It is no secret that the COVID-19 pandemic has accelerated the speed of change in the financial sector. Now, when finance business leaders try to, rather ambitiously, predict the financial landscape in 2030, their eyes light up with a lot of optimism.
According to McKinsey, they have already cut down their costs by 29% over the previous decade. Greater efficiency and higher levels of innovation come next. The next decade in finance, therefore, will be made possible via a quartet of imperatives:
- Taking finance beyond regular transactional activities
- Making data central to their operations
- Alleviating decision-making with the help of insights and data
- Transforming the finance operating model
Many famous financial personalities have voiced how customers have begun to demand seamless and personalized services, especially via digital. Well, in 2030, that will not be just demand but an expectation. Data will be the most important currency in the financial landscape, and leaders who want to stand out must prioritize cost reduction and value creation.
Ultimately, it stands to reason that only those financial leaders in India and abroad who can embrace a cutting-edge finance function in the coming years will flourish. Let us find out how they can achieve the same.
On the road to efficiency
Come to think of it, most admired business leaders know that efficiency gains are the way forward for the finance function in this decade.
In that regard, finance business leaders have set a path of differentiation to finance in 2030. Research suggests that such leaders devote more time to a series of value-added activities at their organization. They encourage their teams to focus on financial planning and analysis, risk management, treasury, policy-making, etc. Doing so is a sure-shot way to future-proof themselves for 2030 and beyond and elevate their financial capabilities even further.
2030: A Brave New World for Finance
So, what do famous financial personalities and the best business icons in India need to do to ensure a stellar future by 2030? The most important step is shifting their gaze to speed up decision-making, reduce human errors, mine real-time insights, and streamline workflows.
This involves the following essentials:
- Move beyond core finance functions
The finance function in 2030 will likely be built based on improvements in its strategic aspects. In this regard, financial leaders cannot ignore core finance functions. They must consider expanding their role to oversee the implementation of automated analytical processes and create a more technologically-skilled workforce. Thus, financial leaders in India and abroad must:
- Become effective communicators to translate how financial performance can spearhead overall business growth in all spheres
- Pilot more advanced technologies beyond RPA, such as AI and machine learning, to identify relevant use cases and areas where they can provide strategic advantage
- The finance team should invest more time in business analysis and future forecasting models to boost business performance
- Invest in continuous capacity building of employees in spheres of technology and leadership
V Kumaraswamy, the CFO and IT Head of JP Paper Limited, was quoted in an interview: “He (CFO) has to be at the forefront of communications, and of course, he has to be IT savvy. Savvy, and not just conversant with the current what is happening, but reading a little into the future as to what will happen, how one can build sustainable competitive advantage, and cost competitiveness for future-ready organizations.”
- Make high-quality data management central to business transformation
Famous financial personalities have regularly mentioned mastery of ‘data management as the key to unlocking future finance. With exponential data growth not stopping anytime soon, finance business leaders must focus on consolidating, simplifying, and controlling data to support the business. This will be achieved by 2030 via:
- Instilling top-notch data governance and data operating models for higher quality and consistency
- Purging and cleaning data via advanced machine learning and other processes right at the point of entry
- Aligning all business departments to uniform data standards and via an agile, tech-enabled data backbone
- Champion agile decision-making through analytics and skill
As finance business functions become more equipped in data analysis practices, improving these said functions will drive higher quality decision-making – an imperative for all finance departments. By 2030, financial leaders can achieve this through:
- Generating clearer, faster, richer insights for greater transparency, quicker decision-making, and fortifying capabilities against black swan events
- Upskilling finance professionals in data mining and visualization
- Hiring more experienced and high-quality senior finance professionals can utilize analytical insights to produce better business outcomes
The example of Bajaj Finserv, led ably by its Chairman and Managing Director, Sanjiv Bajaj – one of India’s most admired business leaders – comes to mind. Over the last few years, Bajaj Finserv has implemented data, technology, and analytics processes as business-as-usual practices. Analytical models across new customer acquisition, cross-sell, propensity management, risk management, collections management and customer service have enabled the company to become more agile and customer-centric. In contrast, OCR and AI/ML capabilities have expanded statistical risk management models and data refinement.
- Bolster the finance operating model
Finally, by 2030, we can see a more agile and much different finance function, a leaner core, greater technological capabilities, and much more nuanced financial professionals and job roles. To achieve so, finance business leaders must focus on:
- Creating flat networks of teams instead of hierarchies so that different business functions can utilize a shared pool of analysts for priority-based requirements
- Creating cross-functional work opportunities to build a talented pool of all-round finance professionals
- Incentivizing upskilling and making knowledge sharing and development a key part of every finance professional’s KPIs
- Developing a core of agile working principles
Final Words
The above-mentioned imperatives provide a strong clue as to how finance business leaders can guide the future-proofing of their finance function by 2030.
In that aspect, they will have to:
- Develop the capability to foresee trends that will drive value addition
- Identify the right technologies and skillsets to expand their capabilities, and
- Move beyond just core financial skills to support critical decision-making and business performance improvement
Doing so will help them speed up the transformation rate and emerge future-ready in a decade that will be pivotal for finance – both for leaders and the world at large.