Digital transformation is empowering the finance industry to enhance business agility and prepare for future developments. In the recent Finance 2025: Digital Transformation in Finance report, Deloitte explained that automation, cloud-based and cognitive innovation are enabling finance businesses to transform and simplify activities.

Automation will allow finance-related businesses to improve their costs by restructuring their workflows and how they’re processed. Those businesses reliant on traditional technology and hesitant to adopt new systems are potentially at risk of reducing their progress and being capable of offering the best user experience.

Other companies have embraced digital transformation and utilised new solutions to meet the changing demands of their customers. For large-scale organisations this can be challenging and is often why companies are hesitant to integrate new technologies. Ageing architectures can hinder the ability to adopt new systems and utilise the full potential of the technology available today within finance.

These typical challenges highlight the importance of creating business agility in pursuing new customers and improving the overall end-user experience. The ability to connect with people and deliver financial services to more individuals while meeting customer demands requires a consistent and reliable service. There are many options emerging for finance companies. Still, for anything to happen, businesses need to ensure they have the agility to deliver the right services to the right people at the right time. 

These challenges are typical for larger, incumbent finance businesses, due partly to the rising competition from smaller, agile fintech companies which lack the limitations of large, legacy infrastructures. Mobile banking is playing a vital role in changing the way finance businesses engage with their customers. According to research from McKinsey Global Institute, digital transformation represents some of the most important ways of driving financial inclusion. Smartphone digital payments, for example, have transformed the customer experience, resulting in increased expectations surrounding the broader user experience and encouraging companies to accelerate their digital transformation plans.

The rise of emerging technologies such as big data and IoT is also accelerating the transformation toward intelligence and cloud technologies. The number of data businesses generates today is increasing and managing large volumes of information has driven greater use of AI and other technologies. Financial institutions that maintain pace with the rapid changes of digital transformation are likely to be the ones that reap significant benefits. Companies that fail to address the importance of digital services could lose their competitive advantage.

IT tech and services company Accenture believes that fintech-driven banking is the path toward successful talent acquisition and retention, as more businesses face rising pressure to remain digitally competitive and avoid the potential of losing customers and market share. 

Terrance Wampler, the general manager of WorkDay, describes some of the biggest challenges in finance and how businesses can create added value.

Data represents the core of modern businesses. The main goal for most is creating a reliable data source and utilising this information to improve performance. Achieving this is challenging, especially with the volume of data we generate today. The World Economic Forum predicts that the data generated will exceed 463 exabytes daily worldwide by 2025.

The fact is the majority of value created from information comes from intangible assets, most of which aren’t recorded on finance balance sheets. This can include customer relationships to social and intellectual capital. The importance of intangibles has increased considerably over the last few years, but finding a trusted source of data has become harder than ever as companies face multiple sources, both internal and external.

The expectations of a CFO have also changed, and CFOs require the necessary data, technology and people to generate new channels of value. Traditional systems predominantly focus on tracking value rather than creating it. Legacy systems aren’t configured to examine intangible value drivers, and so the data created makes it challenging for CFOs to meet these new expectations.

One case study of a business facing these challenges is US broadcaster, the EW Scripps company. The company experienced a major transformation, requiring a technology upgrade intended to improve the integration of finance and HR. WorkDay applied its service to digitise the HR operations, and Scripps added WorkDay financial management and Prism Analytics to unify their financial and HR data. Scripps removed multiple system interfaces, making it simpler to access and examine information. The finance team can spend more time on analytics, reporting and forecasting rather than focusing too much time on basic financial activities. Vagelis Kontopos, the VP of financial planning and analysis at Scripps, explains that Workday has provided the data and insights to guide the business strategically, especially during disruptive times. Applying a common platform for all divisions has reduced the monthly reporting time to just a few seconds, enabling rapid and frequent delivery of real-time reports, forecasts and budget updates.

This is a fine example of a business that has transitioned from using technology to measure value to shifting to a position to find value from its data. Creating a trusted data source is critical to generating successful value creation. Businesses require their data to be a single-source, accurate and realistic version of the truth. Once this is achieved, businesses can generate valuable insights and improve business performance, including the most profitable drivers and where to allocate capital to get the best return on investment.

In today’s digital economy, businesses need to consider their data as an opportunity for creating business value, rather than just an asset used to track progress. To achieve this, it’s important to create a trusted source of data, as shown by the previous example. With the appropriate technology, finance can shift from tracking value to creating value, supported with the relevant insights to determine and respond to events, the flexibility to adapt and harness opportunities and the talent to support this transformation.

Payments provide a perfect entry point for software platforms into financial services. A relationship with payments creates data, trust and in most cases, further banking requirements. This provides the opportunity for software platforms to create a range of embedded finance options to increase their revenue, and improve the user experience and customer retention. Any software service offering payments should incorporate a focus on the long-term opportunities in finance.

Software platforms have a clear understanding of the performance and sales of customer businesses. This enables software platforms to make better decisions and allows them to design other opportunities and enhance customer growth. For example, software platforms could design integrated expense reporting services within their package, providing an additional opportunity to generate revenue.

As software platforms progress toward embedded finance, creating a money management product can convert the service into a complete financial operating system. This involves enabling customers to receive sales deposits, add funds and make payments. Combined with a card product, the account acts in a similar way to a conventional bank account, enabling customers to make transactions and withdraw money from their accounts. Furthermore, software platforms can generate interest revenue and interchange revenue, as well as receive regular reports on their finances. For example, Shopify Balance, in partnership with Stripe is considered one of the best options available. Launched earlier this year Shopify claims that thousands of merchants are now using the service.

As software platforms progress further into embedded finance, it’s clear that there are opportunities to expand into other areas. Insurance, purchase financing and payroll are all examples which could be explored. The main factor software companies must consider with the move toward embedded finance is improving the financial lives of their customers.

Climate change can transform our global economy, but the finance industry continues to fall behind in terms of implementing the necessary measures to tackle climate change. Representatives at the conference on climate finance in New York stated that to enhance the rate of progress, the industry must take advantage of new technology, particularly artificial intelligence and machine learning.

Discussions on the progression of data and AI, particularly the advancements in gathering satellite-based data, highlighted the information collected in our world. When examining this data via tools such as machine learning, we can explore multiple trends and patterns on our planet. The high-quality data can enable global markets to assess the short and long-term climate risks and opportunities, from understanding the value of the services nature provides to determining what areas influence the climate resilience of investment plans.

How does AI support the finance industry and understands the value of nature?

Some industry experts believe the finance industry currently fails to acknowledge the value of the ecosystem before certain parts convert into assets. In today’s world, we have organisations with clear economic values, whereas nature has no intrinsic economic value until the trees are cut down and converted into productive assets. Businesses can harness data which recognises these critical parts of nature i.e. the water, carbon, biodiversity and other associated services. These variables can then be integrated into the finance industry and future strategic plans.

How to incorporate these values into future financial plans

This critical information can enable a range of decisions for finance-related businesses. Companies can, for example, identify methane emissions detection down to a specific facility in real-time. This information can determine certain facilities that are impacting the environment. Investors and other interested groups can see the level of methane emissions coming from their investments. If that figure exceeds an emission target, the investor may need to sell off an asset or encourage the facility manager to reduce emissions. If it is affordable to detect these emissions, we can make it very expensive to ignore this data.

In contrast, being capable of determining areas or facilities that are doing a positive job in terms of carbon reductions can trigger higher investments. A bank may decide on additional financing for a business with a lower carbon footprint due to lower legal liability risk and enhanced public perception.

Combining two of the most powerful industries, technology and finance, could transform the level of progress on climate change. Delivering significant transparency in global capital markets has considerable potential for bother industries and how they decide to approach climate action. 

Today is the time for tech and finance to collaborate and deliver the necessary changes. The challenges are severe, but we are equipped with better tools and continue innovating with new technologies.