Much of the conversation around automation treats it like some kind of disruptive 21st-century invention. Look beyond the Silicon Valley banalities though, and you’ll find a tradition that goes back centuries: over the past hundred years alone we’ve successfully automated production lines, lighthouses and supermarket checkouts – among many other things.
Neither the concept nor the debate around the impact of automation is particularly new. Concerns about technologically-induced job losses are thousands of years old: the Roman emperor Vespasian, when presented with a device that would allow stone columns to be transported from city to city more efficiently, famously worried about the impact it would have on his hauliers. In the 18th and 19th century, weavers lamented the introduction of machine-powered looms.
We should certainly have compassion for those who are affected by such innovations. But in doing so, we should also acknowledge that these jobs are invariably replaced by other jobs – and that introducing more automation to your business is both inevitable and necessary for any company hoping to remain competitive.
Where the financial services sector is concerned, there can be little room for compromise. According to recent research by the pay data specialist Emolument, nearly half (47%) of industry employees are concerned about the threat that automation poses to their jobs. Yet in an industry that’s ruthlessly and necessarily focused on the bottom line, the improved business efficiency that it provides is too rich an opportunity to turn down.
Staying afloat in a volatile market
Business is fundamentally about maximising the assets that you have – and automation enables you to do exactly that. Given the present volatility of the market, financial services companies should treat the subject with ruthless, unsympathetic urgency.
In the UK the combined forces of Brexit and an upcoming snap election next month are closing in on the industry, both of which could dethrone the country as Europe’s financial centre. Elsewhere across the West, authoritarian leaders from the left and right alike threaten further regulatory changes. Businesses can’t do much to influence these trends, but they can work to mitigate their impact.
Automation can help them become leaner and effectively prepare for any coming storms. It can help make sure that every pound, euro or dollar spent protects firms from economic turmoil and contributes to their future progress.
Accounting for automation
Take, for example, accounts payable (AP). Because it manages, rather than drives, revenue it’s often at the very back of the queue when it comes to investment. If it doesn’t make money, it typically isn’t considered worthy of high-level attention.
But these areas that don’t receive high-level attention are often the ones that most need it. Just because an area of the business isn’t terribly exciting doesn’t mean it can’t save you money. In AP, software is available to handle many tasks that previously required human intervention. Invoice sending, data entry, tax coding and many other cashflow control processes can be handled by computer programs.
Despite this, financial services firms still insist on hiring people to undertake these tasks – not because they need them, but because they don’t know where human labour is and isn’t required. Keeping processes manual when they could be made automatic also inhibits their ability to gather better data – and therefore make use of data-driven insights.
When firms are rooted in outdated methodologies, they aren’t working from the best information available, their analytical capabilities are negligible and they continue making bad decisions, wasting money and hiring unnecessary employees.
It’s an unsustainable approach. Finance departments need to evolve and automate: in the present market, it’s no longer optional for them.
Difficult decisions, rewarding consequences
Of course, this isn’t necessarily a simple or easy thing for a business leader to do. At the very least, it will lead to an awkward conversation with your AP team: nobody likes being told that their position is being filled by a software program or a robot.
But tough choices are inevitable for financial services firms that hope to remain competitive. Automation can save up to 75% of the resources needed for the entire function. Many shy away from it, but in the long run it’s a choice between losing many staff across some departments or every member of staff across all departments, as the company begins the slow march towards preventable bankruptcy.
By removing time-consuming, expensive administrative work, you can simultaneously save money and free up your employees’ time for more thoughtful work where human intervention is necessary. If you can maintain and increase your volume of business with a reduced headcount, there’s no good reason not to.
Circumstance often forces businesses to attempt to do more with less. By strategically using technology and automation, they are presented with a way to actually do it. The choice between going out of business or streamlining your firm’s workforce is, in the end, no choice at all.
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