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

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

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 show an overview of how far the transformation of the finance function has progressed, what goals the industry is setting itself through 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, these include the increasing trouble spots (recession, energy crisis, supply chain disruptions and economic downturn) and the increasing ESG regulatory requirements. 78 per cent said in the survey that they expect ESG regulations to bring great or even very great changes to the business.

The executives surveyed only see digital transformation as an even greater task. It is true that the necessity and urgency of digitalisation are widely recognised. However, many companies find it difficult to find suitable personnel for this change. For 41 per cent of respondents, the shortage of skilled staff affects the future work of the finance function. In the future, more employees will leave the workforce than new ones will come in. Every second participant in the study (49 percent) reports 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 work environment and to mitigate demographic change.

Further findings of the study:

• To increase productivity and efficiency, 51 per cent of finance functions surveyed plan to invest in building end-to-end process chains and intelligent automation in the coming years.
• With regard to ESG regulations, data management is considered the biggest challenge. Especially when it comes to data collection and preparation as well as report publication, it is already becoming apparent that the finance function has the central responsibility here.
• The technologies with the greatest growth in importance for the finance function of the future are data lakes, self-service business intelligence and artificial intelligence.