The finance function is undergoing a seismic shift. By 2025, the traditional image of number-crunching accountants confined to back offices will be a relic of the past. Technological advancements, evolving market demands, and a heightened focus on sustainability are converging to reshape the finance landscape. CFOs, controllers, and management accountants must embrace agility and foresight to thrive in this dynamic environment.
The rise of the machines: AI and automation in finance
Artificial intelligence (AI) and automation are no longer futuristic concepts; they are integral components of the modern finance function. Andrew Harding, CEO of CIMA, notes that AI is enabling "fast and accurate predictions of the future," empowering business leaders to make informed decisions. Repetitive tasks, such as financial reporting, are increasingly being automated, freeing up finance professionals to focus on strategic initiatives.
A recent report by McKinsey estimates that automation could potentially displace up to 30% of work activities in finance and accounting. This doesn't necessarily translate to job losses, but rather a shift in required skills. As Harding points out, CFOs are already envisioning a future where their teams are dedicated to "building models of the future" rather than manual reporting.
However, the integration of AI is not without its challenges. A survey by Deloitte found that many finance professionals lack the necessary skills to effectively implement and manage AI-powered systems. This skills gap needs to be addressed through training and development initiatives.
ESG: A new imperative for finance leaders
Environmental, social, and governance (ESG) factors are rapidly gaining prominence in the world of finance. Investors are increasingly demanding that companies demonstrate a commitment to sustainability and ethical practices. This is forcing finance leaders to integrate ESG considerations into their financial planning, reporting, and investment decisions.
Harding highlights the emergence of global ESG standards but reminds us that the regulatory landscape remains "fractured and confusing," with different countries adopting varying approaches. The European Union and China are leading the way with stringent ESG regulations, while the United States is still grappling with the issue.
The Task Force on Climate-related Financial Disclosures (TCFD), for example, has developed a framework for companies to disclose climate-related risks and opportunities. Many organisations are now adopting the TCFD framework to enhance their ESG reporting.
Finance leaders play a crucial role in ensuring the accuracy and transparency of ESG data. They must also develop new metrics and KPIs to measure and track ESG performance. This requires a shift in mindset, as Harding suggests, viewing sustainability as "long term business success" rather than simply focusing on pollution or environmental concerns.
Finding and retaining skilled finance professionals
One of the biggest challenges facing CFOs today is the talent shortage. Harding notes that "95% of the CFOs that I talk to say that their biggest challenge is hiring the right people to do the work and finding the right skills out there." The rapid pace of technological change and the growing importance of ESG have created a demand for new skills that are often in short supply.
The half-life of a skill today is estimated to be around four years. This means that finance professionals must continuously update their knowledge and skills to remain relevant. Traditional accounting qualifications are no longer sufficient; finance professionals need to develop expertise in areas such as data analytics, AI, and ESG reporting.
To attract and retain top talent, companies need to offer competitive salaries, opportunities for professional development, and a supportive work environment. They also need to foster a culture of innovation and encourage employees to embrace new technologies.
Soft skills: The differentiator in the age of automation
While technical skills are essential, soft skills are becoming increasingly important for finance professionals. Harding emphasises the importance of "the abilities to influence, the abilities to lead, the abilities to communicate and the ability to inspire." These skills are crucial for building relationships, collaborating with colleagues, and driving change within the organisation.
In a world where routine tasks are increasingly automated, soft skills are what differentiate successful finance professionals from the rest. The ability to analyse data, identify insights, and communicate those insights effectively is highly valued. Finance professionals need to be able to tell a story with the numbers, explaining the implications of financial data for the business.
Harding introduces the concept of the "T-shaped accountant," where the vertical of the T represents technical skills and the horizontal represents soft skills. While technical skills are assumed, it is the soft skills that truly differentiate individuals and drive career progression.
"Those are the abilities to influence, the abilities to lead, the abilities to communicate and the ability to inspire...those are the things that make the difference." Andrew Harding
Strategies for enhancing value in the finance function
To enhance their value, finance professionals need to adopt a proactive and forward-thinking approach. Harding recommends "horizon scanning," staying abreast of global trends, and understanding the risks and opportunities that lie ahead. This includes monitoring geopolitical developments, supply chain disruptions, and regulatory changes.
Finance professionals also need to understand how their business creates value. This goes beyond short-term profits and encompasses factors such as customer relationships, intellectual property, and relationships with stakeholders. By understanding the drivers of value, finance professionals can help their organisations make better decisions and create long-term sustainable growth.
Moreover, finance professionals should embrace continuous learning, focusing on "just-in-time learning" to acquire the specific skills needed for upcoming projects. They should also invest in developing their soft skills, such as communication, leadership, and decision-making.
Embracing the future
The future of finance is bright, but it requires a willingness to adapt and embrace change. Finance professionals who are agile, forward-thinking, and equipped with the right skills will be well-positioned to thrive in this dynamic environment.
CFOs, controllers, and management accountants must take the following steps to prepare for the future:
Embrace technology: Invest in AI and automation tools to streamline operations and improve decision-making.
Integrate ESG: Incorporate ESG considerations into financial planning, reporting, and investment decisions.
Develop talent: Invest in training and development programs to equip finance professionals with the necessary skills.
Cultivate soft skills: Focus on developing communication, leadership, and decision-making skills.
Embrace continuous learning: Stay abreast of global trends and acquire new skills as needed.
By taking these steps, finance professionals can transform themselves into strategic business partners, driving value and helping their organisations achieve long-term success. The agile finance function is not just a vision for the future; it is a reality that is already taking shape. Those who embrace it will be the leaders of tomorrow.
Click on the PodChats player to hear the details of Harding’s views on Architecting an agile finance function in the age of AI.
How has the roles of management accounts evolved following the pandemic, and in particular the growing adoption of AI and automation in finance functions by 2025?
What challenges will finance professionals in Hong Kong face as they adapt to new technologies and regulatory requirements?
How can finance leaders in Hong Kong effectively balance innovation with regulatory compliance in a rapidly changing financial landscape?
What skills will be most essential for accountants and controllers to succeed in the future finance landscape in Hong Kong?
What strategies should finance professionals take to enhance their value in and around functions like forecasting, risk management, planning and budgeting?
In your opinion, how critical is it for finance teams to integrate ESG factors into their reporting and decision-making processes?
How should finance leaders prepare for potential shifts in global economic conditions that may impact Hong Kong’s positioning in the world market?
What role does CIMA play in supporting finance professionals in Hong Kong to navigate these upcoming changes?
Can you share examples of best practices in management accounting that have led to successful transformations in finance functions?
Allan is Group Editor-in-Chief for CXOCIETY writing for FutureIoT, FutureCIO and FutureCFO. He supports content marketing engagements for CXOCIETY clients, as well as moderates senior-level discussions and speaks at events.
Previous Roles
He served as Group Editor-in-Chief for Questex Asia concurrent to the Regional Content and Strategy Director role.
He was the Director of Technology Practice at Hill+Knowlton in Hong Kong and Director of Client Services at EBA Communications.
He also served as Marketing Director for Asia at Hitachi Data Systems and served as Country Sales Manager for HDS’ Philippine. Other sales roles include Encore Computer and First International Computer.
He was a Senior Industry Analyst at Dataquest (Gartner Group) covering IT Professional Services for Asia-Pacific.
He moved to Hong Kong as a Network Specialist and later MIS Manager at Imagineering/Tech Pacific.
He holds a Bachelor of Science in Electronics and Communications Engineering degree and is a certified PICK programmer.
