As the digital revolution continues to transform the global economy, the finance sector is experiencing a rapid metamorphosis.
Traditional financial services are being challenged by the rise of financial technology (FinTech), blockchain, and data analytics. These changes have major implications for leaders in both the public and private sector, says David Barrick, who has worked for many years as a financial manager for local governments in Canada as well as private companies.
This new reality of finance technology should make financial leaders rethink their strategies and adapt to a new landscape, Barrick said.
“Any financial manager should be thinking about how to stay competitive and maintain growth,” David Barrick said. “But doing that in 2023 and beyond means becoming an expert on how to leverage these emerging technologies.”
The Rise of FinTech
FinTech has disrupted the financial industry through innovative and efficient alternatives to traditional financial services.
These new solutions include digital payment platforms, robo-advisory services, and peer-to-peer lending to cryptocurrencies and digital wallets. FinTech has enabled businesses and consumers to access financial products and services with greater ease, convenience, and cost-effectiveness.
If you’re not looking at how to use FinTech, you’re already behind, Barrick says.
“For financial leaders, understanding and embracing FinTech is crucial,” he said. “They offer so many benefits in streamlining processes, reducing costs, and enhancing the customer experience.”
However, he added, financial leaders must also assess the potential risks and challenges associated with FinTech adoption. These include regulatory compliance, cybersecurity, and privacy concerns.
Blockchain and its Impact on Finance
Blockchain, the technology underpinning cryptocurrencies like Bitcoin, has the potential to revolutionize finance through decentralized, secure, and transparent transactions.
This makes it an attractive option for certain financial applications, such as cross-border payments, trade finance, and asset management, Barrick said.
“We’re really just at the beginning of blockchain’s impact on the industry, and we should only expect to become more relevant,” according to Barrick.
Financial leaders must grasp the fundamentals of blockchain technology and consider how it can be applied within their organizations to gain a competitive edge. They should also be aware of the legal and regulatory implications of using blockchain and work closely with their compliance teams to ensure adherence to relevant laws and regulations.
Harnessing the Power of Data Analytics
Data analytics, which involves the use of statistical techniques and algorithms to uncover patterns, trends, and insights from data, can significantly improve decision-making in finance.
It empowers financial leaders with a deeper understanding of their customers, while also improving efficiency and identifying new revenue streams.
But to use it, financial leaders must invest in necessary infrastructure, like data storage and processing capabilities. It also means acquiring the right tools and software to analyze the data effectively.