If one wished to forecast how the corporate finance function will evolve in 2019, what might that look like? Here is our view.
At most companies today, finance operates in a typical pyramidal hierarchy, with a thin layer of leadership at the top, a middle-management layer, and at the bottom a “finance factory” — essentially a data processing unit.
However, because technologies such as robotic process automation (RPA) are increasingly occupying that bottom layer of the pyramid, we see finance organizations shifting into something more closely resembling a diamond-shaped structure.
As 2019 progresses and gives way to 2020, there will be fewer processing-oriented roles and a larger middle layer where more insight-oriented activities will take place.
For finance professionals, the new model will focus less on accounting skills and more on data analysis, financial modeling, and communications expertise.
Simon Bittlestone
That will result in a much more dynamic workforce, with analysis, interpretive skills, and data-driven insights providing it with a much deeper sense of its value. This shift, which will enable finance to play a bigger role in guiding performance and strategy across the enterprise, will project well into the future of the finance role.
Of course, we’ve seen this before: When technology disrupts a business model, it tends to create new roles that require a higher skill base. In finance specifically, we believe RPA and artificial intelligence may be capable of creating many more jobs than they’ll displace.
The coming year will feature more movement toward these new, high-value positions. We see the trend as a massive opportunity for finance workers to move from data processing and number crunching to more adaptive, thoughtful roles.
In our research focused on millennials in finance functions, we found that, while 61% of them believe accounting skills are important, 68% believe technology-based skills are progressively more important, and that analytics will play an ever-growing role.
In addition to RPA and AI, other oncoming technology trends will also act to push the detailed understanding of accounting to a secondary level of relevance for the finance function. These include real-time audit capability, blockchain capabilities, and synchronized accounts.
Put another way, masses of readily available data, intelligent application programming interfaces, and the application of AI will collectively supersede human accounting capabilities.
To be sure, that’s a scary prospect for some finance professionals. At the same time, it stands to pre-empt the sorts of human errors that have caused significant financial losses for companies or resulted in accounting scandals.
Finance as a Temporary Career
The concept of corporate finance as a lifelong career is growing markedly less relevant to the millennials we surveyed, and surely we will see that further take shape in 2019. Overall, they see finance as a key stepping stone in their career to provide them with a rounded set of business skills.
One in three said they aspire to become a CFO — but that means almost 70% have other career goals. A quarter of them want to get out of finance altogether; many want to start their own business.
Still, many of them see the factors that are causing fundamental change in the way finance works as an opportunity to quickly move beyond support roles to strategy-focused jobs.
Some attitudes vary significantly by gender. The millennial men we interviewed were more likely than women to see a CFO job as their ultimate aim (42% vs. 24%), while women were twice as likely to be uncertain about their future goals (26% against 13%).
However, almost half of both genders (49% of women, 45% of men) saw their future either going it alone or moving outside finance.
These trends will not affect only one generation. Decisions are still being made by the older generations in power, whose members are far less tech-savvy. They will have to adapt.
The people who will suffer most will probably be the classically trained accountants. Simply put, they will have a harder time understanding the power of data.
How Will the Big Accounting Firms Respond?
That big changes are unfolding will be underscored by the reactions of the Big Four accounting firms. They’re all looking at this new model in a fundamental way, because they are at the top of a professional services business that is caught in the eye of a perfect storm.
How will technology affect them in 2019? Might they start lowering the cost of their auditing services, with technology increasingly doing more of the work? Maybe, but the thought that comes more readily to mind is that with technology carrying out the process activities, they will shift their business mix by providing more advisory and strategic services.
In the coming year, I suspect we will see the Big Four firms looking to take greater advantage of real-time data feeds, AI, and blockchain technologies.
Conclusion
Should the finance function be overly worried about its future? Not if it grabs hold of the large range of new opportunities that technologies are creating.
We see the finance function already evolving into higher, value-add roles and a different structure that balances technology with human skills. This promises to create more value-add for finance and interesting roles for finance professionals.
Simon Bittlestone is CEO of Metapraxis, a financial analytics technology business based in New York and London.
