In a recent PwC study,
I don’t think the fintech transformation stops there, however. From my vantage point, I see disruption coming to the public accounting and auditing lines of business. Only I don’t see these lines of business as being jeopardized necessarily. What I see is a fintech driven shift in the types of services these firms offer their clients, which, based on my personal experience, is a very welcome development.
Financial tech eliminates costly data entry
I began my career working for a small public accounting firm that specialized in accounting, auditing and taxes. Clients paid $165 per hour for us to essentially do high-level data entry. Each day we entered hundreds of line items manually. It was pretty much the same inside a corporation — highly educated financial team employees, even today, spend their days doing data entry.
Time is money, as the adage goes. If your day is spent entering data, you hardly have time to think about the big picture of the business or a sector. And data entry isn’t the reason why you paid all that money for a college education. But fintech, with its built-in logic and compliance, means that business models can be built once, with data flowing through it automatically. The amount of time needed to prepare an audit or create a budget or forecast is greatly reduced, leaving staffers with the time they need to do more strategic work.
Take auditing, as an example. The public accountant’s approach to auditing is all about sampling, specifically, what’s the right statistical sample? Auditors literally spend hundreds of hours determining the statistical sample size and ratio analysis that says if we pull this number of records and verify them, we can then have a reasonable assumption that everything else is correct.
Then in 2015,
Creating business models is another great example of fintech automation. Clients no longer need to contact an accounting firm to build a budget or do their financial planning and analysis. Emerging FP&A platforms now allow finance teams to create a model of their companies — with all of the unique structures intact — just once, and simply update it thereafter. These platforms use real-time data from the company’s ERP, CRM and PL system, which means they’re far more accurate than budgets built in Excel. Automation streamlines the creation, and built-in logic eliminates massive data entry efforts. In the early days of my career, making a change that’s tied to a based-on driver required us to find and update up to 150 separate records within that operating expense. Now it can be done instantly.
The silver lining: work you went to school for
The PwC report talked about jeopardized revenue, but in my opinion, public accountants have nothing to fear and a lot to gain from financial tech. These firms can stay relevant and retain clients by embracing the advances that the market has seen. To be sure, revenue will shift away from the lines of business with heavy data entry, but it will grow in areas that require advanced data analytics, such as helping clients improve operations or using business insight to pinpoint areas of growth and efficiency. This is the type of work people who have advanced degrees in finance want to do. And more and more companies now realize that the finance team can and should contribute more directly to the day-to-day operations of the business. It’s win-win for everybody.
So rather than eliminating work, fintech is all about shifting people with prestigious degrees in finance and accounting away from data entry and focusing them on breakout FP&A, strategy and analytics to improve the company.
