The year ahead promises much in the way of technical developments for the financial services sector, and within that for the accountancy profession.
Changes in how society itself operates, combined with new laws opening up the market, mean 2018 promises to accelerate the development and use of new technologies. Accountants will need to keep up to speed with these if they are to continue to offer an efficient and competitive service to clients.
One of the most obvious areas of change is around artificial intelligence (AI), with many banks already using chatbots and automated tools to handle customer interactions.
For accountants, this could mean a greater degree of reporting being done automatically, particularly as clients gear up for the introduction of Making Tax Digital, giving them the ability to offer additional services such as identifying growth areas and scenario planning using financial information drawn from the cloud.
“2018 will be the year that AI goes from sprinklings to a tidal wave for the profession,” predicts Damon Anderson, director, partner, at Xero. “We’ll see more practices making the most of these tools available to support their day-to-day working lives. As a result, the role of the accountant will continue to evolve into that of an advisor. AI will give accountants more time to focus on value-added and advisory services for their clients.”
Capabilities around this area will increase over the coming year, says Johnnie Ball, chief data scientist at Fluidly. “The profession and large software vendors are beginning to realise the power of AI techniques such as machine learning so 2018 is set to be an exciting year,” he says. “We can expect to see adoption of sophisticated algorithms and statistical modelling that start to eliminate time-consuming and low-value tasks.”
This could have implications for the skillset of accountants in the future, with a need for both people who can understand technology and ensure software packages work effectively, and those who can focus on more strategic issues, using information gleaned from such data. “But we do need to proceed with caution, because the FSA will expect due diligence to avoid mis-selling,” warns Paul Nicklin, technical director and co-founder of inniAccounts.
“It’s not unthinkable that the next mis-selling scandal could come from a ‘robo-adviser’ as artificial intelligence is integrated into the sales and customer service process. If the robots don’t have a complete view of your financial situation, the information is flawed in some way or the app is badly programmed, then it could encourage people to buy things that are not right for them.”
Further down the line, it’s even possible that smart assistant technology could evolve into holographic assistants, taking repeatable and time-consuming tasks away from accountants, suggests Sean Evers, accountant development director at Sage. “Holographic assistants could action tasks such as ‘pay Simon’ or ‘send invoice’,” he says. “As a result, accountants would be free to focus on the tasks they love and not have to worry about mundane, repetitive tasks.”
Closely linked to the use of AI is open banking, under which third-party developers and challenger banks can access financial information, down to transactional data, from the more established players. The Payment Services Regulation came into force in January, and should mean it is much easier for software packages to access information which can help improve services to customers, including making payments, for those who have given permission.
“Many cloud accounting packages already have live bank feeds, demonstrating how valuable linked bank data is to accountants and book-keepers to drive automated reconciliation,” says Caroline Plumb, founder and CEO of Fluidly. “New services will arise such as like Fluidly’s automated cashflow forecasting, PensionBee’s solution to aggregate all pensions into a single pot from bank data or more seamless loan applications from platforms such as Funding Options without having to send photos of bank statements.”
For accountants, this should mean genuine end-to-end accounting is possible, but could also see those with relatively simple requirements such as the self-employed no longer needing to use an accountant at all, suggests Nicklin. “The situation for accountants providing services to small businesses is different because there is more complexity involved in company accounts,” he says. “Specifically, our intention is to use open banking to overcome the limitation with the tax tools we have developed. Any tool is currently only as good as the information people submit but open banking will overcome this and make it a truly real-time service.”
This is likely to take some time to develop, however, meaning there may be relatively little progress in 2018, says Sam O’Connor, co-founder and CEO of digital current account provider Coconut. “It’s not a totally new concept, especially for small businesses, because the major accounting packages have bank feeds already, but what it does do is open up the market to smaller players,” he says.
In the long run, it’s possible blockchain – effectively an openly available distributed ledger which can be used to create a log of activity – will have the greatest impact of all on the accounting space.
A recent white paper published by Deloitte suggested a few ways in which the sector could make use of this, including companies writing transactions directly into a joint register rather than having to rely on the current double-entry book-keeping system.
“Since all entries are distributed and cryptographically sealed, falsifying or destroying them to conceal activity is practically impossible,” it said. “It is similar to the transaction being verified by a notary, only in an electronic way.”
This could enable accountants and auditors to verify a large proportion of data automatically, leading to time and costs savings, it claims; once again freeing up time for more value-added activities.
In time, this could lead to a situation where almost every element of accounting or auditing is performed by a computer, believes O’Connor. “Imagine a world with one universal ledger that shows the value being transferred and the entries on both sides,” he says. “There’s no need for invoices, POs, bank recs or anyone to do any accounting or auditing work because it’s all just there and computer-readable. This level of adoption is a long way off, though, so I think we’re safe for now.”
Nick Martindale is a freelance journalist, editor and copywriter. He regularly contributes to a wide range of national and business media, including The Telegraph, Raconteur supplements in The Times and HR magazine.