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How Tech Can Help Uncover The Story Behind Financial Data

For a chief financial officer (CFO), having technology — from ERP systems to cloud accounting and cash forecasting tools — has become paramount when deploying a successful growth strategy. But come reporting time, many of these solutions still aren’t replacing spreadsheets and can’t capture key information behind the data, according to Wouter Born, chief technology officer of software firm CXO Solutions.

Born, who spoke with PYMNTS about what’s missing in today’s array of business intelligence tools, noted that despite the field having adopted sophisticated technologies like data analytics and artificial intelligence (AI), there is often a human element missing from the reporting process.

“Companies still rely too much on Excel for reporting,” Born explained. “They invest heavily in corporate performance management solutions to consolidate their financials and corporate plans, but still send out Excel sheets and PowerPoint slides to senior management and other stakeholders.”

Not only does this take significant amounts of time, he noted, but it is also prone to error. Further, these platforms do not offer the opportunity to take advantage of more sophisticated analytics.

The cloud certainly has given this space a chance to improve, though. Last month CXO Solutions announced the launch of CXO-Cloud for Oracle’s cloud-based Planning and Budgeting Cloud Services, another sign of support for the cloud by the firm.

“With cloud technology, you take away the barriers of traditional enterprise infrastructure. By using ‘out-of-the-box’ cloud infrastructure building blocks, you can align the C-level suite by bringing the data together that stakeholders need to make decisions,” said Born. “Although security is one of the biggest concerns for organizations that consider the move to the cloud, I believe that the cloud can be secured better than on-premise solutions.”

The mobility of cloud-based reporting tools, too, can bring a new level of ease for the C-Suite, he added.

“We have heard from CFOs of Fortune 500 companies that can now look up everything they need during one of their kids’ football matches,” said Born. “Previously they had to wait until Monday to ask a controller to generate the overview they needed.”

And, as the financial services industry continues to gravitate towards technologies like machine learning and artificial intelligence, this niche is doing the same.

This comes at a time when much of the FinServ space is growing concerned over the potential for automated robots to assume human roles in the enterprise.

Last year, a report by Citigroup estimated that 30 percent of bank jobs could be replaced by robots between 2015 and 2025, with Citi concluding that “FinTech is forcing banking to a tipping point.” Some experts are worried a similar trend can be seen within the financial functions of the enterprise itself, with automated accounting and forecasting capabilities now offered quicker and more accurately via robots than humans.

But Born said the human element is the key that’s often missing in these innovations to corporate financial reporting.

“Many reporting solutions offer predictive algorithms to predict a future result using historical and external data,” he said. “This can be of great value for many aspects of the business, but the question is whether predictive algorithms can be of any value for finance and reporting. The nature of financial reporting is to communicate facts aggregated using accounting rules. These facts can be audited back to the source. The value of a predictive algorithm is very limited in a reporting process, mainly because the outcome cannot be audited.”

There is space for these technologies, Born said, especially in the area of error detection and anomaly prevention.

“These algorithms can help an executive to get directly to the right content at the right moment,” Born explained. “By applying this technology, a CFO no longer needs to look through 300 pages of tabular reports, but gets directly to the top 10 breaking trends in their data.”

Further, solutions that deploy automated data management and analytics features can be critical for government reporting and regulatory compliance.

But data can quickly turn into a burden. Research recently released by accounting firm EY found that CFOs and controllers are struggling to grasp the power of Big Data for their financial reporting needs. They do, however, recognize its importance: nearly one-third told surveyors they will be seeking better data analytics technologies to bolster their reporting efforts.

In some ways, corporate financial reporting is about the human element needed to tell the story behind the numbers, Born noted.

Technology may stand in the way of that, or it can act as a companion to the human talent of the C-Suite to analyze the information given to them by machines. These tools, Born said, can help executives more efficiently tell the story of their organization’s financials, a process that is typically manual and involves a lot of the same questions asked over and over. But these tools are only as good as their ability to present the story in the first place.

“Organizations focus too much on the numbers – key performance indicators – and not on the story behind these results,” Born said.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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