The Evolving Playground of Finance Technologies

According to the book Debt by David Graeber, humans started having debt even before physical money was developed. This debt could have been between people, from people to the government, or even unpayable obligations promised to the gods that provided them with life. Analogously, barter started as an exchange method that quickly required a system to register transactions, as humans felt the need to quantify and keep records of such interactions. 

At some point in history these rudimentary systems evolved into the first ledgers, which were certainly manual and based on the then available tools, like pen and paper. For many years, manual ledgers, bookkeeping and accounting was finance’s main function: it was used to keep track and standardize, as much as possible, the transactions being performed in companies. Clearly, the more transactions the companies achieved, the more workforce was needed to record them. 

With the access to personal computers in the early 80s, it seemed obvious that all the financial numbers needed to be digitized.  Several companies jumped at the opportunity and developed their own accounting software using the available technologies, like the programming languages Pascal, BASIC and Fortran, the operating system MS-DOS, and the server AS400 from IBM still widely used in banks. In September 1985 MS Excel was launched with its versatility to do everything in the financial world (and other worlds). Amazingly, even after 37 years, MS Excel is still one of the most used tools around the world for finance despite its many restrictions, like the 65,536 rows limit that it used to have. 

Later in the 90s’, ERPs (Enterprise Resource Planning) came along --with significant important costs for the companies-- proving to be a mandatory tool for the proper administration of companies. Some worth mentioning ERPs are ORACLE, SAP and NetSuite. For finance and accounting, ERPs meant a significant workload reduction, with the added advantage of having all the information connected and centralized in a single point, simplifying processes and improving data quality. Nevertheless, not all companies have every ERP module, nor every ERP software has all the tools required for every company. That’s one explanation of why MS Excel survived as a parallel tool that complements ERP functions. 

More recently, other tools like robotic process automation (RPA) and robotic desktop automation (RDA) were introduced into the financial world by companies like UiPath, founded already on the year 2005 in Bucharest, Romania. These new so called “robots” helped automize many processes that, even after the use of powerful and expensive ERPs, remained manual, repetitive and time consuming. On the perils of the robots, it was found, not surprisingly, that they didn’t adapt to changes in processes and technologies, and high maintenance was needed. They turned out to be the opposite of a definitive holistic solution. 

In parallel to the robots, Business Intelligence systems were being developed, one example being Tableau, founded in 2003 in Mountain View, California. This kind of system helped finance people to extract and display in a colorful manner all the information coming from ERPs and other sources, bypassing Excel, and automating innumerable reports.

Almost ten years later realizing the potential of Business Intelligence bigger players came to the scene like Microsoft with Power BI and SAP Analytics Cloud, and nowadays it’s a market valued on $24.05 billion in 2021 forecasted to almost double by 2028 according to https://www.fortunebusinessinsights.com/ 

There is a myriad of disruptive technologies that are currently being adopted globally, like AI and blockchain, both taking advantage of the ever-increasing computer processing power and connectivity, which are taking the financial world into new levels in terms of predictions, safety, and automation. 

Companies like Sidetrade and HighRadius are using Artificial intelligence and Machine Learning Algorithms on one of the main operations for the finance department which is the Order-to-Cash process, automating manual tasks and demonstrating with time and money savings the impact that this kind of technologies are having.

Others like Lukka and Kaleido are serving companies to adopt and manage blockchain and digital assets aiming to reach a global finance automated world going beyond traditional currencies and government and relying on the internet and expanding into other areas like legal with smart contracts that basically eliminates the need of a third-party intermediators and guarantees the compliance of the contract rules.

The financial functions have evolved through the years from a highly manual workload to an automated data management system that acts as a business partner to other areas in the company. The arrival and use of new technologies over the years is one of the reasons for this evolution but also the increasing cost of manual labor and the need to analyze and process more and more data faster every time.

Even nowadays, and despite all the evidence, the payback of the digital transformation projects is a recurring concern, but as the history demonstrates, digitalization is the traced path, not only to keep the pace of the business but also to retain talents with newer and interesting challenges