Small businesses (SMBs) are increasingly satisfied with their traditional financial service providers, though banks are pushing to heighten their innovation strategies and provide SMBs with the high-tech, customized services that those small businesses demand.
The October 2017 PYMNTS Bank Innovation Readiness Index, developed in collaboration with i2c, found these financial institutions (FIs) are enjoying a bit of success in their efforts to digitize and innovate. Seventy percent of surveyed FIs that have flexible IT infrastructure said their recent innovations were “extremely successful,” more than twice as high as the overall average of FIs with both flexible and non-flexible IT infrastructures. Nearly two-thirds of FIs say meeting customer needs is the key driver for innovation.
But while business customers are certainly playing a significant role in pressuring FIs to heighten their technology game, a new research report from eProcurement firm Wax Digital shows that oftentimes, the companies’ own financial departments are behind on the digital transformation they’re demanding from banks.
Four out of five financial professionals surveyed by Wax Digital and Sapio Research agreed that their financial departments are falling behind the rest of the organizations’ movement toward innovation and digital transformation, the report found, according to SmallBusiness.co.uk, which covered the findings of the survey last week.
Nearly half (45 percent) said the finance department expresses resistance against digital transformation, and 39 percent agree that the finance department relies too much on manual processes that hold it back from embracing digital transformation.
Financial professionals know they are struggling with this evolution, too, Wax Digital found. Two-thirds say they know they are more paper-reliant than professionals in other departments of the enterprise, and more than half (58 percent) said they are not likely to make decisions electronically.
The Worst Offender
Key areas of corporate finance continue to lag in digital transformation, the report found. Expense management and budgeting, for instance, see some of the lowest levels of digital transformation. But invoice management is furthest behind, researchers said, with 66 percent of data received from supplier invoices manually entered into company systems.
Even the archaic fax machine is holding fast in the finance department, with almost 10 percent of invoices delivered this way, found Wax Digital. Nearly a fifth of invoices are delivered in the mail, 15 percent are hand-delivered and 23 percent are sent via email — not a true digital form of an invoice, since professionals must still manually extract and re-enter data from an invoice sent via email.
Only about a tenth of invoices are delivered through eInvoicing portals that can support automated data capture and processing.
Meanwhile, a third of both accounts payable and accounts receivable continues to be manual, researchers found, with companies identifying these two areas as having the greatest need of digital transformation.
“By their own admission and the opinions of those leading the digital cause, it’s clear that finance is lagging behind other departments when it comes to digital transformation but is in great need of change in areas such as how it manages its invoices,” reflected Wax Digital Director Daniel Ball in a statement.
According to Ball, the failure of the finance department to embrace digitization is holding the rest of the enterprise back, even when the rest of the enterprise wants to innovate.
“The whole business, including senior management, needs to be on board with leading a digital transformation for finance so that it matches the innovation shown by departments such as sales and marketing,” the executive continued. “For example, there’s exciting potential for finance teams to utilize artificial intelligence, with applications such as robotic process automation, to reduce time spent on manual processes involved in areas such as reporting and transactions and minimize tasks such as scanning invoices that are prone to human error. The finance team and the business in general needs to adopt a progressive way of thinking in order for the department to reach that stage.”
Wax Digital surveyed 200 senior finance managers and 100 IT professionals for its survey, reports said.