Artificial intelligence. Blockchain. Robotic process automation. Read any article about the future of finance these days and you are likely to come across all of these technological terms – plus many more besides.
Setting aside the differences between individual technologies, the overriding implication of these articles is this: the finance function of the future will be far more automated than it is today – perhaps to the extent that it doesn’t even have any real finance professionals in it, not even the CFO.
The fact that the finance function is set to become much more automated is beyond doubt – although how quickly this will happen is not clear given that spreadsheets are still the tool of choice for many finance functions.
Nearly three-quarters (72%) of medium and large businesses in the UK still use spreadsheets for budgeting and/or forecasting purposes, according to YouGov (even though poor spreadsheets have caused 17% of large businesses to suffer financial loss).
Still, despite the prevailing fondness for spreadsheets, there is nothing to say that we won’t have some kind of finance ‘Big Bang’ sooner rather than later. All we need is a few pioneering CEOs with ambitious ‘finance transformation strategies’ that aim to enhance operational effectiveness and boost shareholder returns by dramatically improving the efficiency of the finance function.
The next thing we’ll know is that all the bog-standard processes will be automated – expenses, invoices, month-end reporting – and robotic software will be responsible for producing the annual accounts. Finance, meanwhile, will need to completely reinvent itself as the data interrogation department.
OK, so that makes finance sound like a 21st-century, high-tech version of the Spanish Inquisition. Maybe I should say ‘the data analysis department’. The overriding consensus seems to be that the finance professionals of the future will be accomplished data analysts who are able to instruct software on which queries to run, make sense of the reams of data that our state-of-the-systems will spit out and investigate anomalies – all with the purpose of giving their organisations a crucial competitive edge. In that respect, they will be the frontline troops in the next world war – the Data War.
The good news, then, is that finance professionals will still have a job – even if they have had to rebrand themselves and reskill themselves. So what about the CFO? Will he/she still have a job or can they expect to relinquish their seat at the board table to the Chief Information Officer (CIO)?
The outlook for the CFO
With all the talk that is flying around about what data will mean to the finance function of the future, it is easy to forget the fact that finance has always been about data. The data produced by finance teams – even if it is on unwieldy, unreliable spreadsheets – has long been used to inform business decisions and strategy and to provide crucial insight into the health of an organisation. All that has changed is that we can expect to see a lot more data in future and we will be able to do more with it.
So data actually fits as comfortably into the remit of the CFO as the CIO. But I think there is another important reason why data will help to preserve the CFO’s role at the board table – ethics. CFOs – or at least those who trained as chartered accountants – have usually had a solid grounding in ethics as part of their training. It is also the CFO who tends to be seen as the ‘ethical’ face of the company by outside stakeholders – the person whose word is taken as gold by analysts, investors and shareholders. We almost expect the CEO to be a little economical with the truth – they are the exuberant ‘salesperson’ for the company, after all – but we want the CFO to be the sensible person who we can trust to do the right thing.
In a world where we are giving away more and more about ourselves than ever before, we need to trust that the organisations we give our data to use it in an appropriate way. Sure, there are plenty of rules about data protection, but this is not just about disclosing our information to third parties. This is about how we are marketed and sold to, which products and services we are exposed to, and how information that we willingly – but perhaps unwittingly – disclose about ourselves can be packaged up and used by the organisations we do business with.
Recently, I attended a presentation on how the Facebook advertising service works and it made me very aware of how much information about myself I willingly give to Facebook, information that advertisers can use to target me with their products. Now, it could be argued that they are providing a helpful service by targeting me with products that I’m interested in.
But what if one day an organisation uses information that I’ve provided to target me in a way that I don’t find helpful at all – what if I find it a nuisance, upsetting or even sinister? We are only just starting to realise the huge possibilities of data. Given the sensitivity around financial information, in particular, I think the ethics of the CFO will be a crucial component of boardroom governance in the years to come.
Data is not the only reason why we still need the CFO. Long-regarded as the right-hand man or woman to the CEO, they are the person that the CEO will typically bounce ideas off. The best CFOs are prized for their discretion and fine sense of judgement. That judgement will become even more critical in future –for example, when systems come up with data in support of a business decision that seems perfectly logical on the surface but management fears somehow isn’t quite right. Then we will really need the CFO.
Of course, it is entirely possible that we may one day end up with a world where none of us has a job and where computers end up doing all our work for us and taking all the difficult decisions (hurray, I hear you say!) In that case, there may be no CFOs, but there will be no other job roles either. Personally I hope that day never comes – not just because I think work brings a sense of purpose and fulfilment to many people’s lives – but also because human nature being what it is, there will always be someone, somewhere who is in charge of the robots. If that person doesn’t operate under the watchful eye of the CFO, we should be afraid – very afraid.