Financial automation: An introduction
The 3rd industrial revolution ushered in the era of automation, electronics and computers. We witnessed the birth of the internet, desktop computers and smartphones. Today, in its fourth iteration, the industrial revolution has built on the advancements of the third. The World Economic Forum describes it as: “a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.” Artificial intelligence, machine learning, the internet of things and cyber-physical systems dominate the era we live in. Consequently, with these advancements in AI and machine learning, we see the rise of financial automation.
What is financial automation?
Financial automation uses artificial intelligence and machine learning to automatically capture, analyse, process, and deploy financial tasks. As a result, the need for human intervention is significantly reduced or, in some instances, eliminated.
According to Mckinsey, 42 per cent of financial activities can be fully automated, and a further 19 per cent can be mostly automated. PwC estimates that financial automation and behavioural change can reduce between 30 – 40% of the time spent on financial operations.
Financial automation can procure the following advantages:
- Focus on less mundane tasks. Believe it or not, legacy systems such as manual bank reconciliation are still being done today. These tasks are tedious, time-consuming and error-prone. This is a perfect instance where financial automation can take the wheel, improve efficiency, speed up processes, and allow corporations to allocate personnel to more productive tasks.
- Data standardisation is the process of capturing, analysing, and processing financial data into a standard format. This format will ensure a consistent, understandable, and logical flow of data. In addition, this process preserves the integrity of the data, eliminates human errors, and facilitates the easy troubleshooting of erroneous data.
- Security. Having a digital footprint will ensure complete control over who accesses what, when and where. This can eliminate fraud and the tampering of data. This also gives you peace of mind. You can access financial data anywhere and store it indefinitely without paper records fading away or the misplacement of documents. Encrypting your data is also an option to repel unauthorised access.
- Real-time data. Automation software is robust and capable of handling big data. Access your financial data and operations instantaneously.
Where to deploy financial automation?
While the list is not exhaustive, here are 3 areas where automation can assist:
- Reconciliations. Manual reconciliation is inefficient and expensive. They are also prone to human errors. Automate, reconcile and allocate all your cash movements from one platform with financial automation.
- Payment automation. Automate outgoing and incoming payables and receivables from a single point. Automation software allows you to combine and standardise data from many systems. This improves cash forecasting and thus enables you to scale millions of transactions every day.
- Liquidity Management. Manage liquidity across all your banks from one place. Customise cash sweeping to move liquidity across many banks. Thus, removing the need for lengthy, paper-based administration processes.
Delivery of financial automation software
Two standard methods for delivering financial automation are a Software-as-a-Service (SaaS) or Platform-as-a-Service (PaaS). At Fennech, we deploy a Platform-as-a-Service for finance, treasury, and payment solutions. Our proprietary technology, F³, can be configured, scaled, is cost-effective, and requires significantly less coding than SaaS solutions. It integrates smoothly with your existing IT stack and banking partners via a rich library of APIs.
Fennech has helped multinational corporates automate their financial operations. For more information on how we can help your business, get in touch.