

However, despite the rapid development that AI has already showcased, it should be remembered that this is a technology still in its infancy. Whether it can continue to digitally accelerate at the tempo that many expect it to, is ultimately unknown. Moreover, in the past, new technologies like IBM’s introduction of data processing equipment in 1960 have all been met with similar levels of concern yet never truly delivered the catastrophic impact on human employment that has been touted. Instead, there has always been a merging between humans and technology, never a usurpation.  

This follows the same prediction that Mark D. McDonald, Senior Direct Analyst at Gartner, alludes to when stating that the creation of a human-AI loop is the best way forward for finance functions. Rather than allowing AI to lead itself which Mark deems as risky, AI should execute rote, repetitive tasks and be informed by human ingenuity – this, he claims, will be the key to “reach[ing] new level[s] of productivity and value without big risks”.

Leverage AI for what it does best – automating manual tasks.‍

Mark D. McDonald, Senior Director Analyst
Gartner

Although every financial leader knows that no forecast can be based solely on historic trends alone, the above prediction is backed up by some significant stats. In fact, between 1999 and 2010, automation created 1.5 million jobs across Europe instead of doing what many feared – destroying them. Technological evolutions such as the dawn of AI should therefore be viewed as an opportunity for personal evolutions too.

Key takeaways

• The majority of CFOs are worried about AI's impact on financial jobs
• Like other digital tools, AI should be deployed to handle repetitive tasks
• Technological evolutions can also unlock personal evolutions

Financial outlook

It is not just digital acceleration and AI that financial leaders have concerns about. Like everyone else, they are experiencing the effects of climate change, shrinking economies, and even wars, but with the added responsibility of steering the finances of firms through these tumultuous times.

Consequently, 60% of surveyed financial professionals are worried about the financial outlook of their company compared to the same time last year. Interestingly, there was a vast disparity in holding this belief between those surveyed in the East Midlands (67%) and London (18%).

Regardless of location though, firms will inevitably be anxious to quickly gain a competitive advantage in such apprehensive times. Given that 25% of financial leaders emphasise the immediate importance of digital acceleration to gain an advantage, even when purses are being tightened, this strategy is wise given the lasting positive effects it will generate. Moreover, for businesses who feel that the clock is constantly against them, digital transformations that will enable them to make better use of their time, stand out as a perfect solution.

Ultimately, for firms worrying about where they will be next year, the key is to act, to get ahead, to get projects up and running right now for immediate time-saving returns, something which Aurum Solutions clients can attest to:

• Aurum, helps Fexco Property Services reconcile their general account 8x quicker than they used to
• Aurum results in The Tote spending 95% less time on managing exceptions
• Aurum automatically extracts, transforms and loads (ETLs) data, reconciles and reports for British Land, saving them more than 800 hours a year

Key takeaways

• The majority of finance professionals are concerned about the financial outlook of their company
• Digital acceleration can gain firms a competitive advantage quickly
• Digital acceleration allows finance professionals to reclaim their time and focus on priorities in testing times

The political landscape

Fintech might seem far removed from the world of politics. The former is unlocking financial autonomy for everyone and building a frictionless cross-border future. The latter often causes divisions and is deemed as antiquated. However, no matter how disruptive and popular Fintech might be, it operates within the confines of political decisions. As such, knowing the course of politics is as important for financial leaders as it is for them to be aware of their own markets.

With a general election looming in the UK which will decide the next five years of political leadership, acknowledgement of political opinions upon Fintech becomes even more important for the likes of CFOs. Yet despite recent polls suggesting that the nation is clear on how it will vote – Labour (43%), Conservatives (24%), Liberal Democrats (10%) - the same can’t be said amongst financial professionals about which party will best invest in the future of Fintech in the UK.  

Considering that these two opinion polls are at odds with one another from the perspective of financial leaders, it therefore appears that they will have to take a deeper interest in the policies of parties which are not their personal choice. That is if they wish to be informed enough to prepare their companies for the next five years of new laws.

There is however some similarity between politics and Fintech – they are both unpredictable. As a result, although knowing current political views puts financial leaders in good stead for predicting what new laws relating to finance and tech could arise, there is no saying that opinions won’t change in Parliament or that new technologies could come along.

Nevertheless, due to the rapid rise of AI and frequent calls for it to be regulated, the next government will almost inevitably be responsible for creating landmark legislation relating to it and similar digital technologies. Given the importance of these developments to the financial sector, investing in it in a way that does not align with future policies will be extremely costly for any CFO and their company. Ultimately, although data-handling, reporting, audits etc. are all typically associated with the world of finance, they are of equal importance to politicians and wider society, and as such are extremely susceptible to change. As a result, financial leaders should adopt software that can adapt to change in these areas rather than one which aligns with today’s political views.

Key takeaways

• Politics and fintech are intwined to one another but are equally unpredictable
• Fintech is less likely to be able to influence politics but laws and regulations will always influence fintech
• Solutions designed to futureproof fintech firms should be flexible due to how significantly political influences can disrupt their operations

Accelerate forwards with clarity

Despite many believing that money is what drives the majority of decisions, the financial sector is in fact influenced by an infinite amount of variables. Those discussed in this report - digital acceleration, AI, and politics - can be described as unpredictable and catalysts for making change take place at an ever-increasing pace. Financial leaders therefore face a future that is predictably unpredictable.

Speed of agility, flexibility, and the ability to innovate safely in a way that keeps their companies both competitive and compliant with regulations are therefore crucial both now - in the dawn of AI - and for many years to come. Whilst these demands can sound overwhelming during a time of political change, supply chain problems, and the prospect of new technology replacing traditional finance roles, moving with the times is the best and only way for finance operations move ahead.

To accelerate in tandem with the changes affecting the financial landscape, book your Aurum demo today. Scale, adapt and build a platform for continuous innovation, together with aurum.soltuions.