Saturday, May 25

Accountancy and finance professionals in fintech

With our global strategic alliance partners Chartered Accountants Australia and New Zealand (CA ANZ), we’ve been taking a deep dive into the world of fintech and what it means for the accountancy profession in a new joint report Fintech state-of-play: Opportunities for finance professionals.

Technology has always been an essential part of the role of accountancy and finance professionals, but especially more so in the modern digital and artificial intelligence age.

We have always welcomed the use of technology and data for and by the accountancy profession. It should be embraced and understood, rather than feared as a means of taking over the work of accountancy and finance professionals. In fact, technology enables them to move up the skills value chain to higher value interpretation, analysis, and leadership skills. Human impact and insights remain relevant even when operating in the tech enabled world.

The coming together of finance and technology in the form of fintech has become much more ubiquitous over the years, transforming how financial services are delivered and consumed.

It’s a sector that’s thriving with many diverse components such as online or neobanks, payment systems, payment gateways / application programming interfaces (APIs), investment banking back-end infrastructure, insurtech, wealthtech and regtech.

And added to this are the relative newcomers such as central bank digital currencies, cryptocurrencies, and non-fungible tokens. We have come a long way since the earliest forms of fintech such as ATMs and credit cards.

We believe that accountancy and finance professionals need to engage with these fast-emerging fintech developments as it seeks to both disrupt and collaborate with the traditional financial architecture that powers our world.

Whether in fostering trust in financial and non-financial data through audit and assurance, driving digital transformation or ensuring regulatory compliance; accountancy and finance professionals can play a vital role and in doing so, create new and exciting opportunities for themselves and their clients.

We have identified ten job roles for accountancy and finance professionals within fintech, illustrating how their contributions and skillset add value to the organisations that they represent. This spans a rich seam of experience from CFOs and auditors to digital transformation experts and entrepreneurs.

These ten job roles reveal an exciting, broad, and high-value portfolio of skills that accountancy and finance professionals already bring into fintech – from understanding new business models, commerciality, and the ability to tell a compelling financial story to investors. They can drive trust through assurance and clarity of financial information with emerging norms in corporate reporting, a digital-first mindset that can operate without voluminous paper trails, and perhaps crucially, a flexible approach that can pivot to changing needs in a fast-moving industry.

The crypto world

Cryptocurrencies and bitcoin are at the forefront of the fintech innovation. How the accountancy profession engages with this frontier is yet to be seen.
The market cap of all cryptocurrencies currently exceeds $2 trillion, suggesting they have gained a place among asset classes. Their continuing maturity could depend on factors such as the intrinsic value of a coin – beyond just what someone is willing to pay for it; their use as everyday money; managing money laundering risk and high energy consumption. Cryptos are part of a broader push to web 3.0 which is based on decentralised ways of initiating and validating financial transactions. As these transactions get more sophisticated, such as with crypto lending in addition to payments, a new eco-system sometimes termed ‘DeFi’ is aiming to replace current structures.
The regulation of cryptocurrencies is also under consideration, with the Securities and Exchange Commission in the US proposing to classify cryptocurrencies as securities which would entail rigorous reporting and disclosure requirements.

It is therefore essential that accountancy and finance professionals are well-informed of developments across the range of digital assets, including the evolving regulatory environment. Over time some digital assets could become part of finance operations. But at present their relatively early stage of development and in many cases speculative nature suggests they should be treated with caution by the custodians of an organisation’s finances.

Understanding the way ahead

Our report recommends for the profession to build awareness of the products and services within the fintech landscape globally and the competitive dynamics that will shape it.

Accountancy and finance professionals also need to understand the fintech regulatory landscape. In many instances, particularly for emerging areas like cryptocurrencies, there is a need for those who can help to shape the standards and regulatory treatment as well.

They’ll need to embrace an innovation and purpose-driven mindset. Fintech is extremely fast paced and dynamic, and benefits from individuals who are excited about new ideas that can drive sustainable value; and who can pivot fast to changing business requirements.

We also see governments and regulators playing an interconnected role here too – they need to explore together opportunities for common principles to underpin a multi-jurisdiction approach to fintech regulation. There are precedents, such as the EU’s General Data Protection Regulation (GDPR) covering all EU member states.

And we’d like to see governments incentivising more fintech innovation and growth. Governments should consider an approach which prioritises areas identified by finance professionals globally such as building links internationally to learn best practices, working with education partners to improve skills/training, developing labs/sandboxes to support innovation, and supporting fintech as a tool for the development agenda to tackle challenges such as financial inclusion.

Fintech is a brave new world, in which accountancy and finance professionals will have a central role to play.