CFOpinion: Digital Transformation of Finance Series – John Lynch, EY Ireland

August 3, 2021April 19, 2023

In the fourth interview of our Digital Transformation of Finance series, EY Ireland Finance Project Director, John Lynch talks about how organisations are aiming for touchless processing of transactional activities to achieve efficiency gains within their finance function and much more.

1. How is the role of the CFO evolving?

We’re living in an environment of multiple disruptions: technological, societal, geopolitical, environmental, monetary and experiential changing the way we do business and run Finance.

New businesses are emerging while many are growing organically or through Mergers and Acquisition (M&A).

CFOs and Finance Leads should look to reframe Finance for this new hyperconnected reality. A move to a more strategic, digital, efficient, and scalable Finance is now inevitable.

2. Finance has traditionally been viewed as a back-end function in the past. Do you see it having more of a strategic role in the organisation going forward, with more input into areas like product development?

Absolutely, CFOs and Finance functions are actively wanting to move away from the image of being the machinery to produce regulatory and required accounting reports after having been dominated by regulatory topics during the last decade.

High-performing finance functions have defined, clear visions to guide everything they do. That vision is reflected in the way they design processes, evaluate and select technology and structure their organizations. As a first step, it’s crucially important to re-assess the core services finance provides.

Value-added services such as providing information will address the needs of the business more effectively than organizing around constrained, transactional processes, as was common in the past. Finance is now moving towards that business partner role where they will provide insight to drive strategy and operations, challenge decision making in a positive way and enhance the control environment.

3. When it comes to digital transformation, do you feel that the finance function is slower to adapt compared to other business departments?

I don’t believe that to be the case, the modern finance trends/challenges are:

Increase how finance works cross-functionally as part of an extended ecosystem to enable new business models and value creation.
Improve data and analytics capabilities to transform forecasting, risk management and understanding of value drivers.
Reduce finance function costs through new technologies, automation and acting as overall custodian of cash and profit.
The finance function will need to consider its operating model before it can take advantage of digital transformation.

The operating model is a framework that needs to be designed, built and optimized in order to manage, resource, execute, and monitor all aspects of the business.

4. What do you see as the typical barriers to digital transformation in the finance function?

Organisations should have a clear and targeted technology strategy and roadmap that is joined up across the enterprise. Typically, CFOs work with the CIO on a unified cloud strategy and architecture to boost digital capabilities, drive data integration and foster innovation.

Often a clear strategy for deploying technology to the greatest effect is missing. This leads often to suboptimal design decisions, integration issues, a lack of proper prioritization, unrealistic implementation timelines and payback cycles.

Significant progress has been achieved in deploying standard software for the finance function a global scale.

In addition, the availability of the right resources to engage and drive the transformation, and the complexity of existing systems increase the challenge.

5. There have been many changes in finance in recent years. What do you consider to have been the biggest catalyst for transformation in the Finance function?

Adding value and cost reduction have been the main drivers.

Many organisations have executed finance automation programs. Most initiatives are still lacking to meet the original business case due to missing end-to-end integration and automation e.g completely integrating payments into the procure-to-pay process. However, certain success has been achieved with point automation solutions.

Organisations are aiming for touchless processing of transactional activities to achieve efficiency gains within their finance function, e.g. processing of incoming statements. A best-of-breed technology is often used to support those process optimizations (e.g. RPA, AI / ML, OCR).

Organisations also aim for reporting processes leveraging real-time data analytics supported by the latest technologies incl. real-time consolidation and advanced analytics.

6. What impact, if any, do you think AI will have on the finance function?

AI will have a significant impact on organisations. There will be a migration away from manual transaction processing to more value-add activities such as managing exceptions and providing insight to the organization. Manual processes will be automated, and manual hand-off points are managed through workflow solutions. Seamless integration of workflow and intelligent automation solutions to support this will be available.

7. What technologies do you think will offer the biggest opportunity to the accounts payable/receivable functions?

Fully integrated processes enabled with AI, ML and RPA coupled with secure authenticated supplier self-service where query activity will be devolved back to the source.

8. As businesses are going global, how do you think technology could help to foster better relations between organisations and their international suppliers?

Cloud SaaS ERP solutions enable organisations to gain better visibility over their international suppliers. These solutions also have country-specific localisations which adhere to local tax and reporting standards. In the payments space, there are also capabilities where real-time tracking of supplier payments is possible giving suppliers greater visibility of payments.

9. According to the banking association UK Finance, a total of £207.8m was lost to bank transfer fraud alone in the UK in first half of 2020. What role will technology play in the battle against financial fraud?

Firstly, it is vital that the correct policies, procedures and data governance is in place and master data needs to be managed centrally on a single platform.

Organizations need to engage in continuous improvement programmes and processes need to be established.

Root cause analysis and continuous improvement initiatives should be common practice, ML/AI/process mining-based preventive analytics can be established which will enable transparent real-time incident and resolution reporting.

View previous interviews in the CFOpinion series:

CFOpinion explores the thoughts of CFOs and finance leaders on the topic of digital transformation of finance. Each week a CFO will offer their thoughts on matters like security, the role of AI in finance and how the finance function compares to other departments when it comes to digital transformation.

Fexco International Payments provides automated solutions for international payments and receivables. We remove the friction in cross-border payments, giving your businesses more time to concentrate on strategy and success. You can talk to us on IRELAND 1800 246 800 or email us at fcpsupport@fexco.com.