Blockchain, chatbots, and AI could reinvent corporate finance

Over the next several years, CFOs and their finance organizations will be able to tap three key technologies to make their business processes better, faster and less expensive.

Traditionally siloed and manual corporate finance operations are beginning to test – and in some cases adopt – three still evolving technologies that can offer a single view of corporate data in near real time while also automating arduous business processes.

Blockchain, artificial intelligence (AI) and chatbot technology may not be fully baked yet, but they are already available for proof-of-concept testing and limited production rollouts in enterprise finance departments, according to a new report from Deloitte LLP. The sooner enterprises begin testing them, the better prepared they'll be to move into production when the technologies mature, according to Deloitte.

"In business, robots are working alongside human beings to build cars, deliver packages, design computers, and make electricity. Blockchain is tracking supplies of diamonds and monitoring construction equipment. And smart machines are taking up residence in hospitals, shipping containers, drug stores, and more," Deloitte said. "What does this have to do with the future of Finance? Everything."

In general, the barriers to having real-time corporate information and deep insights now are tied more to legacy systems in mature enterprises. But newer companies have more options and are more likely to experiment.

For example, a start-up today isn't likely to install an internal ERP system; instead, it's more likely to use the latest cloud-based service and finance applications and  configure those systems for real-time access to data and insights.

"The technology is there; the migration from legacy complexity will take time," Steven Ehrenhalt, a principal analyst with Deloitte Consulting LLP, said via email.

Over the next five to seven years, routine requests within a finance department will be handled by interacting with digital assistants and chatbots, similar to those on retailer websites or built into music streaming apps. Those kinds of tools will become common in finance, Ehrenhalt said.

Finance blockchain Deloitte LLC

Digital assistants will be especially helpful in handling routine queries and questions, such as providing information on accounts receivable aging like for a certain period for a line of business, or detailing the top 10 customers who are past due in a particular region or country.

They could also answer how many days late a particular customer may be on a payment, figure out global expenses on facilities in 2017 or detail daily sales on a given date for a product.

"We're building prototypes of this now using digital assistants to trigger robotic processes that extract information from an ERP [system] and trigger the distribution of a user-friendly dashboard report via email," Ehrenhalt said via email.

Among other advances offered by the new technologies:

  • Touchless transactions: Automation and blockchain will take out the middleman to create seamless, almost instantaneous transactions. This will create a need for employees who understand both business and technology on a large spectrum to build and connect systems.
  • Improved response from Finance departments: Automated operations will make it easier to provide stellar customer service.
  • Finance cycle changes: Actual spending and forecasts will happen in real-time, moving away from traditional analytics as data scientists and design professionals will be relied on to engineer real-time forecasts.

"It will take some time for organizations to digest and embed the technological progress of the past several years to change the way work is done, how workforces are organized, and how workplaces are structured," Ehrenhalt continued. "The capabilities of currently available technologies have not yet been fully manifested in any company's finance organization that we have seen. Just as society, regulation and governmental policy are taking time to catch-up to technological progress, so too are large enterprises."

A key benefit that CFOs and their teams are seeing from blockchain implementations is not only a singular view of their data but the data integrity that an immutable blockchain environment can afford, according to Charlie Moore, CEO of Global Debt Registry, a FinTech company that provides a B2B credit ledger based on blockchain.

"Many corporate finance processes haven’t changed in decades, but by bringing all parties into a singular ledger, finance officers are now getting a clear perspective into their markets. This allows for consistency of data-sharing and financial diligence, and removes redundancies in data evaluation and analysis," Moore said via email.

Business processes optimized by a permissioned blockchain ledger can increase transaction volume by allowing for greater visibility into the process, Moore added.

"These strategies are taking root in certain markets; our focus in particular has been in the structured credit market, which has seen keen interest in adoption," Moore said. "Based on the current growth in interest it’s not difficult to imagine that these strategies will be applied across many markets and finance functions to yield similar benefits.”

finance blockchain Deloitte LLC

In the late spring of 2018, 4,407 corporate executives were polled by Deloitte LLC about blockchain technology.

While generally more conservative than other lines of business, CFOs and their organizations are beginning the process of testing technologies such as blockchain, which through a permissioned, electronic distributed ledger can offer a single view of finance data, connecting previously siloed processes and applications at a transactional level in near real time, according to Ehrenhalt.

The key for CFOs now is to first recognize that change is coming and take steps to be prepared. "Learn about and experiment with the new technologies," Ehrenhalt said, adding that  CFOs should:

  • Have a clear view of how finance needs to support the success of a company and build required capabilities.
  • Govern and scale key technologies across the finance organization.
  • Identify and close the most critical talent gaps, recognizing that finance leaders will need to get more comfortable leading employees with skills they may not fully understand.
  • Determine the cultural changes required, i.e. which behaviors are getting in the way of results and which beliefs are causing those behaviors.

The key to addressing the complex challenges of automating business processes, Ehrenhalt said, is "combinational innovation" or weaving together multiple technologies.

One example: connecting chatbots that use natural language generation and natural language processing with advanced visualization connected to cloud-based ERP systems to enable self-service to line executives.

"While we can envision it, it's going to take a little while to fully manifest and become the observed norm," Ehrenhalt said.

By looking at how other businesses are using new technology, finance organizations can get a glimpse of what automation can deliver. For example, enterprises are using blockchain and its business automation component – smart contracts – to track assets, both internally and in supply chains.

Finance blockchain Deloitte LLC

In the late spring of 2018, 4,407 corporate executives were polled by Deloitte LLC during a webcast about blockchain technology.

"We don't have to reinvent the wheel. We can focus instead on adapting and adopting," Ehrenhalt said. "One area we're observing a lot interest in is dispute management between companies. Commercial transactions where parties can disagree or have different interpretations of what transpired are good candidates for smart contracts."

For example, if a company received inventory from a supply chain of product with a limited shelf-life and that inventory was out of date when it arrived, an immutable blockchain ledger can prove when it was received, and a company can use that to go back to the vendor and request a refund or credit. Or, a company might dispute the quantity or volume of a receivable.

Today, resolving supply chain disputes requires a lot of manual back-and-forth effort between companies.

"It is time consuming, costly and usually frustrates customers," Ehrenhalt said. "Smart contracts enabled by distributed ledgers on a blockchain can create a shared record of when the product was delivered, the pricing terms of the transaction, the conditions under which receipt was taken (e.g. with or without remaining shelf-life) and may even automatically trigger invoicing and settlement at negotiated terms, reducing friction with customers. That's the promise of automated operations and smart contracts."

And in a system that allows both actual spending and forecasts to be produced instantly on demand, traditional cycles become less relevant, according to Deloitte; in effect, the distinction between operational and analytical data begins to disappear.

While finance organizations will still need to meet external demands for cyclical information, outside investors could also get access to more frequent performance data. "You're not forecasting once a month or quarterly. It's all happening in real time," the report said.

At the same time, processes that now involve copying and pasting information from one system to another will become even more anachronistic.

"While it may seem shocking to those not on the inside watching the sausage being made within the finance function," Ehrenhalt said, "there is still a great deal of human 'duck-tape and bailing wire' holding things together in many companies – especially those who were frequent acquirers who never fully rationalized the financial systems post acquisition."

Copyright © 2018 IDG Communications, Inc.

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