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Why Financial Services Firms Need to Embrace Technology

Technology is here, whether you like it or not. Cash registers count change for you, your car tells you when to brake, and everywhere you look people’s faces are buried in their cell phones. It’s completely transforming industries across the board, and the accounting industry is no different. Piles of paperwork and spreadsheets are becoming a thing of the past. CPA’s are learning that in order to compete in today’s tough market, they’re having to move to a more tech-savvy way of life.

According to DigitalResponsibility.org, being overly connected to technology can cause personal psychological issues such as distraction, narcissism, and depression. On a wider scale, it can lead to the expectation of instant gratification, which carries over to clients’ demands on a busy accounting firm. Instant access, instant updates, instant results. It’s up to us to bridge that gap and meet those client expectations, going above and beyond. Tech-savvy, multi-channel customers expect results. Now.

Accounting firms that have embraced the digital transformation show much better gross margins, earnings, and net income than organizations that didn’t.

But not all CPA’s are as connected as customers expect us to be. There’s a gap between technological and organizational (traditional) progress, and it’s widening. According to the Harvard Business Review, digital transformation is paying off for those who embrace it, causing a digital divide across industries. Accounting firms that have embraced the digital transformation show much better gross margins, earnings, and net income than organizations that didn’t.

Not all companies and industries have been impacted at the same time, and in the same way. Industries like communications and media were affected early on. Those like bookkeepers and accounting services are just now experiencing the growing pains. Forward-thinkers are already set on delivering the best client experience, and they’re embracing the change with open arms. But advisers that are unable or unwilling to adjust to the fact that their “cheese has moved” are having a tough time keeping up.

Closing that gap between the processes requires that business not only instill short-term fixes like adopting new technologies, but paying attention to longer-term organization around strategies for growth and partnership in a sustainable way. Firms need to embrace technological changes proactively, not be reactive.

According to Larry Miles, writer for Technology Tools for Today, technology is a must have. Not something that is just nice or convenient. Adapt or die, because there’s much that technology can do for financial services.

Benefits of Utilizing Technology for a Financial Services Firm

Technology may just improve your relationship with your bookkeeping team. While it sounds impersonal, it’ll actually connect you in ways you never imagined.

Technology may just improve your relationship with your bookkeeping team. While it sounds impersonal, it’ll actually connect you in ways you never imagined. Happy employees will definitely contribute to happy clients. With things moving along smoothly, no lost files or missed deadlines, morale will be up. Things like video conferencing and online surveys will help you stay linked with your team and collect feedback from them quickly. The best people want to work with the best technology. Up and coming CPAs and accountants are all tech-savvy and crave working in an environment that is able to provide the client with the whole experience. Happy employees = employee retention.

Technology could help brighten the client experience by making interactions more lively, quick, and helpful. Investing in smarter technology capabilities will let you be more intelligent about your customers. According to pwcGlobal, customer intelligence will soon become the most important predictor of revenue growth and profitability. Technology advances have given businesses access to exponentially more data about what users do and want. This is an amazing opportunity to utilize analytics to give your payroll customers what they really want!

Technology continues to advance. Companies should be laying the foundation for even more digitization in the future now. They’ll have to be willing to accept some short-term losses or setbacks, but with an eye on the larger target future, longer-term profitability will be greater.

Short-Term vs. Long-Term Planning

 The key is to pay attention to and prioritize innovation over short-term profits before the ramifications have a huge impact on long-term, broader capital markets.

While technology, itself, is nothing more than a commodity, firms that have the vision and ability to execute these changes will be the true leaders; companies that have the foresight to plan for what lies ahead, well into the future. These are the companies that will strike a chord with clients and will stay, long into the future.

The key is to pay attention to and prioritize innovation over short-term profits before the ramifications have a huge impact on long-term, broader capital markets. Historically, the drive for financial services firms has been to generate the largest possible short-term returns. Institutions that successfully make the leap will be the ones to invest in leaders. Leaders build companies for the next 50 years. They don’t see just five years down the road.

To whit: Jeff Bezos, over 20 years ago, imparted some wise thoughts in a letter he sent to shareholders right before Amazon’s Initial Public Offering:

We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions…. We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.

 

Key Words

Technology

Client interaction

Client experience

Digitization

Employee retention

Digital transformation

Client expectations

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