KPMG Enterprise Director Fleur Telford considers the next phase of the IT accounting revolution.
When BankLink introduced the electronic delivery of bank transaction data to a simplified ledger in the early 90’s, we didn’t realise the paradigm shift that would occur.
Xero entered our market in 2010 with a complete cloud accounting system fed by bank transaction data which fundamentally changed our expectations of accounting systems.
For the first time an accounting system had been deliberately designed for small business owners to prepare and understand their own books, as well as being a ledger accountants could utilise.
Cloud single ledgers weren’t new when Xero launched. Saasu was well-established yet failed to see the power of bank feed integration, sacrificing early market share by coming late to the party in 2014. MYOB had integrated feeds by the end of 2012 with their cloud and hybrid offerings and then went on to buy BankLink outright in May 2013 .
Why was this a paradigm shift? For the first time, both accountants and businesses in different locations and networks, could view and edit general ledgers simultaneously.
The ledger now contained the most recent bank transactions thanks to overnight updates. No more going out to the client, no more waiting for bank statements, no more downloading CSV files from online systems, and so on…. All you had to do was log in and get to work.
This was enhanced by auto-reconciliation. The bookkeeper’s work was half finished without even opening the ledger. Bookkeepers and accountants were now able to work with clients and give them advice in real time, rather than waiting 12-18 months after the close of the financial year.
Meanwhile, the ATO had started a digital journey to make compliance easier for business and for individuals. Today, not only can individuals download myTax for free, lodge their tax return and be paid within 14 days, but with the imminent arrival of single touch payroll , the average accountant will have even less to charge for.
Like a tadpole in a fast shrinking puddle, it’s time to transform in order to be ready for the next phase of accounting services. So what will this look like? What will it contain? And what will our clients expect from us?
These are all big questions. As a technologist, I believe the next phase will see robotics and AI mop up the last of the processing tasks that have not already been replaced by bank feeds and auto-reconciliation. We may have visions of large, silver, humanoid figures punching away at keyboards, but robots in the finance industry are essentially scripts. They are written to direct mouse clicks to copy and paste data, and open and close applications in a precise and directed manner.
In her article “Robotics will hit finance jobs harder than offshoring” , Agnes King commented that the public sector, a large employer of finance professionals, will be big users of robotics as the option of offshoring was denied to them due to privacy and national security issues.
So doesn’t this indicate that robotics is ostensibly a replacement for offshoring? Large firms have already started programming their own robots to complete individual tax returns in bulk, a task they had offshored over the last five years.
The spokespeople King interviewed were of the view that robotics won’t take jobs away, but will allow finance professionals to “focus on higher-value tasks that add real value to the customer”. This raises the question of what those higher-value tasks are and how they will be delivered.
AI engines are data hungry creatures that bear more resemblance to Pac-man than David, the character played by Haley Joel Osment in the movie “AI”.
An AI engine processes large amounts of data, looking for patterns and clustering events in a quest to find solutions to complex problems in a more human-like manner. How they do this is varied and still an emerging science, but is already a part of the Xero accounting application.
Xero has a chatbot that provides basic business advice through a messenger system. This will be followed up with ‘Hey Xero’ dispensing advice from an activated ledger. So does that mean that the simple, low level advice usually given by accountants or bookkeepers will be re-assigned to technology as well? Our puddle is shrinking more rapidly than we thought.
Or maybe it isn’t? Most likely, Hey Xero will make our clients ask different questions of their financial data. They will then seek professionals out who can answer those questions.
It isn’t just smart technology that is drying up tasks. Simple integration of all applications in a workflow can return 10 percent to 20 percent capacity to a business that is manually re-typing figures from one system to another. I am still surprised that there are practice management systems that haven’t prioritised complete integration within their suite of applications. They will lose market share to those who have.
So for those of us who have moved to full integration, what do we do with such increase in efficiency? Do we reduce the workforce head count? Or is there a smarter way?
The rise of integrated reporting applications and online dashboards give varied information to improve clients’ businesses. But this assumes two things: first, the finance professional must be able to use the tool sufficiently well to extract the ‘much and varied information’, and second, that they know what to do with it once extracted.
These two assumptions find firms investing heavily into reporting tools that create amazing reports and dashboards to find that only one person in the firm is capable of using them successfully.
An equally large investment should be made in training and planning the services that will be wrapped around the tools. The tools are really only underpinning the relationship we have already developed with our clients.
Tools are merely background systems, and should be treated as such to keep the focus on what is truly important: our client relationships. Clients will far prefer a meaningful chat about their business than a slew of meaningless reports emailed to them once a month.
The reassurance we bring to our clients by working with them personally can never be replicated by software. That is where we need to be focussing the time we have liberated by embracing technology.
We need to design service offerings that are complemented by technology, rather than being overpowered by them. We also need to look for a different skill set in our graduates. Those with the highest marks aren’t necessarily the best for the next phase of accounting services.
The next crop of graduates need to be “people” people, those naturally inclined to strike up conversations and listen intently. We need to get back to the basics of being able to hold conversations and understand what our clients want for their business and for themselves. Technology delivers the solutions, but we deliver understanding and service.
It’s true we no longer visit the bank to get transactional data. Robots are here, and AI is nowhere near as cute as Haley Joel Osment led us to believe. Our puddle of traditional services is shrinking.
By getting back to basics and reminding ourselves that technology is an aid, not a replacement for our services, this transformation may not be as bad as we thought.
Image credit: MYOB BankLink
Sholto Macpherson
Leave a Reply