Cofounder and CEO of Kolleno—a global, B2B SaaS accounts receivable and collections management platform.
The challenge of digital transformation is more vital than ever. Indeed, to assimilate the various changes underway while remaining resilient in the face of one crisis after another, new technologies represent a significant reinforcement for companies to:
• Comply more easily with regulatory requirements.
• Enhance their operational efficiency.
• Facilitate decision-making.
While digital transformation is necessary, it is particularly beneficial for the finance function, which gains efficiency in transactional processes—the vast majority of which can be automated—and decision-making processes, facilitated by the exhaustive exploitation of data, rich in insights into customer behavior and market fluctuations.
From embedded finance and open banking to decentralized finance (DeFi) and generative AI, I will explore the five crucial trends for financial management in 2024.
1. The Rise Of AI In Finance
The exceptional progress made in AI, particularly in generative AI solutions, has enabled AI-powered tools to become so widely available that they have profoundly transformed many businesses and markets. With the rise of AI, finance teams will be empowered to save time on several fronts, including
• The automation of repetitive tasks.
• Mass data analysis and analytics.
• Cash flow and risk prevention with greater precision.
The predictive power of AI makes it a potent tool for finance teams. Indeed, when there has never been so much data available, and demand for prediction is on the rise, AI represents an opportunity to increase predictive capabilities while improving the reliability of projected scenarios.
Many use cases are still at the experimental stage, but some applications are already having a decisive impact on the financial processes of companies.
In 2024, it will be a matter of deploying AI with practical use cases for businesses and not just for the trend. A study conducted by KPMG in 2023, for example, showed that 59% of finance managers at companies with sales of over $1 billion were already using AI tools in their tax or financial processes.
2. Standardizing The Use Of The Cloud To Optimize Embedded Finance
The cloud is a key player in businesses’ digital transformation.
By making data accessible in a unified way, anytime and anywhere, the cloud is moving toward automating transaction processes. Real-time data updates foster team collaboration and improve companies’ visibility of both financial and non-financial information. Last but not least, the high adaptability of cloud technology means that IT costs can be better adjusted.
Indeed, cloud offers are flexible, making it easy to increase or reduce allocated resources according to business needs. As KPMG points out, the cloud can be important in optimizing embedded finance.
Embedded finance means integrating financial services into non-financial platforms and applications, blurring the lines between traditional banking and everyday activities. In 2024, anticipate a surge in embedded finance solutions across various sectors, including e-commerce, ride-sharing and healthcare.
By embedding financial services seamlessly into existing platforms, businesses can enhance customer engagement, streamline transactions and unlock new revenue streams, driving greater innovation and accessibility.
3. Keeping Up The Blockchain Momentum To Look Toward DeFi
Although blockchain technologies are particularly popular with FinTechs, their use is still restricted to certain players. Yet the possibilities offered by blockchain make it a particularly effective tool for:
• Immediate and infallible authentication of a security or certificate, as well as its provenance.
• Traceability of all elements recorded on it.
• Secure transfer of assets.
• Automatic execution of contracts.
This self-regulating, tamper-proof environment, open to all, represents a trusted, low-cost solution, expediating audits or accounting exercises free from error or fraudulent manipulation. For these reasons, blockchain is a reliable way of increasing tax efficiency while reducing tax-collection costs and meeting cybersecurity challenges.
But what’s more interesting for 2024 is DeFi, which represents a paradigm shift in traditional banking and finance. Built on blockchain technology, DeFi platforms offer financial services including lending, borrowing and trading, without intermediaries. In 2024, DeFi should gain further traction, fueled by growing interest from both institutional investors and retail users.
As regulatory frameworks evolve to accommodate this burgeoning sector, DeFi has the potential to democratize access to financial services on a global scale.
4. Modernizing Financial Tools With Open Banking
Developments in the banking sector, notably the 2015 adoption of the Payment Services Directive (PSD2), have recently led to the emergence of the open banking system. Thanks to standardized APIs, open banking allows the sharing of customer banking data with third-party services.
If open banking is presented as a sum of considerable advantages for customers, who now have access to personalized and more efficient services through the various APIs, it is also an asset for businesses.
Indeed, thanks to open banking, finance functions have new technological levers at their disposal, revolutionizing the financial landscape. Sharing banking information in real time opens up new opportunities for automating financial processes.
5. Building Future-Oriented FinOps Solutions
Automated financial operations, payments and reconciliation should continue to disrupt the finance and accounting function.
By linking platforms with customers’ ERP and accounting information, financial processes can be more effectively centralized and automated, evacuating any need for manual data entry. With APIs, companies can launch payments directly from their accounting software or ERP system. The transaction is faster but still just as secure with the available information.
Finally, modern digital tools enable invoices to be systematically reconciled in an error-free manner with their corresponding bank transactions. This makes the company’s accounts much easier to manage while improving accuracy for finance teams.
Tech And Finance—Two Communicating Vessels
Tech trends can sometimes seem excessively complex to integrate, encouraging CFOs to adopt a conservative stance by focusing exclusively on their fundamentals.
Yet, competition will inevitably force all companies to adapt or suffer the advantages other players acquire. Therefore, continuous learning and innovation are the only options available for businesses to thrive in 2024.
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