Looking back, it’s easy to conclude that 2022 has been a volatile and challenging year in world markets. But beneath that volatility, a transformation is taking place in the investment and accounting worlds. That’s the continued steady advancement and implementation of many significant new technologies.
You may have seen these innovations firsthand. If not, prepare to hear more about them in 2023, as most of these trends are continuing to gather momentum.
Robotic Process Automation
One of the most accessible of these modern trends is RPA or Robotic Process Automation. RPA is software that uses machine learning to automate repetitive tasks, freeing staff time and eliminating human error. What’s especially exciting about RPA is that it doesn’t require new investment in infrastructure. Instead, these programs are designed to be launched by and run alongside your existing core asset management programs.
Additionally, RPA doesn’t take months or years to implement. Often it can be developed and put into operation quite quickly, in some cases in as little as a few weeks. This results in a significant return on investment and the minimization of errors. Read one example of how an RPA application helped a family office automate and eliminate one recurring frustrating problem.
Artificial Intelligence
Further up the food chain is true artificial intelligence, or AI technology. AI goes beyond the sheer automation capabilities of RPA since AI has the ability to learn and adapt. So instead of just automating a process, AI can change how it works and make decisions as it encounters new situations. This happens without human intervention. Because it is expensive to create, AI is entering wealth management and fund administration organizations primarily through large financial companies with the budgets to develop these platforms. So for smaller organizations, it is likely that your partners will be using AI, and you’ll benefit from their efforts and systems. In 2023 and beyond, expect more AI to show up in compliance, reporting and auditing applications.
Data Analytics
In our information-filled world, investor expectations are on the rise. Enterprising firms are learning that you can meet that need and turn it into a competitive advantage by using the right client reporting software. Instead of information being out of date as soon as it is shared or waiting for an outside vendor to generate reports, you can automatically push reports out to clients quickly with the right tool.
That means finding the right software that includes data analytics capabilities and client-centric reporting functions. Some of today’s top players provide it, allowing flexibility in reporting and automated ways to quickly customize reports to your end user’s requirements. Going forward, look for more advancements in this area with on-the-fly, user-definable reporting and charting to bring your data to life.
Cloud Computing
Agility is a core requirement for success today, so it’s no surprise that cloud computing is continuing to increase its foothold in the financial industry. By moving parts of your operations to the cloud, you can expect many benefits, including lower costs and the ability to quickly scale capacity.
With the continued shift to remote work, momentum toward cloud computing is expected to stay strong in 2023, allowing teams to collaborate without worrying about geography. Cloud security is advancing too. Look for continued data encryption and intrusion detection improvements, making cloud computing even safer.
Big Data
Another innovative trend has been “big data.” This means processing large pools of data quickly to mine for patterns. Then, the findings are used for more accurate and detailed forecasting. Today, big data is making even more strides in the investment world, and we expect to see more in 2023. One area to watch is predictive analytics, where big data is used to tease out insights and make predictions based on ever-larger data sets.
Blockchain
While cryptocurrencies have hit a rough patch, the underlying technology of blockchain continues to provide tangible benefits. So don’t expect the growth of that technology to slow much in 2023. One area of focus is smart contracts, which can help eliminate the need for an intermediary in financial transactions. That can mean more peer-to-peer transactions and faster and more secure settlements.
Smart contracts also promise to automate manual financial processes such as evaluating creditworthiness, processing claims or reviewing documents for regulatory compliance. Another use on the horizon is blockchain-driven smart contracts to verify identity. This could be a game changer since blockchain theoretically involves tamper-proof technology.
Continuous Accounting
Due to cost prohibitions, some of the previous trends may not be as applicable to smaller organizations. But one that is universally applicable is continuous accounting.
Continuous accounting is an innovative approach to organizational finances that gives you real-time information. That means no more lengthy monthly close processes or uncomfortable guesses based on month-old data. Instead, you get up-to-the-minute reporting based on currently available information. This real-time access to results means better visibility, which can help with better decisions and more accurate forecasts and cost controls.
More organizations are seeing this benefit and transitioning to accounting systems that offer it. (Learn more about FundCount’s award-winning continuous accounting solution for family offices, private equity, fund administrators and hedge funds.)
Many call this more of a transformation than a trend since it can significantly impact your ability to steer your organization through changing times.
Key Takeaway
We are looking for 2023 to see this technological transformation continue with unabated momentum. That’s good news since all of these technologies can deliver less tedious work, offer more security than ever before and better information, meaningfully improving business and life for all.
