Organizations risk losing employees as household budget needs are prioritized

The challenging financial circumstances faced by many Australians have led to increased job search behaviour, with employees seeking better pay packets to address their household budget needs. Despite a slight decrease in business confidence and consistent employee perceptions of job availability, active job searches increased by 2 per cent during the first quarter of 2023.

Work-life balance has become the top factor employees consider when looking for a job, surpassing location, while compensation remains a key consideration. Manager quality, people management, and work-life balance are the top reasons cited by employees for switching jobs, indicating a willingness to leave their current roles.

The economic environment presents a risk for employees who consider changing jobs, as they may face the possibility of being the first to be laid off. However, financial struggles and poor managerial relationships can drive employees to take a chance and seek alternative employment opportunities.

In response to these challenges, Gartner emphasizes the importance of empathetic leadership. Employees are looking for leaders who demonstrate care, respect, and concern. Organizations can support their employees by extending programs that offer financial planning services, access to financial advice, and flexible work options that reduce commuting costs.

While some organizations are attempting to bring employees back to the office for collaboration and innovation, Gartner warns that this can further strain employees who are already facing financial difficulties. Maintaining work-life balance is crucial for employee retention, and employers should provide clear rationales for returning to the office while considering funding social gatherings to alleviate financial stress.

The survey data highlights the need for organizations to understand and address the financial well-being of their employees, as it not only impacts their personal lives but also their productivity and engagement in the workplace.

Tags: AustraliaGartner

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Despite the decline China VC remains a force in global market

The China venture capital (VC) funding landscape experienced a decline in both deal volume and value during January to May 2023 compared to the previous year, attributed to geopolitical tensions and recession concerns. However, China remains a dominant player in the Asia-Pacific (APAC) region and globally, showcasing its continued significance in VC funding activities, reveals GlobalData, a leading data and analytics company.

An analysis of GlobalData’s Financial Deals Database revealed that 1,310 VC funding deals of worth $US15 billion were announced in the China during January to May 2023, a year-on-year (YoY) 18.1 per cent decline compared to 1,599 VC deals announced in January to May 2022. The corresponding disclosed value of these deals also declined by 37.5 per cent YoY from $US24 billion to $US15 billion.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “Geopolitical tensions and recession fears seem to have had a dent in deal-making sentiments in China. However, despite the decline, China continues to remain the top APAC market as well as one of the top five markets globally for VC funding activity both in terms of deals volume and value.”

China accounted for 14.4 per cent share of the total number of VC deals announced globally during January to May 2023 while its share of the corresponding deal value stood at 14.3 per cent.

Meanwhile, it accounted for 46.7 per cent share of the total number of VC deals announced in the APAC region during January to May 2023 while its share of the corresponding deal value stood much higher at 57.6 per cent.

Some of the notable VC funding deals announced in China during January to May 2023 included $US750 million secured by Zeekr, $US375 million fundraising by Libode, $US340 million raised by SJSemi, $US321 million fundraising by Yunnan National Titanium Metal, and $US300 million worth of funding raised by JD Industry.

Bose concludes: “Despite the challenges, China’s innovation ecosystem remains a compelling destination for venture capital funding. The notable funding deals during this period highlight the ongoing investment interest in China’s innovative and promising start-ups, indicating the potential for future growth and opportunities in the country’s entrepreneurial landscape.”

Tags: China VCGlobalData

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Nippon Life India Singapore is at an exciting point in their expansion

SS&C Technologies Holdings, Inc.  today announced Nippon Life India Asset Management (Singapore) Pte. Ltd. (Nippon Life India Singapore), the offshore multi-asset, multi-strategy platform of Nippon Life India Asset Management Limited, has transitioned its operations onto the SS&C Eze asset management platform. The firm will now take advantage of the Eze Investment Suite ecosystem for its recently launched Fixed Income ETF, among other funds.

“We were looking for a singular, scalable and robust solution to streamline our front-to-back investment operations and data across asset classes and strategies. Eze’s longstanding reputation, its ability to scale up and its capability in handling the entire investment process made Eze Investment Suite a great choice for our investment operations,” said Abhijit Singh, CEO and Global Head, International Business at Nippon Life India Singapore. “SS&C’s deep experience and capabilities supporting firms similar to ours make them a valuable, trusted partner in our growth strategy. The platform’s expansive capabilities and flexibility will enable our teams to evolve the business seamlessly over time.”

Nippon Life India Singapore manages funds investing in Indian capital markets and UCITS funds for international investors focusing on Indian Equities, Fixed Income, & Alternative assets.

“Nippon Life India Singapore is at an exciting point in their expansion, and we are pleased to be a partner,” said Frank Maltais, Head of Sales, APAC, SS&C Eze. “SS&C focuses on reducing the friction of business data flow by eliminating burdensome paperwork, Excel spreadsheets, manual and double-entry to deliver automated reporting. Our teams have cultivated a strong rapport, which will be crucial to future momentum.”

Tags: Nippon lifeSS&C

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Avallis to automate its investment accounting

Clearwater Analytics, a leading provider of SaaS-based investment accounting, reporting, and analytics solutions, today announced that Singapore-based fund manager Avallis Investments has selected Clearwater Analytics to power its investment data management, portfolio analytics, and investment reporting operations to drive higher growth across its business. Avallis Investments is an independent asset manager based in Singapore aiming to continually grow its presence in the high-net-worth wealth management space across Asia.

Clearwater’s single instance, multi-tenant technology platform will provide Avallis Investments with a comprehensive view and a single source of truth for its clients’ investment portfolios. By eliminating the need to manually aggregate, reconcile, and validate data from different sources and systems, Avallis Investments will benefit from having “a single pane of glass” to holistically view their entire investment portfolio and easily respond to unique reporting challenges. As a result, Avallis users will be able to derive actionable insights to make more informed decisions that grow wealth.

“After evaluating a number of investment accounting and front-to-back-office investment operations solutions, Clearwater Analytics came out on top,” said Gary Cheo, CEO at Avallis Investments. “Clearwater’s powerful network effects—its single instance, multi-tenant architecture—delivers a clear advantage for us in terms of speed, flexibility, and operational efficiencies. It also aligns with our belief in an open, transparent service model that empowers our clients and put their interests first. In a few clicks, our clients can quickly drill into portfolio specifics and track the necessary information to make effective portfolio decisions, manage risk, and measure performance.”

“We’re excited to work with Avallis Investments in supporting their relationship managers with Clearwater’s innovative, on-demand technology platform that boosts operational efficiencies and profitability,” said Scott Erickson, President, Americas and Asia, Clearwater Analytics. “Avallis Investments joins our clients in Asia and around the world seeking a transformational, more competitive path forward.”

Tags: ClearwaterPrnasiaSaaS

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Flexible approach to finance tech stack

CFOs who adopt a composable technology strategy will achieve higher revenue growth than peers who take more traditional routes with their technology investments, according to Gartner, Inc. By 2024, 60 per cent of finance organizations will seek composable finance applications in new technology investments.

Gartner has identified a new model for CFOs based on a composable technology paradigm that focuses on modular technology solutions delivered by best-fit vendors that enable specific finance capabilities. The framework is built upon three distinct layers of composable platforms (groups of related finance applications) based on the main purpose and the strategic value they deliver.

CFOs are near unanimous in their intentions to invest more in technology in 2023, yet most will be held back from achieving their objectives by legacy mindsets in their approaches to upgrading their technology systems. Traditionally, most finance department technology planning prizes elements that are not compatible with agility and innovation, such as selecting large complex systems that can be used by multiple departments and favoring a single vendor approach for technology selection.

“The needs of the business and dynamic nature of new technologies have outrun the traditional technology planning models relied upon by CFOs,” said Nisha Bhandare, VP analyst, research, in the Gartner Finance practice. “What may appear to be efficient and practical on the surface actually keeps CFOs stuck in outdated and siloed systems, in what we call the ‘trap of traditional thinking’.”

“A composable architecture allows CFOs the flexibility and nuance to build a strategy that incorporates sustainable differentiation and innovative new processes while still providing a secure and cost-effective base to support core finance processes,” said Bhandare. “Gartner predicts that those organizations pursuing composable finance will enjoy 30 per cent higher revenues than traditional-minded peers by 2025.”

Each layer of the composable technology architecture is dedicated to the main purpose and value it provides, and can be managed to different timelines, governance models, and needs of the business.

• Core Platforms aim to deliver standardization and compliance within finance capabilities. The pace of change, and updates within these platforms, is typically slow since these capabilities are well-established and common throughout most industries.
• Differentiated Platforms enable unique or differentiated capabilities, including scenario planning and insight differentiation, and those activities that allow finance to support a specific industry. The pace of change within these platforms is typically 1 to 3 years, reflecting the need to accommodate frequent updates and changing business dynamics.
• Innovative Platforms aim to support an experimental “fail fast” environment for testing new ideas to support the company’s next competitive advantage. It is a fast-moving environment where the pace of change, and need for updates, often occur in under one year, since the capabilities these platforms support are not always fully defined and can include emerging technologies such as predictive analytics and AI.

Bhandare encouraged CFOs to explore a flexible technology governance structure to match the agility that a composable architecture provides, where each layer of the architecture can have tailored governance that better allows for the exceptions that will occur more often among the differentiated and innovative platforms.

Tags: CFOsGartner

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The applicability may vary across organizations and industries

“Organizations ignoring these use cases should have a good reason for doing so because they offer the best combination of feasibility and business benefit,” said Mark D. McDonald, senior director, research in the Gartner Finance practice. “Looking to apply AI to other use cases before getting these five working effectively is likely leaving process efficiency and business performance gains on the table.”

Gartner analysts examined 23 AI use cases in corporate finance representing the types of processes a future-looking autonomous finance organization will work on. They were ranked according to their business value and feasibility of implementation.

“FP&A Leaders should take into account the maturity and needs of their own finance organization because the applicability may vary across organizations and industries,” said McDonald. “These use cases are commonly implemented and effective, but the most valuable use cases exploit a company’s unique strengths and allow it to further differentiate itself.”
To clarify the use cases, Gartner experts provided more detailed definitions.

• Demand / Revenue Forecasting: Using both internal and external sources of data, models predict demand and associated revenue across a variety of dimensions including business unit, product line, SKU, customer type and region.
• Anomaly and Error Detection: Anomaly detection uses a series of machine learning (ML) models to highlight transactions or balances that are in error or potentially violate accounting principles or policies. A comprehensive solution will also include real-time analysis during data entry preventing errors from entering the workflow and avoiding costly downstream corrections.
• Decision Support: ML prediction algorithms designed to predict outcomes based on current data are used to predict outcomes when alternative data values are used. Using models with hypothetical data predicts the result of alternate decisions.
• POC Revenue Forecasting: Or POC accounting, ML models forecast the percentage-of-completion metrics (e.g., hours, cost, units, weight, etc.) to predict POC revenue and the total completion effort remaining.
• Cash Collections: ML models are used to forecast when customers will pay invoices triggering proactive collection efforts before payments are past due. Using the predictions from these models, collections staff focus their efforts on at-risk accounts. Forecast cash collections also contribute to overall ML-driven cashflow forecasting.

“Forecasting is a popular use case in finance departments because legacy processes are manually intensive and notoriously unreliable. AI excels at automation and improving accuracy.” said McDonald. “Many pre-configured software packages address common finance processes such as accounts receivable and accounts payable but be aware that use cases which address unique business needs, such as forecasting, will require some internal skills to build.”

Tags: AIGartner

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Wayne Byres, Chairman APRA discusses how financial promises made by the institutions that APRA supervises are met within a stable, efficient, and competitive financial system to Parliament.

As the prudential supervisor of the financial services industry, APRA currently supervises around 2000 institutions across authorised deposit-taking institutions (banks, credit unions and building societies), general insurers, life insurers, private health insurers, friendly societies, and most trustees of the superannuation industry.

In total, these institutions hold about $US8 trillion in assets for Australian depositors, policyholders, and superannuation fund members. That amount is up by around one-third from just five years ago, highlighting that, notwithstanding the financial and economic ups and downs in recent years, the financial system has continued to grow strongly.

This hearing is formally to discuss APRA’s Annual Report for the 2020/21 year. That Report detailed how APRA and the Australian financial system responded to the significant health and economic impact of the COVID-19 pandemic that dominated the year. In that report, we noted that the Australian financial system remained financially and operationally resilient during a period of immense disruption, and regulated institutions – banks, insurers, and superannuation funds – all played important roles in supporting the broader Australian community through an extremely difficult time.

However, given we are about to publish our Annual Report for 2021/22, I thought I would focus my opening remarks on a few more contemporary issues. In doing so, I want to start by emphasising that the Australian financial system remains in sound shape, with financial institutions that are, in aggregate, well capitalised, liquid, profitable and operationally resilient, and well-positioned to continue to deliver services and support the Australian economy.

That is important, because we are obviously not the first to note that the economic outlook and operating environment in Australia is rapidly evolving. More broadly, frequent natural disasters, elevated geopolitical tensions, and cyber threats – most recently evidenced by the Optus data breach – and the lingering impact of COVID-19 are creating volatility in financial markets, increasing cost pressures for all industries and heightening risks in the financial system. These pressures are occurring alongside developments in technology and digital innovation which are rapidly changing business models and the operating landscape.

Against that backdrop, I wanted to briefly outline for the Committee some of the key critical work streams underway at APRA to ensure the ongoing stability and resilience of the Australian financial system.

As we repeat often, a strong financial system is not just dictated by traditional metrics of financial strength. New and novel risks are constantly emerging. This means APRA is devoting increasing share of its efforts to a range of industry-wide themes:

• deepening our understanding of how technological change and digital innovation will transform the financial system.
• materially enhancing the cyber and operational resilience of the financial institutions.
• ensuring institutions take well-informed approaches to managing climate-related financial risks.
• establishing plans for institutions’ recovery from financial stress or, if they are no longer viable, arranging their resolution without the need for taxpayer support; and
• strengthening institutions’ governance, risk culture, remuneration and accountability.

On this last point, I note that the Financial Accountability Regime (FAR) legislation is currently before the parliament. APRA and the Australian Securities and Investment Commission (ASIC) have been working extensively in recent months to be ready to jointly administer this regime, including developing joint administration frameworks and systems to support entities with the implementation and ongoing compliance with the FAR. We will be ready to go if parliament passes the legislation.

We also have two major initiatives underway that will materially benefit APRA-regulated institutions, and other stakeholders. These are to:

• modernise APRA’s prudential architecture and approach to regulation in the face of new technology and an evolving financial system; and
• enhance our collection, use and publication of data to support better decision-making.

Both are substantial, multi-year projects that will bring major efficiencies for APRA and the regulated institutions that must comply with our requirements and meet our data obligations.

And then, within each sector of the financial system, we have several industry-specific priorities.

In banking, we are devoting considerable attention to analysing the impact of a large and relatively rapid increase in interest rates. The banking industry remains well capitalised and prudentially sound, underpinned by the implementation of the Basel III and “unquestionably strong” capital reforms over the past few years. However, banks and other deposit-takers face funding cost pressures and heightened risks in credit portfolios from an environment of higher interest rates.

A particular focus of many is the housing market. While developments in this market are unlikely to create stability issues, there will inevitably be pockets of stress from borrowers who find themselves over-extended. This will be exacerbated as property prices fall.

In insurance, while adequately capitalised, each of the general, life and private health insurance industries face varying availability, affordability, and sustainability challenges. Factors creating these pressures differ across products and, in some lines of business, are becoming quite acute.

As a prudential supervisor, we cannot solve these issues ourselves. We are, though, actively collaborating with Treasury, ASIC, industry, and other stakeholders to help develop solutions that target the root cause of issues for specific insurance products. There is unfortunately no silver bullet: the drivers impacting affordability of home and commercial building insurance, such as a changing climate, differ from those impacting the availability of public liability or life insurance products. Solutions are likely to require coordinated action across all arms of government and with industry.

Finally, in superannuation our focus continues to be on identifying and addressing fund underperformance, and ensuring trustees have an unwavering focus on the interests of their members.

In August, APRA published the results of the 2022 MySuper performance test. While there were five failures, and four funds that have now been closed to new members, overall, the advent of the test, alongside the existing APRA heatmaps, has driven positive change. Trustees of underperforming funds can no longer hide from the spotlight, and we have seen a steady flow of trustees acknowledging that their members would be better placed in the hands of another, better performing trustee. This consolidation is driving costs down and seeing more members in better performing products.

As the committee would be aware, a review of the Your Future Your Super reforms is now underway. The review will give stakeholders the opportunity to have a say as to what enhancements could be made to the reforms, including the performance test. From APRA’s perspective, a review after two cycles of the test makes good sense.

Transparency on how businesses handle customers data

Cisco published its 2022 Consumer Privacy Survey, an annual global review of consumers’ perceptions and behaviours on data privacy. This year’s survey highlights the critical need for further transparency as consumers say their top priority is for organizations to be more transparent on how they use their personal data. The survey also showed that while, in theory, consumers are supportive of AI (with 54 per cent willing to share their anonymized data to improve AI products), many (65 per cent) have lost trust in organizations due to their use of AI. “Organizations need to explain their data practices in simple terms and make them readily available so that customers and users can understand what is going on with their data. It is not just legally required; trust depends on it,” says Harvey Jang, Cisco Vice President, Deputy General Counsel and Chief Privacy Officer.

This year, 81 per cent of respondents agreed that the way an organization treats personal data is indicative of how it views and respects its customers – the highest per centage since Cisco began tracking it in 2019.

Consumers Are Increasingly Acting

In response to the erosion of trust in organizations’ ability to protect data, many consumers are acting to better protect their data themselves including:

• 76 per cent say they would not buy from a company who they do not trust with their data
• 37 per cent indicated they had indeed switched providers over data privacy practices
• 53 per cent say they manage their cookie settings from a website before accepting
• 46 per cent of those with a home listening device say they turn it off regularly to protect their privacy

Disconnect Between Business and Consumers When It Comes to AI

Ever-evolving technologies make it difficult for consumers to trust companies with their data. Most respondents believe the potential benefits of AI outweigh the risk, provided proper de-identification is in place, with 54 per cent willing to share their anonymized personal data to help improve AI-based products and decision-making.

However, there is a disconnect between businesses and consumers: while 87 per cent of organizations believe they have processes in place to ensure automated decision-making is done in accordance with customer expectations, 60 per cent of respondents expressed concern about how organizations are using their personal data for AI. Powerful steps organizations can take to address this include giving consumers the opportunity to opt-out of the AI application and explain how their AI application works.

Desire for Government to Play a Primary Role

Finally, more than half said national or local government should play the primary role when it comes to protecting consumers data. Many consumers do not trust private companies to be responsible with personal data on their own accord.

As governments and organizations continue to demand protections on data transferred outside their national borders, more are putting in place data localization requirements, demanding data to be physically stored in the country or region where it was collected. Yet data localization comes at a price. The Cisco 2022 Data Privacy Benchmark Study reported that 88 per cent of surveyed organizations experience significant additional operational costs due to data localization. Consumers are evenly split on the value of data localization (41 per cent in favour, 41 per cent against) if it adds cost to the products and services they buy.

“We hope that the insights from this survey will motivate organizations to continue to prioritize their customers’ desire for security, privacy, and transparency,” said Brad Arkin, Cisco Senior Vice President, Chief Security and Trust Officer.

Tags: APRAASIC

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Automation in most finance functions has gone after low-hanging fruit

A February 2022 survey of 155 finance executives revealed that 55 per cent of respondents are aiming for a touchless financial close by 2025, according to Gartner, Inc.

“Most finance functions want to close faster, cheaper, and with fewer errors,” said Pritika Bhattacharjee, vice president, research in the Gartner Finance practice. “However, it is particularly noteworthy that over half of respondents say they are aiming for a touchless close by 2025.”

At least half of the respondents identified four financial close goals with the aim to achieve them by 2025. Eighty six percent said they wanted a faster, real time close, 68 per cent said they want a cheaper close, and 64 per cent said they want an error-free close by 2025. The most ambitious functions according to Bhattacharjee, were the 55 per cent targeting a touchless close in this period.

“Finance has invested heavily in technology to reduce time to close with three technologies deployed by more than half of functions already: general ledger technology, a financial close solution, or workflow automation. However, a touchless close is a goal that will require moving beyond basic automation towards autonomous finance,” said Bhattacharjee.

Autonomous Finance

A touchless close means that the entire financial close process is carried out autonomously without routine intervention from human employees. Although finance executives appear to be broadly optimistic about reaching a state of autonomous finance, few functions are making much meaningful progress towards it.

“Automation in most finance functions has gone after low-hanging fruit,” said Bhattacharjee. “Using technologies such as RPA, finance has successfully automated many simple, repetitive tasks, but typically this leaves behind many tasks that require human intervention to keep the process running.”

An autonomous, touchless financial close will require a big step up from existing automation in terms of digital maturity for finance functions. Autonomous finance yields augmented real-time insights, effortless compliance, and greater flexibility in financial strategy. It goes beyond an automated function in its ability to learn and act without human intervention.

For example, an automated accounting close has a bot perform reconciliations and sends exceptions and errors to a human for adjudication. In an autonomous finance function, technology embedded in the close process learns how to handle those errors and self-corrects on its way to a continuous real-time close.

“Most finance functions simply are not ready to implement the kind of technologies that can lead to an a touchless close,” said Bhattacharjee. “The lack the appropriate skills are hard and costly to source, and their data handling and processes are not ready for full autonomy.”

To help finance leaders understand what’s involved in autonomous finance, Gartner experts have prepared some examples:

• Back-office use cases, such as with AI-enabled process mining algorithms capturing all variations and exceptions in P2P and O2C.
• Middle-office use cases, such as blockchain enabling an audit-ready continuous close
• Front-office use cases, such as decision Intelligence powering financially savvy tactical and operational decisions
• Office of the CFO use cases, such as decentralized finance facilitating innovative options for raising capital and insuring against financial risk

Tags: financeGartner

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