Shabnam Pervez (MBPsS), thematic analyst at GlobalData, recently published an article feature in the International Accounting Bulletin magazine on the future of accounting. Below are a few of her key points.
The rapid evolution of digital banking in the wake of Covid-19 has resulted in many customers finding it more convenient to manage their finances through online channels. The financial services will have been digitally transformed by 2030, according to GlobalData’s Tech in 2030 report.
Financial services
Financial services are being embedded into apps and other digital channels where the omnipresence of smartphones has accelerated the adoption of digital wallets as a payment option. Big Tech will have an advantage in the buy now, pay later (BNPL) sector and will integrate BNPL into their ecosystems. Governments will continue to explore and develop central bank digital currencies and we expect many digital currencies to be a mainstream payment option by 2030. Therefore, accountancy firms must adapt to the changes in the financial services industry.
Cloud-based data management (cloud accounting)
One of the key areas for accountancy firms to focus on is the adoption of cloud-based data management, also known as cloud accounting. Cloud accounting stores encrypted records of cash flow, liabilities, and assets online, where only those with a login can access it. Online accounting software solutions are an easy way for accountancy firms to upload their files and bookkeeping onto the cloud. Cloud accounting users can connect the software to a business bank account where cash flow automatically will be marked in books and banking statements.
Cloud accounting is a convenient way for accountants to monitor money as it reduces the need for manual data entry. A good cloud accounting platform can also help companies scale as it can incorporate add-on business features, including payroll and inventory management. Add-ons have the potential to create a customized platform offering full business performance visibility, with numbers from various sources flowing into a single platform. They enable speed and transparency within the organization and fuel data-based insights and decision-making. Through custom add-ons, companies can capitalize on the full potential of accounting platforms to add business value.
Open banking
Open banking refers to banks opening access to their data to third parties, most commonly via open application programming interfaces (APIs). Typically, open banking is introduced at the behest of regulators, such as the UK’s Competition and Markets Authority (CMA). Both public (e.g., product specifications) and customer data (account and transactional data) come under the remit of open banking. Consumers can share their account data with approved third parties to gain access to extra products and services. These may include account aggregation services that give users a single view of all the accounts they hold with different providers or services that allow consumers to make accurate product comparisons. Open banking aims to encourage innovation by making it easier for specialist providers to compete with banks on an equal footing, improving outcomes for consumers by making more choices and options available to them.
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By GlobalDataBy integrating open banking, accountancy services can access customers’ financial data in real time directly from their business bank account, including data such as balance and transaction history. A June 2022 survey by Iwoca found that of the 200 accountancy firms interviewed, 46% had already adopted open banking. However, 90% of respondents used cloud accounting software, suggesting that accountancy firms are still early in their open banking adoption journey. According to the same survey, the most common use case for open banking among accountancy firms was bookkeeping, followed by accounts receivable.
Read more here: https://accounting.nridigital.com/iab_supplement_dec22/the_digitalisation_of_financial_services_and_accountancy_firms
