2019 is already shaping up to be a turbulent year when finance departments take a more strategic role. After 10 years of bullish growth we could see a severe global liquidity crisis, and after a boom & bust 18 months 50% of cryptocurrencies could disappear. Integrated operational and strategic technology should support the development of a sharper competitive edge.
Prediction #1: RPA (Robotic Process Automation) drives the ongoing automation of financial processes, as an Internet of Value begins to emerge
In 2019, we’ll see automation continue to increase, driven by the innovative capabilities of RPA and lowering costs. As more companies begin automating it will effectively create a virtuous circle, with increasing innovation making ROI more visible, and increasing uptake making it more affordable.
By 2020, I believe we’ll see the number of companies automating all their basic transactions, either by off-boarding or technology, rise to 50%. This growing automation and outsourcing will enable finance departments to play a more dynamic, strategic role. And as we’ll see in Prediction 3, that could be crucial.
RPA: DATA INTO ACTION
Automation will also increase through RPA, adding crucial can-do to the Internet of Things (IoT). With IoT creating ever higher volumes of data, how can businesses act on it? The combining of AI and RPA into end-to-end process automation turns IoT data into actionable results. A combination of software and hardware robotics, RPA leverages drones, robotics, virtual reality and augmented reality, to perform tasks automatically or augment human delivery. In 2019, we’ll see the move towards end-to-end automation systems in finance progress as the hunt for value continues. Digitally integrated financial systems that merge and connect a company’s finances with worldwide financial analytic and trading resources will keep developing. Leading to initiatives like the Internet of Value (IoV), which will begin to emerge in 2019.
IoV: THE INTERNET OF VALUE
Why do payments or transaction still move so slowly compared to other digital information? In the US a typical international payment takes 3-5 days to settle, has an error rate of at least 5% and an average cost of 42 USD, found c-currency firm Ripple, founders of the successful XRP currency. Worldwide, there are USD 180 trillion worth of cross-border payments made every year, with a combined cost of USD 1.7 trillion.
The Internet of Value aims to change all that—positive news for global companies looking to accelerate and broaden their real-time, transactional reach. IoV is a secure, end-to-end system that enables the real-time exchange of c-currency, value and information. What does it mean for finance departments? As company systems increasingly aim to view a wider data source, being able to pull the most critical, high-value data into your own system space delivers speed and a powerful competitive edge in both trade and risk.
BIG DATA: SIZE ISN’T EVERYTHING
And IoV could be a powerful enabler when it comes to big data. When operating in a multi-currency space 24/7, being fed big data that relates directly to the currencies you trade or need to hedge delivers massive added value. As we all know, ‘big’ is often the least valuable part of big data. The quality and applicability of data is often more valuable. In increasingly connected financial markets and industries, IoV could play an important part in filtering out noise—and adding in value to big data.
END-TO-END, OPEN SOURCE, TOTALLY SECURE
From automation to dynamic strategy implementation—new AI-enabled and collaborative integrated systems that can connect and tailor company systems to gain the crucial intelligence of larger financial markets and industries, in real time, will deliver massive strategic and financial value. We’ll see take-up of such systems build in 2019 as leaders in an ever-faster business landscape expect more strategic data, support and decisions from their finance departments. Systems like IFS Enterprise Operational Intelligence (EOI), that can interact with and filter big data, offer full integration, visualizations and algorithmic processing, will become essential as large corporations become more entwined with world markets and the pressure to turn data investments into value increases.
Prediction #2: Digital assets mature in 2019 as blockchain projects continue to add value and crypto-currencies halve in volume but strengthen in trust.
A minute is a long time in modern finance. Especially with algorithm-driven trading doubling or halving stocks and currency parings in fractions of a second. Take Bitcoin. Right now, it is valued at 4,000 USD per coin, down from 20,000 USD in December 2017. It’s been a volatile year for all c-currencies, as the market has swung from giddy FOMO to sober anxiety about c-currencies’ failure to deliver on many technology promises around speed and scalability.
2019: A BRAVE NEW WORLD OF REGULATED C-CURRENCIES?
2019 we will see many key questions around c-currencies answered. Especially those around governance and regulation. Major regulators like the US SEC (Security & Exchanges Commission) will finally classify exactly what c-currency is, whether a security, commodity or something else entirely. This is vital. I’ve written before about c-currency success in Japan and South Korea, and how c-currencies were clearly classified as a tradable commodity there from the beginning. The SEC doing the same in the US in 2019 will see a new start, new confidence and a major, much-needed cull. Currently, 1,600 currencies exist. With increased regulation, in 2019 over 50% could disappear to sort the ‘wheat from the chaff’.
Gaming companies are well positioned to champion c-currency technology as they are traditionally tech savvy and used to working in online spaces with dense transactions and digital tokens. If they champion one or more c-currencies it will promote these digital assets further in ‘real world’ use and provide the positive catalyst required for further breakthroughs. When a high-profit, high-volume operation like this makes a success of c-currencies, others will be sure to follow.
BLOCKCHAIN BREAKTHROUGH AHEAD
New regulation will also boost c-currency’s partner technology blockchain. Blockchain has yet to go that final mile to full c-currency transactions, but 2018 has been an important, successful year for the technology.
MAERSK EMBRACES BLOCKCHAIN
In August 2018, global shipping giant Maersk launched the world’s first blockchain-enabled shipping solution with IBM. 94 major organizations signed up to take part in the open standard platform, including more than 20 port and terminal operators, and customs authorities in the Netherlands, Saudi Arabia, Singapore, Australia and Peru. The blockchain solution lets them interact seamlessly and securely, sharing real-time access to IoT and sensor data, ranging from temperature control to container weight, as well as standardized protocols and processes. In 2019, we will see blockchain continue to be taken up, continuing to perform strongly in the supply and distribution sector.
Prediction #3: In 2019 a severe, sudden liquidity crisis leaves those with integrated, AI-enabled strategy systems streets ahead
When is the elephant in the room, a bull? When it’s the unprecedented bull run that today’s markets have experienced—uninterrupted—for the last 10 years. When the IMF’s first deputy Managing Director David Lipton recently said “I see storm clouds building”, he was echoing a number of analysts predicting a crash or severe recession at the end of 2019.
It’s easy to see why. Recessions are a natural part of any economy’s cycle. But where we have until recently seen 4–6-year cycles, 10 years of uninterrupted expansion is unprecedented. Pumped up by years of quantitative easing and negative interest rates, global markets remain aloft despite unprecedented levels of debt. But—what goes up….
DEFINING A DIGITAL CRASH
And for businesses, this crash will be a lot different to the last one. Since 2008 the amount of high-speed, high-frequency algorithmic trading has increased hugely. In the US, algorithmic trading now contributes to around 70% of trading volume. In India in 2018, it reached 49.8% of total cash and derivatives trading, up from 9% in 2010.
And more algorithmic trading amplifies the speed and severity of reactions to change. From Facebook to the Renminbi to the Pound, 2018 has shown how much more connected world markets, world news cycles and world industries now are. Global, high-speed, hair-trigger algorithms mean both that it could well be a minor event that triggers a crash, and that the impact will be sudden.
DYNAMIC STRATEGIC TOOLS
But again, as we saw in Prediction 1, better strategic technology also gives businesses the capabilities to predict, manage and even capitalize on crises better than ever before. End-to-end, technology-enabled, collaborative solutions can integrate a company’s operations and strategy with world markets, trends and intelligence, helping it adapt in real time to the most relevant data and pressing events. According to a 2017 global risk oversight report, only 20-30% of companies have integrated corporate risk processes, leaving the majority of risk matrices in folders on shelves, unconnected. In high-risk, volatile times, the new generation of AI-enabled strategy tools will become powerful need-to-haves.
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