How Does Financial Services Outsourcing Drive Digital Transformation?

Introduction

Digital transformation in finance is picking up pace. Finance’s evolution from being just an F&A function to a key driver of business success that harnesses the power of financial data to fuel strategic business growth has CFOs looking at the digitalisation of key processes. Simply put, they want to optimise the length and breadth of finance by harnessing the power of technology.

However, there is a problem. A mammoth 80% of CFOs and finance professionals are concerned about the rapid rate of digitisation. While CFOs must embrace digital transformation to improve process efficiency and productivity, they are still sceptical about maximising digitalisation ROI.

What Stops CFOs From Realising Digital Finance Transformation and its True Potential?

When it comes to finance transformation, risk, experimentation, and learning curve are associated with modifying or updating existing finance processes. For some time, such changes have the potential to impact business performance until it starts delivering value. Stakeholders might not be comfortable with the ROI lag. We are seeing a misalignment between finance teams who are enthusiastic about technology but might not have enough knowledge and IT teams who have the knowledge but do not offer timely and relevant advice with respect to tech deployment. This scenario is brought to light by a Workday survey on CFO-CIO partnership conducted across the UK and Ireland:

49% of organisations have executed a digital finance strategy
But, only 34% of organisations say IT helps them identify the right technology

This results in a scenario in which CFOs might not be aware of or confident in technology deployments, which prevents them from investing in them or incurring high technical debt because of ineffective or limiting technology deployments. The cost burden on CFOs is immense. Besides the cost of expensive finance and accounting talent, CFOs are battling increasing costs of meeting regulatory and compliance agendas. Such costs eat into the finance budgets, leaving little or no room for technology investments
that can fuel finance transformation.

There is also a shortage of skilled talent that can leverage accounting technology to meet their KPIs. The accounting industry is suffering from a shortage of qualified talent, which means finding people with the right tech skill sets can pose a challenge and result in low-tech ROI. Technology evolves rapidly, and any tech deployment that looks cutting-edge today might look outdated tomorrow. CFOs need to stay on top of the latest developments in finance tech to update legacy systems. This presents a challenge as key stakeholders don’t want to leave the comfort of the existing technology framework or want to make continuing investments in technology upgrades.

A Move to Finance and Accounting Business Process Outsourcing

CFOs who realise the importance of accelerating digital finance transformation but want to control costs without compromising on tech-led benefits can consider finance and accounting outsourcing as a progressive solution. But before leveraging outsourcing, they must think about the following factors:

Whether the financial services outsourcing provider can help standardise and streamline existing financial and operating processes. The provider should have the capability to identify technology gaps within the existing tech stack and be able to add software to the tech stack seamlessly to plug these gaps. Outsourcing should help CFOs and the F&A function benefit from the automation of time-consuming, non-strategic, or repetitive tasks.

The services component should include not only technology but also personnel that can harness the technology capabilities of the updated tech stack. The key deliverable of working with a third party to drive digital transformation efforts in the finance department is to enable a robust, risk-free financial environment configured for better productivity, scalability, accuracy, speed, and reliability.

What does Financial Services Outsourcing Offer?

Labour arbitrage is the most significant benefit of outsourcing. However, outsourcing should be looked at strategically. While quick and long-term scalability backed by a team of highly skilled accountants is a key deliverable, this process should also bring new efficiencies and reinvigorate the existing finance process.

A finance and accounting business process outsourcing provider helps you manage multiple finance technology products deployed across the finance ecosystem. They can build and deploy tailor-made technology and automation solutions and also help optimise the use of current systems.

An experienced outsourcing provider with robust and future-ready digital finance transformation capabilities can help you build and execute an outcomes-focused transformation vision from scratch. CFOs struggling to prioritise and line up transformation initiatives can benefit from a comprehensive roadmap that conveys tangible transformation value propositions to get complete buy-in from decision-makers. The finance and accounting outsourcing company will first conduct a tech audit to assess the current state of finance capability and identify technology gaps that can enhance output and help build a future-proof technology framework backed by the latest technologies like AI/ML.

QX is a tech-led vision enabler whose core focus is accelerating the digital transformation journey helmed by forward-looking CFOs. Our expert team of tech professionals can build customer software that achieves focused optimisation of current systems through integration and facilitates migration to newer and more advanced systems.

FAQs

What is the role of the CFO in digital transformation?

CFOs are the key drivers of digital transformation not just in the finance department but across the business. They can calculate the pound-for-pound ROI of technology transformation and make a positive case for investing in digital initiatives in front of naysayers. More importantly, they realise the emergence of F&A as a strategic function whose potential can only be maximised by harnessing cutting-edge technology. Their position in the organisation hierarchy means people will listen when they make a case for a digitalisation push.

What is F&A outsourcing?

F&A or finance and accounting outsourcing involves outsourcing financial tasks to a third party with a successful track record of managing F&A functions for diverse businesses, irrespective of size or scope. However, their expertise is not limited to F&A tasks alone. It also includes driving digital transformation initiatives for companies that want to automate their accounting framework or help implement innovative tech solutions to improve the F&A process.

What is the impact of outsourcing on financial performance?

Financial services outsourcing can make your internal F&A process more efficient and productive by strengthening and scaling it with a skilled team of accounting professionals and advanced tech deployment. This translates into improved financial performance in the short and long term.

Originally published May 23, 2024 03:05:06, updated Jun 18 2024

Topics: Finance and Accounting Outsourcing Services, Finance and Accounting Transformation