Oracle Research – CFOs Prioritize Digital Technology Investments in Finance Function

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New Oracle Search finds that nearly 85% of finance and ERP leaders say modernizing finance operations is critical to competing in global markets.

Today’s banking and insurance CFOs face challenges ranging from inflation to supply chain constraints and regulatory requirements while competing and growing revenue in a dynamic global marketplace. According to a new IDC survey sponsored by Oracle, these challenges are driving investment in advanced fintech.

IDC’s recent Business Brief, Road Map to Driving Finance Transformation in the Chief Financial Officer’s Office, found that 84.5% of respondents agree that modernizing financial operations will be a critical part of being competitive in volatile local, regional and global markets. 77.8% of leaders believe the finance function within their organization needs to change and more than 75% said they are investing in finance modernization.

“IDC’s findings showed that a large majority of financial institutions crave integrated fintech systems and access to close, near real-time data on all aspects of their financial operations,” said Jason WynneGroup Vice President, Risk and Finance, Oracle Financial Services. “To truly modernize finance operations, CFOs and CIOs will need to be aligned and view the transformation journey as a life cycle rather than a one-way ticket to a single destination. They must invest now in digital technology that leverages advantage of the latest innovations and enables efficient use of their organisation’s data.

The survey confirms that today’s CFO and finance office need more advanced and innovative technology, but the market also reflects this need. The global market for financial applications reaches $37.5 billion in 2021, with investments primarily driven by companies moving to the cloud for more effective and efficient financial management processes. Technologies such as artificial intelligence, machine learning, and robotic process automation can provide the flexibility, cost savings, and strategic insight into the organization’s business that the CFO needs.

Several other factors influence the desire to invest in fintech. Organizations have weathered recent market volatility and global disruption due to the pandemic, which has also highlighted the need for more connected planning and processing. As a result, 72.9% of CFOs surveyed focused more on business resilience. Forty-four percent of respondents said lack of visibility into financial data is a challenge, and 70% of banking executives believe their lack of reconciled data is a major barrier to providing timely information. More than a third (36.7%) of respondents are also investing in digital transformation to meet regulatory rules, such as IFRS 17 and Baselfaster and more cost-effective.

Respondents also cite environmental, social and governance (ESG) issues as a driver for the finance function to play a more strategic role. The new sustainability standards aim to help organizations manage all of their ESG impact, including a transition to a Net Zero operating model. Additionally, there is increasing pressure from investors for organizations to consider ESG factors in their operations. Both have brought to the fore the impact of ESG on financial performance. Financial transformation can help improve the visibility of ESG impacts within an organization and accelerate reporting that supports new regulatory compliance requirements while informing ESG-related business decisions.

Finance teams that are agile and have access to modern data management tools and processes can accelerate time to analysis and take action to address some of these challenges.

Deep cracks in financial data and risk management

It is clear that the complex and siled management of data in the finance function is inefficient and drives up operating costs. More than half (56%) of respondents said they urgently needed to reduce the cost of collecting, correcting and reconciling current data. 44% of finance leaders said they saw significant room for improvement in financial data management, and 38.2% cited inconsistent data and hygiene as a barrier to improvement.

Financial institutions have revealed that they are seeking automation and machine learning to streamline key financial processes such as reconciliation and auditing. A large majority (81%) of finance executives said they would be willing to pay more for a cloud-native architecture that includes microservices and containers. This technology makes it easier to transfer data between cloud providers, deploy services independently and in different languages ​​and frameworks, and avoid downtime. When modernizing finance to a cloud-native architecture, financial institutions can significantly reduce their total cost of operation and be more flexible to meet highly dynamic market demands.

But managing data and profitability cannot be done without the right talent in place. Organizations also highlighted the importance of talent acquisition. More than a quarter (27.5%) of finance executives cited the desire to attract and retain top talent as a driver of finance modernization. To do this, 27.5% of respondents are investing in financial modernization technology because it can help make an organization more attractive to potential employees.

“As financial institutions contemplate their post-pandemic outlook, they continue to seek out cloud-native applications that can have a transformative effect on their bottom line,” said Kevin Permenter, Research Director, Financial Applications, IDC. “The CFO and the overall finance function will need to drive the financial modernization of their organizations to respond to the macroeconomic changes that will continue to shape this dynamic industry.”

About the survey

Oracle Financial Services and Oracle ERP partnered with IDC to survey more than 200 finance executives from 19 countries at financial institutions with annual revenue of $1 billion or more; the majority have assets greater than $100 billion. The primary business activity of these organizations includes insurance, investment banking, corporate banking, retail banking, or wealth/asset management, and the majority of respondents were C-level executives (financial director, Risk Director, Chief Compliance Officer), directors or senior roles. Read IDC’s full white paper to learn more about the current state of financial operations modernization in financial services companies here. You can also access our recent podcast, The CFO Agenda: Finance modernization that deliver value from the start (Part I, Part II).

Learn more about modernizing Oracle Finance here.

IDC, Business Brief Road Map to Driving Finance Transformation in the Chief Financial Officer’s Office (doc# US49323922) June 2022.

IDC, Worldwide Financial Applications Forecast, 2022-2026: CFOs go beyond the numbers. June 2022. https://www.idc.com/getdoc.jsp?containerId=US49194023&pageType=PRINTFRIENDLY

Contact information

Judi Palmier

Oracle, Corporate Communications

[email protected]

+1 650 784 7901

Brian Pitts

Hill+Knowlton Strategies

[email protected]

1 312 451 1757

About Oracle Financial Services

Oracle Financial Services provides solutions for retail banking, corporate banking, payments, asset management, life insurance, annuities and healthcare payers. With our comprehensive set of integrated digital and data platforms, banks and insurers are able to deliver next-generation financial services. We enable customer-centric transformation, support collaborative innovation and drive efficiency. Our data and analytics platforms help financial institutions better understand their customers, integrate risk and finance, fight financial crime, and comply with regulations.

To learn more, visit our website: https://www.oracle.com/industries/financial-services/index.html.

About Oracle

Oracle offers integrated application suites and a secure, self-contained infrastructure in Oracle Cloud. For more information about Oracle (NYSE: ORCL), visit www.oracle.com.

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