Driving Innovation in Finance
American companies operating in 2021 have had to weather an unprecedented year in order to keep their businesses running. At one of the lowest points, 22 million Americans were jobless (Forbes), with hundreds of thousands of businesses on the brink of bankruptcy.
But surprisingly, since April 2020, the economy has experienced one of the biggest comebacks in recorded history, far outpacing and exceeding most analyst’s bleakest outlooks. For instance, the most recent data from February 17th, 2021, showed US retail sales surged the most in seven months to 5.3%, above the 1% consensus view held by economists (Bloomberg). What gives?
One reason for the economic boom is certainly the US government’s incredible push to get money into the hands of everyday consumers. Another one that can’t be discounted is overall US businesses’ ability to quickly make innovative changes in the face of uncertainty; some analysts even now predict a steady return to normal growth levels.
Whether it was digital transformation, investing in new technology and people, or supporting their communities, the businesses which have recovered or even grew in the last 12 months likely did on the back of their innovation pursuits.
A great example of striving and creating innovation during hard times can be found in Square Co-Founder Jim McKelvey’s book, The Innovation Stack.
Published in April 2020, McKelvey researched and wrote about companies that fostered innovation during hard times ultimately managed to scale, become successful, and even stay defensible; in an interview with Chief Executive Magazine (link), McKelvey says, “Innovation stack companies by definition are more adept at handling the unknown.
So in a world where everyone is suddenly thrown into an unknown state, they are gonna perform relatively better. Not that anyone would ever choose this. Nobody is high-fiving… but a company that has an innovation stack is relatively better positioned and therefore these situations make them look better than everybody else.”
As business leaders continue to research potential technology and investments to prepare for the unknown, here are key themes and technologies that the most innovative companies like Square are using and investing in 2021.
7 Key Fintech Themes and Technologies to Know for 2021
Artificial Intelligence (AI)
Artificial intelligence is defined as “…the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings.” – Britannica
Put simply, AI is a blueprint that enables a computer to solve a problem or complete a task.
AI Automation for businesses includes: streamlining, cash management processes to minimize human intervention, automatic balance reporting at set intervals, alerts, or monitoring key performance indicators or financial thresholds.
Machine Learning (ML)
Machine learning algorithms are a form of AI that can be taught to accomplish tasks without the need for specific directions. These algorithms are able to learn for themselves and are able to identify errors and increase the accuracy of their work the longer they are able to run.
Natural Language Processing (NLP)
Natural Language Processing is used to power features like natural language search. NLP enables programs to answer questions or retrieve data without the need for rigid syntax in search terms.
NLP drastically reduces time spent gathering data and enabled the customization of automated cash reports. With NLP, professionals can intuitively sift through vast amounts of transactions to quickly find the data they need.
Robotic Process Automation (RPA)
Robotic process automation drives efficiency. RPA software automates simple and repetitive tasks like converting currency.
One of the significant benefits of RPA is that it gives finance and accounting teams at enterprises the ability to process large amounts of data without diverting resources to tedious, manual work, all while reducing human error.
Data lakes are large digital data collection centers that are built to house data in various forms. These large pools of data can then be used to teach ML algorithms to sift through the raw data to spot trends and enhance forecasts.
Cloud computing allows non-enterprise level organizations to leverage the benefits of automation without the heavy IT investment required to build and maintain a data lake.
Cloud computing providers build and maintain the infrastructure to collect, manage and store data so that businesses of any size can leverage the benefits of automation.
Automated Cash Management
Automated cash management refers to the combination of AI, APIs, and cloud computing that allow users to easily access high-quality cash insights on-demand.
APIs provide real-time data, while cloud computing creates a single source of truth for raw transactional data. The data is then processed by AI and ML algorithms to create up-to-the-minute forecasts and reports.
Innovation Past 2021
As technology advances, so do the businesses that rely on it. This is especially the case for companies undergoing digital transformation. While these improvements with technology can be a massive boon, it’s important to find technology that is simple, provides increased visibility, and is easily accessible by everyone in an organization – read the Trovata Tech Checklist blog to find out more.
Want to see firsthand how automation can improve your cash management processes? Click here to schedule a demo.