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Future-proofing your fintech

The fast pace of the fintech industry can make start-ups into unicorns virtually overnight, meaning a future focus is critical.

Continuing development in automation has posed significant opportunities for making businesses more efficient and creating a perfect environment for scaling.

“The key thing with the fintech market is that the lifecycle of the businesses is much faster to turn over large transaction volumes. When they see that high growth, clients often come to me in what I describe as panic mode,” said Helen Basset, Business Outsourcing Partner at Eveyln Partners during Innovate Finance and Evelyn Partners’ “Future-Proofing your Finance Systems: the Role of Technology” webinar. 

 Helen Basset, Business Outsourcing Partner at Eveyln Partners
Helen Basset, Business Outsourcing Partner at Eveyln Partners

She explained that in this “panic mode,” customers tend to make rash decisions, turning immediately to hiring personnel.

A lot of the time, there are much more efficient and cost-effective ways to scale. 

“I think the first call to action would be to understand your processes,” advised Mo Salim, Associate Director, Technology and Transformation at Evelyn Partners.

“Understand where you start and where you end up in terms of data flows. Once you’ve understood your data flows well and what you want to do, start looking at your automating system.”

Automation particularly effective in fintech

According to a Grand View Research report, the global robotic process automation market was valued at $1.89 billion in 2021 and is projected to rise at a CAGR of 38.2% from 2022 to 2030. Many respondents cited that having Robotic Process Automation (RPA) will become “mandatory” to maintain their competitive advantage.

It is estimated that, on average, 10-20% of work hours are spent on repetitive processes, 70%-80% of which could be automated. There are now many ways of automating a business. Aimed at reducing time and human resources spent on repetitive functions, in fintech, it can be particularly critical. 

The industry’s fast pace can swamp scaling fintechs with large volumes of processes ranging from payroll to risk assessment, significantly raising lead times. In a sector where high speed is essential for customers, businesses are at a disadvantage. 

Automation, leveraging technology and AI, can be a cost-effective way to reduce time, leaving firms with a more robust infrastructure for growth. 

Moving away from Excel

“Consider the processes you are doing and whether there is a module you can add to your software. That can help alleviate the processing,” continued Salim. “Most cloud-based systems generally have that module where your provider can generally switch it on in the background, and it’s available quite quickly.”

As technology develops, processes are opened out to automation. Traditionally data input into Excel has driven automation systems, but apps with in-built innovation can simplify functions even further. 

Mo Salim, Associate Director, Technology and Transformation at Evelyn Partners
Mo Salim, Associate Director, Technology and Transformation at Evelyn Partners

“We had a client who was processing 100 expense claims through Excel, so employees had to fill out Excel forms at the end of the month,” said Dom Gibbs, Business Outsourcing at Evelyn Partners.

“This used to take the business four to five days a month to review and process all the expense claims. They brought it back to one and a half days just by using an automatic application where employees could upload pictures of receipts in real-time.”  

He explained that one of the main reasons Excel is still so widely used is that although many apps are available, few cover the full range of business functions. In addition, if businesses scale up through acquisition, different apps will likely be used within the companies across various jurisdictions.

However, most apps support Excel input systems, creating a continued need for the software to link the business’ data. 

“We have just partnered with Luca net software, which has out-of-the-box integration and provides over 250 links to apps like SAP, X ledger, zero, etc. All the businesses in the group can be on different software, and it’s not a problem. The software we use can bring that all together. For our clients, it has made consolidation so much more efficient.”

Automation improves decision-making for founders

Real-time access to data has knock-on benefits, assisting in management’s ability to make quick decisions and communicate data to third parties. 

“The more automation you do, the quicker you have that information,” said Salim. Having that data visibility is important for more informed decision making.”

“A lot of the people setting up these fintech businesses are entrepreneurial focused and may not necessarily have a finance background,” added Bassett. “With automation, we’re turning finance into representation so that it’s easy to understand whether you are the CFO, whether you only have a finance assistant or whether you’re the prime. This is data that you can directly share to third parties.”

In scaling, this becomes particularly important. Whether the goal is acquisition or funding, easily accessible data is vital to assessing the business’s trajectory and achieving growth goals. 

“A lot of authentic businesses are looking to exit within three years. They may be looking to obtain funding. Many third parties can be interested if you can provide that dashboard and instant picture. Manipulate that data in any way. There are no limitations,” concluded Bassett. 

automation diagram
Automation – turning finance into representation.

Providing unicorns with value

As fintechs grow, as do process volumes. Unfortunately, many apps used at an early stage don’t support such high volumes, leaving Unicorns with a need to adjust their automation strategy. 

“It depends on which processes have pain points, but I recommend looking into areas like robotic process automation (RPA) for that business size. That covers all sorts of processing robotics generally mimic human interaction with software,” said Salim. “We find the most sort of value add from RPA in the finance and accounting space, especially with things like invoice processing.”

Many RPAs have machine learning integration, meaning that processes can be streamlined further as the system continues to work. “It’s about investing in that technology because today, out of the box, you might be able to automate around 60% to 70% of invoicing. A year later, that same system with the machine learning component will be able to automate around 80 to 90% of your invoicing,” he continued.  

“That’s including the scale of both, so if you’re expecting high growth, you don’t need to take on a lot more resources if you’ve got systems like this in place.”

Invest early to support easy future growth

Early investment in back-office technology seems to set the scene for a growing business. Automating repetitive processes reduces the need for personnel early on, freeing up funds and workforce for decision-making based on collected data. 

“Automated processes can lead to staff retention, high morale, and attracting new talent. The remaining tasks will be creative, special projects that add to business success, and that’s going to be the focus of the role,” concluded Salim. 

Gibbs added, “Do research upfront. Make sure it fits your needs for years. You don’t want to keep jumping from small accounting software to small accounting software all the way up to mitigate.”

  • Isabelle Castro Margaroli

    Isabelle is a journalist for Fintech Nexus News and leads the Fintech Coffee Break podcast.

    Isabelle's interest in fintech comes from a yearning to understand society's rapid digitalization and its potential, a topic she has often addressed during her academic pursuits and journalistic career.