Digitalisation and ESG: how the finance function is gearing up for the future

The outbreak of the coronavirus pandemic at the beginning of 2020 and the resulting acceleration of digitalisation in many areas have also significantly changed the demands on the finance function. In addition to the digital transformation, the main reasons for this are the increasing multi-crisis situation. Our survey, which was conducted in collaboration with Lünendonk, shows that 70 per cent of companies now place more value on data-based decision-making processes. The finance function is set to become the central driver of resilience. 59 percent of respondents see the greatest challenges in the areas of digitalisation, data management and the introduction of new technologies.

More than 100 managers from accounting and controlling were surveyed for the study "Finance Transformation 2025 - Aligning the finance function for the future". The results provide an overview of how far the transformation of the finance function has progressed, what goals the sector is setting itself as a result of increasing digitalisation and what it expects from the future.

"A key strategic objective of the finance function should be to navigate a company safely through opportunities and risks," says Dr Justus Marquardt, Partner and Head of Digital Finance at KPMG. Companies are forced to adapt quickly to new conditions. In addition to the digital transformation, this also includes the increasing number of crisis hotspots (recession, energy crisis, supply chain disruptions and economic slump) and increasing ESG regulation. 78 per cent stated in the survey that they expect ESG regulations to bring major or even very major changes to their business.

The managers surveyed only see the digital transformation as an even greater task. The necessity and urgency of digitalisation is widely recognised. However, many companies are struggling to find suitable personnel for this change. For 41 per cent of respondents, the shortage of skilled workers will affect the future work of the finance function. In future, more employees will leave the labour market than new ones will join. Every second participant in the study (49 per cent) reported problems finding young talent. The use of digital technologies such as generative artificial intelligence (AI), intelligent automation and low coding is essential to create a positive and innovative working environment and mitigate demographic change.

Further findings of the study:

• To increase productivity and efficiency, 51 per cent of the finance functions surveyed plan to invest in building end-to-end process chains and intelligent automation over the next few years.
• With regard to ESG regulations, data management is seen as the biggest challenge. It is already becoming apparent that the finance function bears the central responsibility here, especially for tasks relating to data collection and preparation as well as report publication.
• Data lakes, self-service business intelligence and artificial intelligence are the technologies that will become most important for the finance function in the future.