Digital Transformation in Finance | Loop


Digital Transformation in Finance


June 13, 2022·7min read

What was once a siloed business unit, digital transformation in finance continues to blur the lines between Business and Financial strategy. 56% of organizations in Europe are keen to invest in embedded finance to boost their ability to grow revenue. Finance teams are in fact gatekeepers of critical information that inform decision-makers and stakeholders about a company’s financial stability and in turn, drive businesses’ critical decisions such as equity investments and opportunities for expansion. It would therefore only make sense for financial teams to be fully equipped with market forward trends.


Digital transformation in finance leads on three main fronts


   1. Capturing data – Simplify data capture for your financial database. Meaning data entering and out of the system should be seamless, to minimize errors and rework. Diving deeper into digitizing data capture could mean API-driven workflows – that allow teams to continue using software of choice but minimize or even eliminate cumbersome data migration processes.

   2. Processing – 77% of firms fall behind in terms of automation in finance, while 56% of firms believe in the correctness and accuracy of financial data. This means that institutions currently continue to rely on manual processing for data accuracy and completeness. However, once again, these processes are to be simplified and managed through automation. This includes reconciliation, automation of collections, and payments amongst many others. 83% of respondents in firms believe that data processing and in particular, month-end financial closing processes should be automated as a priority.

   3. Analytics – Implement a single source of financial analytics and real-time reporting for a company-wide view. Data leveraged through finance teams can be pivotal for C-level executives in driving profitable decisions, understanding cash flows, cash leakages, and business intelligence in general.


How does digital transformation in finance make a difference?

Digital Transformation in finance involves a holistic approach to financial management that revolves around the use of innovative digital technology. This digital technology involves the use of automation for end-end processes to eliminate human touchpoints and manual heavy lifting. Furthermore, this may also include analytics and intelligence that enables businesses to drive key business decisions.

Financial analytics and intelligence are building blocks for strategic plans and decisions, especially for sales, order fulfillment, customer demands, and supply chains. Not only do they help us with future trends or predictive analytics – but digital transformation is also essential to analyze volatile market trends.


What are the key trends to look out for?


1. Automated Finance 

Finance functions will continue to become automated, especially in terms of analytics and reporting. This will help finance teams collaborate with multidisciplinary teams across the board. Moreover, COVID-19 has pushed businesses to speed up digital transformation. 60% of finance teams reported a great advancement in Digital Transformation.  In South Africa alone, SMEs have accelerated to an adoption rate of 43%  for fintech in financial management.

2. Real-Time financial cycles

As finance becomes real-time, with automated reconciliation and settlements, financial cycles will soon become obsolete. Monthly, quarterly, or yearly close will soon come to an end and stakeholders will have access to real-time financial data. Moreover, stakeholders will continue to find value in operational data on the go.  Traditional cycles will soon become unnecessary as reported in Deloitte’s Finance 2025 report.

3. Data – APIs

API-driven workflows will soon become a norm as finance heads towards digital transformation. This means data will soon become interoperable across enterprise applications, making it easier for businesses, business units, and banks to share data, analytics, and insights across channels. As easy as the word “integration” sounds, this will require excessive efforts from organizations and business leaders to push data migration and clean-ups at a company-wide level.

 4. Finance professionals’ transformation

Finance leaders will soon transform into data scientists and business analytics experts who advocate change towards digital transformation. Data analytics and data science have become the second most demanded skill for top hires in fintech as of 2019, which is only likely to grow. Banking, Financial Services, and Insurance (BFSI) has become the top industry for data scientists. This trend speaks leaps and bounds of where the financial space is heading in the future.  

5. Embedded Finance

55% of non-financial businesses are planning to offer embedded finance services within the next two years. Embedded finance has been a catalyst for consumers over the past few years, with retailers beginning to offer buy now pay later (BNPL) services. However, embedded finance doesn’t end there. B2B embedded finance is flourishing especially in terms of B2B lending. As demand for financing from SMEs continues to accelerate, the embedded finance industry will continue to grow.

For SMEs and business owners, embedded finance will open opportunities in terms of access to financial resources and opportunities for funding – something that was earlier out of bounds.


About Loop

Loop is building out physical and digital infrastructure to allow businesses to completely automate the cash to digital on-ramp. Loop’s platform enables digital payments from physical cash in real-time. Find out how Loop can help your business grow and stay ahead of top financial trends.

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