The unstoppable march of digitalization will touch every area of government and business, accountancy included. Will accountants be able to adapt?
From Trump to Brexit, recent populist movements have turned away from globalization. Whether you agree with such protectionist politics or not, it is indisputable that the rest of the world is continuing to move towards an ever more global market. Multinational corporations have proliferated. Distance is no longer a barrier to governments or business, promoting increased transactions from abroad. Such progress calls for accountancy to develop competitive advantages that meet these new demands.
By integrating digitalisation, entities can reduce their operational expenses and need for infrastructure and employee interaction in transactions. A recently published estimate by the UK government suggests between £134m ($173m) and £421m ($544m) could be saved annually through greater digitalization of local government transactions. At a time of budgetary squeezes and global macroeconomic uncertainty, governments cannot afford to miss out on these savings, especially those that lack proper infrastructure, services, and leadership.
Adopting digitalisation also grants access to data, services and content across a virtual ecosystem, opening up interaction between citizens and government. For example, Estonia’s 1.3 million residents can use electronic information to vote, pay taxes, and access over 160 services online, from unemployment benefits to property registration. This streamlines public service delivery into a seamless process that all citizens can use, rather than the traditional methods that limit the ability of citizens to access the information and services they need. More importantly, both policymakers and public sector stakeholders can use digitalised accountancy data as evidence in real time to further assess decision-making processes and improve clarity around the impacts of certain decisions. Taking such additional data into consideration not only reinforces trust between the public and government officials, but also presents new lead economic and social indicators that would otherwise be obscured by traditional evaluation methods.
Society should be much better off as a result of these developments. However, such accelerated growth comes at a cost and it would be hubris to assume that digitalisation doesn’t produce any downsides. The automation brought forth by digitalisation poses risks to competition in the accountancy market. As robots take over their duties, the demand for quality accountants that provide sound judgements diminishes and puts humans under pressure to keep pace with artificial intelligence. Continued digitalisation could potentially erode the accountancy profession as a career for humans altogether. In finance [and accountancy] functions in particular, as much as 56% of roles are highly likely to be automated according to some estimates. However, in contrast to these assertions, smart software cannot provide the same strategic advisory service that humans can. Yes, automation saves time on routine tasks, such as number-crunching, book-keeping and transactions, but automation fails to replicate the same interpersonal characteristics human accountants possess.
Industry digitalisation is also expected to generate compliance issues for governing accountancy bodies and regulators. Now that organisations are beginning to handle customer data on electronic servers, information security standards must be enforced. The European Union’s General Data Protection Regulation, which aims to protect EU citizens’ data privacy wherever their data is stored, has considerable implications for how multinational financial services and governments capture, store and transfer data. Some might see these regulations in a positive light, as they protect confidentiality and promote data safety. Others might view them as burdens that limit the scope of their business practices, creating possible ethical dilemmas and increased risk for widespread data fraud. While the issue remains debatable, it’s safe to say impending compliance policy on digitalisation presents a headache for regulators as they attempt to define and tweak the specifics behind rules surrounding the storage, transfer, and use of customer data. Be too strict, and they risk reducing flexibility for businesses and inadvertently fueling unruly behavior.
Digitalisation will inevitably shape future business models, despite the backlash from populists. Many organisations, both private and public, are already beginning to heavily focus research and development resources on developing advanced automated systems to streamline their operations. While questions remain on digitalisation’s implications for the accountancy profession, humans have risen to the challenges posed by innovation countless times in history. This time should be no different. Accountants will evolve and adapt to digitalisation and the efficiency and simplicity it brings.
