Trust: a firm belief in the reliability, strength, truth, or ability of someone or something. By that definition, trust in business may have been flawed late on, especially when it comes to the integrity of financial data.
In fact, in the UK, a string of high-profile corporate scandals caused by poor commercial management followed by three major surveys in the auditing industry, meaning that financial services is now the country's least trusted sector.
So it's not surprising that restoring confidence has become a top priority for CFOs, and a good place to start is by boosting domestic confidence. How do you achieve this? With the amount of finance one driving force: data.
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financial data key
Since businesses use financial data to inform many important decisions, being confident in your numbers is the first step in restoring trust. Recent Stoned Poll showed that almost 70% of global business leaders and finance professionals believe that their organization has made a big business decision based on inaccurate financial data; while more than half of them are not quite sure that they will be able to identify financial errors before reporting the results.
Not only can clicking on scarce data put you at risk of becoming the next front page scandal and damaging your reputation, it can seriously set your organization back in its long term transformation efforts.
As awareness of the risks associated with inaccurate reporting grows, financial professionals are poised to see more accountability in the industry. So how can they be sure that the decisions they make based on their data are the right ones?
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Trust in numbers
To build real confidence in the data, the first step is to ensure the reliability and accuracy of financial information. More than a quarter (26%) of financial report managers are concerned about financial errors they know they must exist, but over which they have no visibility. With confidence hanging in the balance, efforts must be focused on addressing those blind spots and invisible errors that undermine confidence in the numbers.
At the center of these efforts is real-time, cloud-based process automation. By automating manual, time-consuming processes such as matching transactions or journal entries, data becomes not only more reliable, but people can also spend more time on advisory, analytical tasks; in turn, adding more business value.
Continuous accounting, for example, a model that combines modern financial strategies and cloud technologies, can put an end to high error and increase the speed of analysis and improve operational efficiency. With real-time updates, constant messaging, and a host of accountability controls – departments are starting to reap the benefits of improved data integrity and a strengthened culture of trust.
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Transparency: the key to accountability
As technologies such as artificial intelligence (AI), machine learning and robotic process automation (RPA) contribute more towards decision making, transparency becomes fundamental. Not only is full transparency critical to effective decision making, but it will also become an important factor in achieving 'ethical' and 'explain' AI.
While financiers are always expected to be held accountable for testifying books, they are increasingly putting their name on solutions using machine learning algorithms. As a consequence, it has never been more important to understand why recommendations are made, or how decisions are made. Otherwise, how can you be sure of the validity of the results you are responsible for?
The need for transparency will only grow as technology becomes more embedded in finance decisions. For example, if an algorithm denies a loan request based on factors such as a zip code, it may be inadvertently replicating the bias we see in human decision making. Understanding how a decision will be reached, however, will allow the person to reconsider or challenge it, helping to determine the correct, but ethical, course of action.
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The future of finance
While a truly advanced technology like AI is not a reality for finance right now, it will certainly begin to permeate more tasks and features in the industry as it develops in the future. Now, automation in finance ensures broader business decisions are made based on the most accurate and up-to-date information.
Not only is this helping to build a culture of trust in the finance department, but moving towards internal integrity will play a key role in building trust in the business as a whole – being with your customers, shareholders and the public.
Ultimately, using automation to improve the accuracy and reliability of your company's data will pay dividends down the line. After all, what use will smart AI be if it learns from flaws and inaccurate data? And more importantly, who will put his signature on the decisions or recommendations he makes? The bottom line is that data-driven businesses simply won't succeed without first laying the foundations of integrity and trust.
Andy Botrill Vice President EMEA stones.
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