Leveraging FinTech Software for Value Creation
Empowering your Business with FinTech Technologies
FINTECH is gathering momentum globally with countries competing heavily to be the FinTech center of choice. Applying these technologies to both FinTech and non FinTech businesses is a game changer and allows for unprecedented value creation as well as efficiency gains.
Corporates only spend 13% to 16% of their finance function time on management activities. This is according to recent research in the US published by CFO.com with the typical average cost of the finance function being in the range of 0.57% to 2.13% of revenue CFO.com with wide ranges seen within the same industry. Leveraging technology for finance gives opportunity to increase profit but the biggest opportunities for value creation will be in your core processes where you can leverage these newer technologies that are already in FinTech, for potentially bigger impacts to the bottom line.
Technologically Constrained seems a better description based on the above research of where most businesses are today as they manage their processes “as is” without being able to drive home process improvements. Where is the issue? Simply put we can get data into the system but reporting out @anywhere is typically an issue, as specific related data often needs to come from multiple sub systems.
Spreadsheets are therefore often utilized for businesses undertaking decision support, control and management activities and knowledge of how they work often leaves with staff changes. Removing spreadsheets requires the ability to undertake complex and sequentially dependent rolling calculations to perform a data mash, for example within project codes and across sub systems, to give a one page view of reality.
Lack of Compute Power capability and calculation flexibility to achieve this makes reporting and data transformations painstakingly slow, hence the surprising amount of time spent on transaction processing. This is due to the fact that complex processes, until recently, could not easily be run as a single task due to these interrelated dependencies.
Widening Technology Gaps are becoming more apparent all the time to some but not all, and leading consulting firms therefore advise their customers to perform more trial and error implementations, in selected processes, to leverage and understand how these underlying improvements, from the more nimble and smaller vendors, might help them improve.
Cloud is also often held up as a panacea for all process issues but if you put the same software, as you have now, on to the cloud you will end up with the same business flow constraints.
The reason for this is that the issue is not just within the applications but more in the required glue to run processes or bring information together from across different systems. You will however gain some deployment benefits in terms of hardware savings and potentially better access to organize corporate data.
Cloud can be a major game changer for businesses allowing them to leverage the evolving technologies and architectures of online, offline, centralized and decentralized processing to transform business processes. These technologies do not exist in the legacy vendors and cannot easily be achieved simply by moving current systems to the cloud. Technological Advances are therefore enabling a step change, and perhaps are being seen in FinTech first due to them having no legacy systems.
So let’s explore a little further as to how technologies are helping individuals within corporates:-
End User Defined Processes can now be created by them “end to end” and can be deployed at transaction level from 1) data collection such as smart forms or data feeds, for both structured and unstructured data, 2) through all process flow transformations to 3) reporting with visualizations including actionable contextual alerts @anywhere and business simulations. These can be achieved, even for the most complex processes or tasks, against “One Button” to get all relevant information on to “One Page” with any required segregation of duty. As process coding is smaller in scope, designs are quicker to build, deploy and maintain.
BIG DATA handling means that process times are significantly reduced for typical data handling tasks and that makes a big difference throughout the process especially as any (re)-runs are repeatable and auditable. Processes are platform based meaning that security, user controls etc. can be integrated as required into the system as well as appropriate segregation of duty. Time savings from not having to wait for processes to end, make a big difference to an organisation’s productivity and any process that can be collaborated on in slow motion enables continual improvement to take place.
Full Automation with no buttons using the new flexible architectures described above means that you can start to build a picture of the automated enterprise where human interactions take place as needed and without, unless required, the need for human intervention.
Smart Zero Footprint Web Forms that render based on the underlying business needs is a game changer as the forms render based on current business conditions meaning that only relevant process content is presented. Forms and processes can also be changed instantly to make the company agile and nimble.
Virtual Assistants or Robots can in fact help at every stage of the process and can add significant value by being able to perform reviews automatically and to raise contextual alerts and/or workflows.
There alerts and workflows are based on the underlying information at any stage of a process with data rankings. This means that files not received in the data collection process can be chased or if received with errors can be rejected. Their uses are far reaching and might extend to oversight for overseas operations or to give you granular insights into people at risk of leaving ie fully occupied consultants who have taken no holiday. Virtual Fingers can highlight, for the process owner, areas that need attention by placing on-screen messages which do not appear on any printed reports.
Business Simulation capability to fine tune processes and flows requires a lot of compute power that in the past was only available at higher price points. Being able to run these and have scenarios ranked on-the-fly allows new business models to be explored and changed more easily. For example it might be that a corporate wants to stimulate sales by changing the compensation scheme on-the-fly and wants to understand the financial impacts of each move or look at product mix to drive cash flow.
So at a high level what are these technological advances that are enabling such deep change :-
Software has until relatively recently lagged hardware and mobile operating system developments due to delays in writing software to leverage the newer technologies. It has taken software houses some time to get themselves in a position to best understand how to write the software to leverage the new architectures, train staff and most importantly how to introduce it into product ranges with the least disruption. Software solutions today, as a generic statement, need to be 64 bit to be able to support operational deployments that leverage latest processors. This is why older systems do not support this capability, as the effort can be very large, time consuming, and therefore expensive. If not converted then achieving the flows described above will not be possible.
Evolving Technologies such as Compression of Data and Programs, NOSQL Databases and Cloudburst advances are other very meaningful changes that facilitate ultrafast processing. Cloudburst capability will not be used by all but gives additional secure capabilities within a process by keeping all data in-house, and only when necessary, to automatically leverage external compute processes (not storage) on public cloud like Amazon Web Services, Microsoft Azure, Aliyun or IBM SoftLayer etc allowing companies to right size in-house hardware for all but very compute intensive processes.
Change Management from Applications to Agile Processes will be a significant and incremental enabler towards the real time enterprise and this combined with other software changes frees up hardware resources for business simulations and continual monitoring which in turn facilitates reduced time on process and more time on management. Anecdotally it might make existing applications the new middleware or data repository.
In fact “Gartner predicts that by 2020, 75 percent of application purchases supporting digital business will be “build,” not “buy.”
Real Time Organisations do not currently excite most CFO’s as they feel that goal is not attainable across the business but they do understand the benefits that specifically prioritised real time complex processes or tasks can give in reducing transactional processing time. Examples of complex processes at a macro level include consolidation, budgeting, closing, cash management, reconciliations and at a micro level include calculation of commissions, project management, contract management, loan management, inventory valuations, liability management, supplier rebates, to name but a few.
Big Data Analytics are also evolving to help the CFO validate enterprise business streams, examples being from the likes of Facebook Analytics & Insights and Google Analytics.
FinTech Companies have shown how latest technologies can be used to support disruptive ideas and get business systems to enable value creation. If asked “do you work for your system or does your system work for you?”, FinTech enabled companies will probably give a different answer compared with most companies today, but these technologies are now here to be leveraged by all and can create exceptional value and reduce that 50% of time on transactional processing. A game changer.
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