Harnessing the Power of Connected Finance with Real-time Insights and Decision Making | HCLTech

Harnessing the Power of Connected Finance with Real-time Insights and Decision Making

March 01, 2023
10 min read
Anil Dugar


Anil Dugar
Vice President, Digital Process Operations
March 01, 2023
10 min read

Consider this data point: by 2025, the world is expected to generate over 460 exabytes per day – that is 460 million terabytes per day. It is a jaw-dropping statistic, but for businesses, it symbolizes a world of opportunities.

Data has emerged as the lifeline for business across verticals, domains, or industries. From accelerating business intelligence to forecasting, decision-making, and more, the applications of data in businesses are constantly growing, both in depth and scale. But are enterprises capitalizing on this? Are they breaking down data siloes within the enterprise to leverage data to make outcome-oriented business decisions? For many financial services (FS) organizations, the answer, unfortunately, is no.

A unified view of data can be a game changer for FS firms. And it starts with breaking down barriers that prevent seamless interoperability. Consider the potential benefits unlocked if the CFO of a bank can engage with data from teams like IT, operations, sales, and marketing. The CFO can view this data as a whole and use it to make big-picture decisions that enhance internal efficiencies, build more complete and relevant customer experiences, and drive growth.

This is where the concept of connected finance emerges. Connected finance is a that leverages AI, ML, and data analytics to integrate advanced financial tools, multiple aggregating systems, and diverse data sources to support a real-time view of financial functions and provide real-time business intelligence.

Connected finance is not a new concept. In the wake of rapid digitalization, the industry has long grappled with similar concepts. The total market value of smart finance connectivity was already at $228.42 million in 2021. But a surprisingly large number of FS institutions are yet to sign on and reap its benefits. Future predictions are bullish however, and connected finance is expected to be the modus operandi of choice with a CAGR of 4.0% between 2022-2028.

Technology drivers of connected finance

Building a connected financial services operation begins with unifying finance functions that help enterprises become smarter, more agile, and more adaptable. But what is the technological backbone of connected finance? The chief technology drivers of connected finance are:

AI and ML

AI and ML are generally considered established industry enablers in finance. Research reveals that FS organizations leveraging AI see significantly higher top-line gains with 20% higher EBIT on average. The myriad benefits of AI have already motivated over 70% of financial leaders to start their AI journey in 2022. And that’s not all. It is further estimated that AI will enable banks to save up to $447 billion in costs by 2023.

AI can help drive connected finance by unlocking new levels of efficiency, accuracy, and security. It also helps FS firms deliver more personalized and innovative financial services to their customers. Some of AI’s use cases include:

  • Improved decision-making: By analyzing vast amounts of data and market trends, AI can provide financial advisors and portfolio managers with more recommendations and actionable insights.
  • Streamlining operations: By automating routine tasks such as reconciliation and data entry, AI frees up FS employees to focus on core competencies and value-adding activities.
  • Risk management: AI can be used to analyze large data amounts from distinct sources such as market trends and financial transactions. This helps in identifying and predicting potential financial risks.

Distinguish between a business’s differentiated and non-differentiated processes to ensure the focus is on outcomes.

Data analytics

Like AI and ML, data analytics is also not new to the domain of finance. The data-driven analytics market was already worth $3.1 billion in 2021 and is expected to rise steadily to reach $22.9 billion by 2031 at a CAGR of 22.4%. A Gartner survey indicated that almost half (49%) of finance executives consider data analytics to be the prime driver of employee productivity. There is enough proof to make a compelling case for laggards to adopt data analytics as a critical enabler.

The key role of data analytics in connected finance becomes clear in the following use cases:

  • Better business intelligence: Data analytics can provide financial advisors and portfolio managers with more actionable insights and recommendations into KPIs like payroll costs, generated revenue, and net income by analyzing vast amounts of data and market trends from disparate sources.
  • Higher productivity and efficiency: Financial institutions can streamline operations by identifying inefficiencies and bottlenecks in their processes, as well as providing insights into ways to improve performance. Applying data analytics to sift through structured and unstructured data also improves the efficiency of CRMs and ERPs.
  • Fraud detection: The ability to analyze patterns and anomalies in transaction data secures financial transactions and protects against financial losses.
  • Risk management: By analyzing large amounts of data from various sources such as financial transactions and market trends, data analytics can predict and identify potential financial risks.

Enterprise transformation with connected finance

Overall, connected finance helps organizations improve the accuracy, speed, and efficiency of their operations. Moreover, by facilitating collaboration and generating actionable insights, financial organizations see a substantial ROI on their technology investments. The impact is observed in:

  • Improved visibility and decision-making: With a single source of truth for financial data, decision-makers can access real-time information to make informed decisions quickly and confidently. This also allows organizations to have greater visibility which unlocks newer avenues of revenue generation.
  • Enhanced collaboration: By unifying cross-departmental data, connected finance facilitates better collaboration between finance teams and other departments, improving communication and aligned efforts towards common goals. It also enhances supplier and vendor relationships leading to supply chain efficiency.
  • CRM and ERP: The integration of financial data from CRM and ERP systems brings them closer to financial operations and yields several benefits including improved revenue, productivity, and customer experiences.

Charting the roadmap to success

Financial organizations can adopt the following roadmap to embrace connected finance:

  1. Assessment
    Organizations need to start by assessing their position and the current state of financial systems and processes. The imperatives in this stage are to identify areas for improvement and prioritize the most pressing challenges.
  2. Definition
    Next, firms must clearly define the desired outcome of the connected finance implementation. This means determining the desired levels of integration, automation, and data accuracy.
  3. Selection
    This stage involves selecting the right technology that not only aligns with the desired outcome but also integrates with existing systems. Leaders must consider factors such as scalability, security, and ease of use while making their choices.
  4. Implementation
    Firms must devise and implement a data management strategy that includes data quality control, data governance, and data security to ensure the accuracy, consistency, and security of the data.
  5. Training
    It’s critical to ensure that finance teams are trained on the new technology and processes. Teams must be empowered with ongoing support and resources to optimize the adoption and usage of connected finance solutions.
  6. Refinement
    The connected finance solution must be monitored regularly to assess its impact and identify improvement areas. The solution must undergo gradual refinement and iteration to continually meet the evolving needs of customers and the organization.

Adopting connected finance is a sizeable undertaking, but the benefits of improved financial visibility, increased efficiency, and better decision-making make it worthwhile. If planned and executed well, organizations can realize the benefits of connected finance more quickly and effectively. Here, a partner like HCLTech, with experienced technology transformation experts, can ensure your enterprise’s transition to connected finance is seamless, sustainable, and impactful. By leveraging techno-functional frameworks and comprehensive transformation solutions focused on connecting systems, HCLTech offers a competitive edge for financial organizations. With this, financial institutions are:

  • Assured of a sustained evolution in line with ecosystem disruptions
  • Equipped with the ability to identify opportunities amidst challenges

Stay relevant, competitive, and profitable for the future by becoming a connected finance enterprise today.

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