ERP Financial Modules are software programs that collect financial data and produce reports, helping your team communicate more efficiently with external parties such as vendors or customers. With their various functions - general ledgers accounts, payables/ receivables/ budgeting, etc. - Finance ERP Modules offer effective communication that increases efficiency while creating valuable customer relations. In this article, you'll learn of any emerging trends or features.
The Top 10 Technology Trends for the Financial Industry
In the financial sector, innovation is not essential but necessary. The technology industry has been booming and is the key driver of this market. To understand what technology is needed, financial institutions must have an understanding of the tools available. Let's get to the top 10 Trends for 2023.
Banks That Are Agile And Adaptable
Financial agility means being both competitive and capable of swift product launching. Financial firms, institutions, banks, and insurance companies that remain flexible and agile will remain profitable over the longer run; according to research estimates that by 2030 roughly 80% of traditional financial institutions may cease operations altogether and increase business performance and user experience via fulfilling a wide range of business requirements and valuable insights.
According to an academic study, 77% of financial institutions and 44.4% of the firms plan to implement Agile methods to enhance the services provided. Why have these institutions turned towards Agile as a solution?
The answer is straightforward: this model places product development front and center, enabling companies to meet some of their most crucial industry challenges head-on. Agile and adaptive banks are adept at overcoming such hurdles:
- The rise in online criminal activity involving finance is a source of unanticipated risks.
- The pressure of the numerous amendments in legislation and regulations makes compliance a challenge.
- Inability to perform regulatory reviews remotely
- There is a general overflow of service requests in the loan and financial planning segments.
You get simplicity and flexibility in one package with Agile and Adaptive Banking. Oracle's knowledge base is available if you need additional insight.
Open Banking and Embedded Finance
Open banking and embedded financing come next, both longtime industry staples with increasing importance in today's climate. Although open banking has existed for some time, financial institutions only recently recognized its immense potential - it can improve digital experience, speed onboarding, and access other asset markets more readily. Open banking provides unprecedented customer access and fuels the rise of finance sectors like this.
Open banking offers the following advantages:
- Creates an API Management Infrastructure that facilitates data sharing
- API Governance Architecture for Better Compliance and Security
- Improves the efficiency of Financial Services by implementing data policies
Open banking is an approach that promotes sharing data among banks and the firms for customer service improvement and regulatory compliance purposes.
Open banking and embedded finance have combined to enhance customer experiences by providing multiple financial products in digital formats through digital interfaces. Searches for embedded finance products have skyrocketed in recent years.
Open banking and embedded finance have dramatically advanced banks' digital transformation. Customer data has become more central than ever in financial industries; sharing it more efficiently increases compliance chances. The firms that know their customer preferences can create better overall customer experiences.
Artificial Intelligence and Machine Learning
AI and Machine Learning technologies have quickly become mainstream in the, making up one of the fastest-growing sectors worldwide. One simple reason is that AI bots in banking have been estimated to save 826,000,000 of work time over six months alone. Furthermore, search queries related to AI in Banking increased 104% yearly from 2013-14; their benefits go far beyond mere automation alone.
- Productivity and operational efficiency are improved. AI and ML can process, monitor and check vast quantities of data.
- Service personalization is enhanced. AI and ML can assess their customers' personal information to provide better financial services. This includes credit card services and mobile services, and mobile technology that fulfill business goals with business intelligence using actionable insights.
- New products and services are created. AI and ML can help financial institutions develop new products by tapping into innovative business models.
Data is not a secret. AI and ML technologies help better use data than traditional methods. These trends will be important in the financial sector by 2023 and for years to come.
Also Read: ERP Trends To Keep An Eye On In 2023
Robotic Process Automation (RPA), a Powerful Tool for Hyper-Automating Banking
By 2029, RPA and hyper-automation will be worth $4.9 Billion; growth between 2022-2030 should average 27 percent per year, with the RPA market increasing 14 times faster. So why do people refer to this technology as a financial service trend?
Over recent years, the financial services industry has increasingly utilized hyper-automation alongside AI, machine learning, and open banking technology to accelerate banking operations, decrease operating cost estimates, and mitigate human errors. Hyper-automation has proven its worth over time in the financial services sector by speeding up operations, decreasing operating expenses, and mitigating errors caused by people.
RPA and hyper-automation save staff considerable time, allowing them to focus more closely on core financial duties. RPA also proves beneficial for compliance by decreasing human error risk - in one survey by Accenture, 73% of respondents believed RPAwouldl help enhance compliance.
Deloitte found that 80 banking customers interacted with RPA tools in the past year alone; IBM Watson serves as a hyper-automation system capable of taking commercial banking to new heights by gathering insights through AI/ML/RPA tools before using Big Data analytics to generate new revenue streams; suggesting hyper-automation could prove promising for financial institutions in general.
Buy Now, Pay Later 2.0
Splitting purchases into installments without incurring interest is an emerging concept. While BNPLs were traditionally utilized to acquire expensive goods, now this practice has spread into all areas of products and industries, including finance.
The second version enables customers to purchase online using virtual and physical cards, much like regular credit cards do - except with one important exception: purchases can be broken into installment payments - an opportunity already exploited by tech titans such as Apple.
If we consider it, BNPL 2.0 will present us with an incredible opportunity for customer engagement, creating an easy purchase experience and decreasing card abandonment rates. However, do keep in mind that its implementation remains under scrutiny from regulatory bodies such as FTC and SEC, who seek to ensure data security as well as combat potential financial crimes such as money laundering.
Cloud Computing And The Digitization Of Financial Services Will Continue To Grow
Let's discuss cloud computing and digitalization in finance: the global finance cloud market currently holds $29. It is forecasted to experience compound annual compound growth until 2027, at 22.2% compound annual compound. Digital transformation has increased, changing both customer experiences as well as technology offerings of banks and financial institutions - let's now take a deeper dive into how claudication and digitization have taken hold in financial services.
These aspects are associated with the phenomenon:
- Serverless Computing
- Cloud-native re-platforming
- Containerization
- Open banking
- Access to technology
These aspects make migration to the cloud of financial processes a necessity. Why? This process has the following benefits:
- Reduction in costs associated with the migration to cloud computing from physical data centers
- Scalability and agility through rapid increases in cloud storage capacity
- Improved data access and faster response times
- Improved data security, greater transparency
Cloud computing is rapidly advancing, so we can only speculate what data management and storage tools may be developed in the future. Any industry that values data will benefit from sticking with the cloud. Regulations hinder Cloud based software adoption in certain areas, even though the cloud offers many benefits for the financial industry.
Distributed Ledger Technology
Financial sector businesses constantly pursue novel and agile methodologies to replace their complex legacy systems with modern approaches that reduce complexity. Old systems often feature limited transparency, fragmented management of wealth, and siloed operations - three major barriers the companies use DLT as a potential solution for this challenge.
DLT technology brings many advantages to financial industry professionals and capital market practitioners alike, particularly capital market traders. These benefits can include:
- Collateral management. DLT allows businesses to tap into assets that are unused while reducing overheads. The initial margin and the variation margin are automated.
- Issues of trust. Competing interests between parties often characterize financial operations. It is important to establish trust. DLT gives each party an independent node that provides equal data access.
- Inefficiency. There are multiple reconciliations, different operational risks, and manual verification processes when there isn't a single source of data. Smart contracts allow for real-time settlement and confirmation through DLT.
- Democratization. DLT allows for democratic access to information and assets, allowing all participants in financial transactions an equal opportunity.
DLT, a Web 3.0-specific technology, revolutionizes capital markets and asset management. The DLT allows for equal data access and helps the participants to prioritize customer needs over their competitive interests.
Regulatory Technology
RegTech is experiencing similar growth to cloud computing, cloud deployment and cloud-based solution and RPA. By 2027, its market is projected to reach 30 billion. RegTech growth can be explained by fraudulent activities occurring more frequently within the financial industry - some even refer to RegTech as the. It is important to study several elements to understand whether RegTech lives up to its reputation. As its name implies, it provides a way to improve compliance using modern technologies - which has seen usage grow by 50% annually over recent years.
RegTech stands out as an effective approach that delivers distinct advantages over its traditional equivalents, providing these three key advantages:
- Compliance personnel are unable to keep pace with the growing regulations. RegTech automates the compliance process through the rapid processing of large data volumes.
- Traditional methods of compliance rely heavily on human input, which can lead to errors. RegTech relies on algorithms and automation to minimize the risk of human error.
- RegTech increases transparency by connecting people with processes. This allows insights to be communicated much more quickly and candidly.
- RegTech enhances risk management. RegTech allows businesses to use existing data for risk assessment and alert authorities or personnel of suspicious activity.
RegTech is a tool that helps institutions stay on top of the ever-increasing regulatory pressures. This allows them to automate their processes for better compliance, reducing errors, enhancing data processing, and managing risk. It helps to avoid huge fines for non-compliance. Some of these can reach $4.3 Billion.
Metaverse Finance
Mark Zuckerberg will always be associated with the metaverse concept. Yet, few know more than him about how this phenomenon arises so quickly. So we shall investigate one case study on metaverse finance to assess this trend for our investigation.
The fifth phase of banking, commonly called "metaverse," brings virtual banking experiences to another level by using AR and VR technologies to personalize banking services and increase personalization levels. Many banks use tools that promote this metaverse-propagating effort as one of their core initiatives.
By 2030, experts project that 50 banks around the globe will use AR and VR technologies to engage employees and facilitate customer transactions. Bank of America recently unveiled a VR training program that helps prepare staff members for direct customer interactions; BNP Paribas introduced an app that allowed customers to conduct various banking operations using virtual reality technology. Although such experiments may remain experimental in scope, their potential remains undoubted.
Virtual banking will experience increased adoption as people become acclimated to VR/AR/metaverse technologies. VR and AR technology will become more prevalent among younger technology-savvy generations, and metaverse will become a staple of banking institutions.
Financial Super Apps
Financial super apps are currently the rage. These applications specialize in creating an exceptional customer experience through hyper-personalization. WeChat and Alipay are examples of such super apps which have gained immense popularity across China.
Super apps, or "super apps," have become immensely popular over time, combining various applications into a single ecosystem for shopping, communication, product ordering, and scheduling appointments all from within one app - such as WeChat, with over one billion users offering multiple functions rolled into a single application. You don't need to create multifaceted ecosystems using super apps - instead, design products with unique functions which enhance customer satisfaction while protecting data flow.
Read Also: 10 Manufacturing Trends to Watch in 2023
The Key Features
Profit Tracking
Profit tracking is one of the main focuses of ERP modules. Profit tracking gives an overall picture of your business health and how best to utilize financial resources to monitor where more profit can be found by tracking where money is coming in and an ROI analysis on any purchase made.
Tracker calculates profit by evaluating costs and receivables; some software will predict future profits using historical sales and expenses data; ERP financial management can track costs with capabilities including individual cost center evaluation, procurement reviews on an organization-wide level, as well as spending audits; these tools aim to boost company profits; financial management software is there as guidance for business leaders who understand how best to utilize their work environment.
Ledger Management
ERP systems are built around ledger management at their core. A general ledger serves as a comprehensive record of financial transactions. It connects seamlessly to modules like customer relationship management and inventory control. You'll typically make entries here, depending on the system. However, entry may also be possible elsewhere within it. You will have easy access to all your records in one convenient place--from assets, liabilities, and capital accounts down.
Locating all your financial data in one central repository can simplify tax filing and keep spending under control. ERP systems may alert you of unusual transactions, fraud, or irregularities within your department's finances, providing a more accurate picture. A general ledger provides essential data needed for creating financial statements to evaluate the overall health of business operations.
Accounts Payable
Accounts payable will help your business track how much is owed to suppliers and creditors, giving you control of cash flow management. Accounts payable integrates expense data directly into purchase systems allowing you to stay organized with accounts payable management.
Automation of accounts payable can save both time and money while eliminating human error. Automation allows your business to process large volumes of invoices and financial transactions between itself and vendors efficiently and cost-effectively, including document capture (often known as imaging). A tracking system for accounts payable also keeps tabs on what money owes you and when payments are due - meaning no missed payments for you. Sounds good.
Accounts Receivable
Your business can effectively oversee what customers owe them with this system of cash management and invoicing that also tracks customer payments. Customers may access or make payments using some ERP systems; automated tasks may include sending invoices/statements/reminders for payments as needed; all this means faster collection processes while improving customer relations because easier transactions lead to happy, returning customers.
Fixed Asset Management
Track and manage all tangible assets such as computers, office furniture, cars, and manufacturing equipment. This solution accounts for depreciation, tax, and compliance repercussions.
Asset management gives your company greater insight into costs, maintenance, and utilization. Tracking depreciation can help forecast expenses and develop budgets; budget for maintenance as soon as you know equipment requires attention or has become obsolete; avoid tax on assets replaced or eliminated thanks to tracking assets; also identify savings opportunities on sales taxes (some jurisdictions offer tax exemptions or breaks for certain industries); this tool also gives companies better control of expenses by tracking depreciation over time and forecasting expenses using depreciation rates - plus keep tabs on depreciation is another powerful way of controlling expenses - forecasting expenses against budget.
Risk Management
Business leaders understand the risks inherent to running their organizations are immense and prioritize protecting them as best they can. Risk management tools allow leaders to predict, analyze, and control crises like financial issues or natural disasters before they happen; they are also used for other potential issues like security threats, legal liability obligations, or reputational risks.
Keeping on top of ever-evolving compliance regulations is often difficult. Yet, risk management tools offer invaluable assistance in this respect. They will notify you if there are any contamination problems within a manufacturing environment and monitor cash flows into and out of your business - helping ensure adequate reserves should a client miss a payment, thus mitigating credit risk.
Reporting
Analytics offer real-time financial data, which is crucial for successfully running your finances and making informed, data-driven decisions regarding your health. With their visibility capabilities, analytics allow for real-time decision-making about the finances of any given business or organization.
Reporting and analytics provide basic information about where your revenue comes from; the dashboard goes further, showing sales figures, projected sales projections, expenses, and other financial elements. You can choose what categories should be shown and real-time graphs to assess financial status quickly.
Manage Multiple Currencies
The ability to manage different currencies is essential if you serve clients from around the world. The process of buying and selling foreign currency is automated with multi-currency. Currency conversion allows you to conduct transactions in multiple currencies.
Tax Management
Tax management solutions allow users to store system taxation settings while offering auditing and reporting features to help ensure consistent sales taxes or VAT collection across your system. Use these settings to collect sales taxes or VAT reliably across your system.
Your tax management tool could automate the difficult task of identifying which jurisdictions are liable for sales tax at ship-to geographical locations, or it could use pre-built intelligence to ensure sales transactions comply with regulations - its capabilities depend on both your ERP system and business needs; tax management provides an effective means of saving time in business operations.
Bottom line
The financial industry can meet many of its challenges through an analysis of tech trends in the financial industry. AI, ML, and RPA offer unprecedented data management abilities while simultaneously increasing transaction compliance standards and security levels. Metaverse, Agile Banking, and super-apps enable clients to experience personalized services from financial providers. Keeping this in mind, Arion ERP will assist businesses and organizations in taking their next steps into innovation by helping to shape them with our expertise - get in touch with the best and most reliable software solution for the finance industry now to start exploring.
