2019 Fintech & Financing Conference and Expo: FEARLESS, April 3-4, Toronto Canada

A Tech CFO on Three Disruptive Technologies Transforming Finance

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CFO Innovation | by Eric Cheung, Unit4 Asia Pacific | March 15, 2018

The world as we know it is changing. Rapid technological advancements are altering industries and creating new market opportunities. As the business world accelerates towards what arguably is looking like an everything-as-a-service (XaaS) economy, the next few years will be pivotal for finance departments in making the transformations necessary to update their service offerings and deliver service excellence.

Several trends are converging over the next few years that could set the stage for a service-economy shift that will keep CFOs more than ever in the driving seat. This year, 2018, may turn out to be an important turning point for the finance function as three disruptive technologies begin to be widely adopted – as the finance function of Unit4 Asia Pacific, which I lead as CFO, is finding out.

In the finance function, we are developing blockchain-enabled distributed ledgers that we plan to link to our Unit4 Financials single-ledger system in 2018

Blockchain and Self-Driving Finance

As the foundation of cryptocurrencies, blockchain has already played a vital role in next-generation finance tools. It is also gaining traction in a wide range of industries across Asia Pacific. In markets as diverse as Australia, Thailand, and Singapore, there is a strong acceptance of the technology not just in financial services, but across the entire supply chain, from food provenance to logistics.

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Technology industry research organization IDC estimates that spending in Asia on developing blockchain applications – customizing the technology for business solutions such as payments, trade finance, regulatory compliance, and supply chain management – will almost double to US$281.69 million in 2018, from US$148.76 million in 2017.

There is another aspect of blockchain that could prove to be even more influential. As a technology that optimizes efficiency and accuracy of any transaction, blockchain applications can underpin the growth of self-driving finance – if these could be connected to the organization’s internal ledger.

The need for standardization, trust, and compliance are issues that have plagued auditing and financial record-keeping. The simple act of having to manually manage a database enables the entire universe of accounting errors, malfeasance and compliance headaches. Those problems are amplified when the ledger is shared among multiple partners.

By collecting data in distributed ledgers, and feeding that into a corporate single ledger finance system in real-time, reconciliation suddenly becomes a constant, innate operational function that requires no additional effort. This is what we hope to do in Unit4. In the finance function, we are developing blockchain-enabled distributed ledgers that we plan to link to our Unit4 Financials single-ledger system in 2018.

Unified Ledger Integration

A corollary to the adoption of blockchain is the integration of unified ledgers with the performance management system. What this means is the realization of the "single version of the truth" that the C-suite has long sought in data consolidation initiatives. This would quite literally deliver 24/7 real-time intelligence to the boardroom.

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Management consultancy Accenture estimates that, by replacing fragmented financial databases based on transaction processing with a unified ledger system, companies can reduce 50 percent of costs in business operational compliance and up to 70 percent of costs associated with financial reporting.

In turn, streamlined processes with lower error rates and the vast amount of data available will enhance the accuracy of forecasting and decision-making assisted by Artificial Intelligence (AI). And CFOs will be able to access both period reporting data and real-time reporting with no need for the traditional monthly close.

Unit4 recently released a new version of its single, unified ledger financial management solution in the US, and is looking to roll it out in the Asia-Pacific region over the next few years. This version will give companies the ability to store real-time, unlimited, and separately analyzable data against any transaction generated by any business application.

The result will be a real-time intelligence for driving future performance across the whole organization, as well as ensuring compliance within statutory and management reports. This also means that I, as CFO, can perform better data analysis and calculate more complex KPIs than previously, and do so directly from the finance dashboard.

I believe that deeper insights, faster turnarounds and the release of more operating capital for investment are just the beginning of this new paradigm.

Enterprise chatbots and digital assistants can be seamlessly integrated with services like Office365 to support natural language queries and cognitive services – and even capture data like travel expenses and billable times as they occur

Artificial Intelligence in Expense Management

AI and the closely related technology of machine learning have evolved to the point where they are becoming indispensable additions to the finance toolkit. Automated processes are much easier to update than are human brains in response to variable financial rules and changing governmental regulations. This has proven especially true for enterprises with independent or contract mobile workers who must adhere to local laws and financial-reporting guidelines.

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Artificial intelligence programs can now instantly handle the company's accounting consolidation, arbitrage and legal compliance needs. Invoices can be generated more rapidly and accurately as remote workers enter their data directly into the time management system.

Enterprise chatbots and digital assistants, such as Unit4 Wanda, can be seamlessly integrated with services like Office365, and Microsoft Azure’s LUIS (Language Understanding Intelligent Service) to support natural language queries and cognitive services – and even capture data like travel expenses and billable times as they occur.

The emergence of Wanda has transformed and assisted with many of the core functions within Unit4’s finance office. We find that Wanda comes into its own in relation to programmable processes like accounting and backward-looking disclosure.

The technology can autonomously replace human cognitive functions by analyzing massive amounts of relevant data very quickly in a way that we as humans can’t. This is very useful in cases where Unit4’s end goal is well-defined and outcomes can be predicted.

The Future of the CFO Function

I believe that these three technologies – blockchain, unified ledger integration and AI – indicate that a dramatic restructuring of the financial landscape lies in the year ahead. They are coalescing to simplify predictive technologies and apply them to integrated business planning, from strategy to business to budgets – and open up an entirely new opportunity for the finance professionals to get involved in the strategic decision support.

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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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