The technologies redefining accountancy
Information and data are the bedrock for modern economies. The accelerated rate of digital innovation has become a defining feature of the UK’s financial services industry, and the accountancy sector has spent much of this year rapidly adapting to the new era of data-led services.
The ability for firms to adapt to new technologies has become a key determiner for success, but knowing which new tools will truly benefit established practices has never been so bewildering.
The technology that generated the most excitement in 2018 was artificial intelligence. Machine learning and algorithmic trading have become an indispensable component to financial markets. Now, the accountancy sector is also looking to leverage this pioneering new technology. Not so long ago, AI was an arcane and expensive tool that could only be wielded by the most powerful technology companies. Last year saw an increase in the number of accountancy firms using machine learning to streamline and automate manual data-entry tasks. According to Accenture’s “Finance by 2020: Death by Digital” report, up to 40 per cent of transactional accounting work will be automated by 2020. This represents a shift in the sector as tax professionals transition into more advisory roles for the clients.
By leveraging new technologies like AI, accountants are beginning to minimise time spent on lower-value transactional work and instead provide performance management, predictive analytics and decision support. These activities require a broader skill-set and understanding. Fortunately, there has been a dramatic increase in the quantity and quality of cloud-based services that harness big data for accountancy tasks. This is partially the result of new EU legislation implemented in 2018.
The revised Payment Services Directive came into effect on January 13, 2018. It was primarily targeted at delivering improved interoperability between banking services but has had the added benefit of creating greater access to financial data for accountants through open application programming interfaces. In the same way that Lego blocks are built in a uniform way so they stick together, APIs provide a shared standard for how financial data is shared across the internet. Several of the leading players in the accountancy sector launched their own implementation of the open banking API. The new services that are being designed on top of APIs have already enabled small businesses to establish live feeds with their bank accountants and dramatically reduce the time spent reconciling transactions.
The focus on improving access to data throughout 2018 looks to have laid a solid framework for the industry to develop innovative new services this year. In November, accountancy firm Xero launched Dexter –a digital tax adviser that takes the form of a cartoon character. Built with the latest advancements in AI, the virtual assistant uses open banking APIs to bring together all of a client’s financial data in one place. Xero expects the tool to be instrumental in ensuring that millions of small businesses across the UK are compliant in time for the introduction of Making Tax Digital this April.
Accountancy is often perceived as an industry that is resistant to change, but that is starting to change. Last year showed that accountants are keen to innovate and embrace new technologies that make their jobs easier. Disruption has become a key buzzword in the UK’s financial services sector; 2018 will be looked back on as the year tax professionals joined the fray.