Embracing theAccounting Revolution
As the headline sponsor of the 2021 Accounting iNdaba, Standard Bank is driving the conversation around how the accounting sector can embrace the digital revolution and leverage Infonomics to ensure sustainability. By Lee-John Maans, CA (SA).
These are exciting times for accounting professionals, who are seeing a dramatic shift away from traditional roles, in favour of a more strategic approach – that could ultimately drive business and economic growth in South Africa, especially among SMEs.
The changes we are seeing stem mainly from the automation of repetitive, manual accounting tasks, such as preparing financial statements and doing bank reconciliations, together with a proliferation of data.
However, as the Fourth Industrial Revolution and automation gain ground, accountants should not fear being displaced. Instead, we must adapt to the changing environment by applying new skill sets that will allow us to embed a higher degree of ‘value’ in the services we offer.
WHAT IS 4IR?
The First Industrial Revolution harnessed the power of water and steam to mechanise production. The Second leveraged electric power to launch mass production. The Third relied on electronics and information technology to automate production. The Fourth Industrial Revolution (4IR), now here, is extending and accelerating automated production through a fusion of technologies that is blurring the lines between the physical and digital realms.
THE PACE AND SCOPE OF CHANGE
“The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance,” this according to Klaus Schwab, Founder and Executive Chairman of the World Economic Forum – the man who initially coined the term ‘4IR’ back in 2016.
“The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited. And these possibilities will be multiplied by emerging technology breakthroughs in fields such as artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing,” says Schwab.
While the pace of this advancement was astonishing two years back – the pandemic has further accelerated it. As the world adopted new ways of living and working virtually overnight, organisations from all sectors are building new capabilities, harnessing digital technologies and adapting their business models at unimaginable speeds to respond to the pace of change.
So, the real question is how do we in the financial services industry rise to meet the challenges and opportunities presented by 4IR, and what does this look like in practical terms?
4IR AND ITS IMPLICATIONS FOR THE FINANCIAL SERVICES INDUSTRY
As with the advent of any significant innovation, 4IR is set to disrupt sectors on a universal scale. Every industry will have to respond – and respond quickly – to ensure sustainability.
When it comes to the accounting field, the largest global players have already made strides in combining AI with other technologies, such as robotic process automation, to streamline and automate manual tasks performed by accountants today.
Auditors, for instance, are employing machine learning tools in audits to ‘read’ documents, such as leases and sales contracts, perform trend analysis and identify discrepancies.
EY has gone so far as to launch an AI proof of concept that leverages computer vision to enable drones to monitor inventory during the auditing process – for example, counting the number of vehicles in a production plant under audit and feeding collected data directly into their digital audit platform.
The purpose of these initiatives is to reduce administrative time spent on mundane tasks and time-intensive reviewing of audit documents – enabling accountants and auditors to redirect their time to high-value, high-impact tasks and areas that require inspection, problem-solving, decision-making and insights.
EMBRACING INFONOMICS TO DRIVE SUSTAINABILITY
What does a 4IR-driven future look like for independent accounting firms? In other words, how can SME accountants better-support their SME clients? The answer lies in ‘Infonomics.’
WHAT IS INFONOMICS?
According to Gartner, Infonomics is an emerging discipline concerned with the managing of and accounting for information, with the same rigor and formality as applied to other traditional assets.
Essentially Infonomics tells the story behind the numbers. When accounting firms leverage Infonomics to effectively optimise the data at their disposal, they’re able to offer greater value to clients by equipping them with the strategic insights needed to make better-informed business decisions.
Usually, an SME owner is someone who can run a business, knows how to sell, and understands the basic numbers, such as when revenue is up or down. What that business owner does not necessarily know is why the numbers are behaving that way and what he or she could be doing to advance into the future and improve the business’s growth, profitability, and sustainability.
In an automated world, this is where accountants can add significant value. We have access to huge amounts of data, and if we can take that data and tell the story behind the numbers, making connections between a company’s strategy and the micro and macro economy, businesses can use it to make strategic decisions.
For example, an SME that does tax consulting is no longer just making sure that SME clients submit their VAT returns on time but, more strategically, has sound governance and the controls in place to ensure their clients’ sustainability.
WE MUST ADAPT AND EVOLVE TO THRIVE
Over the past decade, Standard Bank has evolved from being a traditional financial service provider, to meeting and servicing our customers on various digital platforms.
To this end we’re harnessing technology to reimagine our role in the financial services sector. In response to the digital revolution and in line with our future-ready strategy, we envisage Standard Bank to be a platform business by 2025 – where we will be primarily focused on creating digitised solutions to engage and support various markets and eco-systems. A few examples include:
- SimplyBlu, an intuitive, do-it-yourself ecommerce solution that has enabled SMEs to access the necessary tech platform to extend their brick-and-mortar operation by attracting new audiences and selling online;
- PowerPulse, an end-to-end online solution that assists businesses to navigate the complex process of alternative energy installations. The platform matches businesses with vetted suppliers and delivers the right technical, legal and funding solutions in a simple, scalable manner.
At Standard Bank, we’re also harnessing behavioural economics and machine learning to drive our responsiveness and customer-centricity. In analysing our customer data-sets, we’re able to identify trends, anticipate needs and recommend solutions to better service our clients.
We also acknowledge that as a data-driven organisation, we have a role to play in providing key insights and solutions to SMEs to support and enable them as critical role players in driving our economy’s growth.
HOW WE’RE SUPPORTING THE ACCOUNTING REVOLUTION
As we move into the future, the importance of accountants being able to add greater value to their clients by providing strategic insights is clear – however, not everyone will feel comfortable with taking on a strategic role in accounting, and that’s where we at Standard Bank are adding value to this sector.
We are proud to announce our new Edge proposition that has been purpose-built to support Accountants and Entrepreneurs. By bridging the current gap that exists between traditional banking and accounting software solutions, we’re able to deliver on our motto: ‘Less Banking. More Business.’
How Edge equips Accountants to better-serve their SME clients:
- Access to client’s financial info:
- Through Power of Accountant permissions, accountants can access and/or request nominated banking documentation and manage administrative and financial business tasks.
- Quick access to your client’s documentation including; FICA, Confirmation of Bank Details, Letter of Good Standing, and Tax certificates such as IT3B and IT3C.
- Streamlined credit applications, tailored to SMEs:
- SMEs need access to credit to bridge cash flow gaps and fund grow. We provide credit-scoring and insights to enable your SME clients to become funding-ready, together with a streamlined credit application process that is less admin-intensive for you.
- Access to financial insights:
- Accountants can access revenue, expenditure and budgeting dashboards that display a summary of business-related behaviors to help optimise decision-making and profitability tracking.
- Dedicated concierge team:
- Consultants and Specialists within the Edge team will assist you with your business development and banking needs, thereby anchoring your relationship with the Bank
- Your dedicated Edge Consultant will be your sole point of contact into the bank. Never again be handed off, or deal with a call centre.
- Access to specialist assistance:
- Need additional specialist insights? Your Edge consultant will source assistance from various divisions within the bank to assist you with business and sector-relevant insights.
Our Edge proposition is available to sole proprietors, CCs, or PTYs that have:
- A Standard Bank business account
- Been established for 12+ months
- An annual turnover between R2 million and R50 million.
Interested to learn more?
Mail us at: email@example.com
Lee-John Maans CA (SA) is the Head of Client Coverage in Johannesburg for Standard Bank.