90% of finance functions will deploy at least one AI-enabled technology solution by 2026

By 2026, 90% of finance functions will deploy at least one AI-enabled technology solution, but less than 10% of functions will see headcount reductions, according to Gartner, Inc. While CFOs are already making changes to fully harness AI in finance, a sense of uncertainty, inflated expectations and employee disengagement often quells success rates in AI’s usage. CFOs who combine the strengths of people and machines increase their chances of AI success through a satisfied and engaged workforce.

“Despite AI’s ability to emulate human performance, algorithms cannot match the unique capabilities of people in areas that require creativity and complex problem solving,” said Ash Mehta, Senior Director Analyst in the Gartner Finance practice. “By recognising the respective strengths of people and machines, finance leaders can build processes that boost the abilities of people and machines, while mitigating their weaknesses. This requires a new kind of collaboration between people and machines that will improve business performance and employee satisfaction.”

For example. while AI-driven machines are very adept at automating simple decisions and processes by analysing large amounts of data quickly, they cannot work independently and may fail to form good conclusions when presented with unusual circumstances.

On the other hand, people use creativity and an innate understanding of human behaviour to quickly draw conclusions when presented with new and unfamiliar problems but could not hope to outperform a machine when crunching numbers.

“To supercharge the abilities of both AI and people, they must learn to collaborate in a way that harnesses each other’s strengths,” added Mehta.

Gartner experts call this collaboration the human - machine learning loop, which promotes continuous process improvements that encourage finance staff and AI-driven machines to collaborate on processes while dividing labor according to the respective strengths of each. While relying on each other for improvements, both parties can iteratively add greater value.

The human – machine learning loop starts with the creation of an algorithm, automated process, machine-driven task or autonomous workflow, respecting what machines are as good or better than people at performing. Then machines carry out these tasks, such as generating a revenue forecast, approving an expense report, or determining optimal payment terms for a specific customer.

Machines can also inform and advise. Such is the case when a forecasting algorithm suggests that a recent policy change will alter the sales outlook, or a machine-driven invoicing process suggests sending invoices on certain days to increase cash collections.

The labour performed by machines in this way then frees humans to take information, advice and recommendations from algorithms, using their creative and strategic strengths to solve complex problems by designing process improvements. Once new processes are in place, people trigger the next iteration of the loop by building new machines that execute the new processes and analyse the respective data.

 

ECB makes second interest rate cut 

The European Central Bank (ECB) Governing Council has lowered the deposit facility rate – the rate through which it steers the monetary policy stance – by 25 basis points. Based on the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it says it is now appropriate to take another step in moderating the degree of monetary policy restriction.

Recent inflation data have come in broadly as expected, and the latest ECB staff projections confirm the previous inflation outlook. Staff see headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026, as in the June projections. Inflation is expected to rise again in the latter part of this year, partly because previous sharp falls in energy prices will drop out of the annual rates. Inflation should then decline towards our target over the second half of next year. For core inflation, the projections for 2024 and 2025 have been revised up slightly, as services inflation has been higher than expected. At the same time, staff continue to expect a rapid decline in core inflation, from 2.9% this year to 2.3% in 2025 and 2.0% in 2026.

Domestic inflation remains high as wages are still rising at an elevated pace. However, labour cost pressures are moderating, and profits are partially buffering the impact of higher wages on inflation. Financing conditions remain restrictive, and economic activity is still subdued, reflecting weak private consumption and investment. Staff project that the economy will grow by 0.8% in 2024, rising to 1.3% in 2025 and 1.5% in 2026. This is a slight downward revision compared with the June projections, mainly owing to a weaker contribution from domestic demand over the next few quarters.

The Governing Council statement said it is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. It will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. The Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction. In particular, its interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.

As announced on 13 March 2024, some changes to the operational framework for implementing monetary policy will take effect from 18 September. In particular, the spread between the interest rate on the main refinancing operations and the deposit facility rate will be set at 15 basis points. The spread between the rate on the marginal lending facility and the rate on the main refinancing operations will remain unchanged at 25 basis points.

Ben Nichols, Managing Director of RAW Capital Partners, commented: “Today’s decision aligned with market expectations, and recent macroeconomic data – such as Q2 GDP growth of 0.3% in the Eurozone – supports the ECB’s ongoing monetary easing strategy. Although inflation hasn’t yet hit the central bank’s 2% target, the Eurozone appears to be on a stable path to recovery, with GDP projected to grow by 1% in 2024.

“With the Bank of England already cutting rates and the Federal Reserve expected to follow suit next week, we’re entering a new phase of global monetary policy. This is likely to provide some impetus to global economic growth, but there is a catch: central banks will continue cutting rates at different speeds in the coming months, which could trigger some volatility in the financial markets.

“For global investors, therefore, the situation calls for agility and diversification to manage the risks posed by any unforeseen macroeconomic headwinds that could emerge. A balanced portfolio that combines traditional and alternative investments could prove key to mitigating downside risks and capitalising on the opportunities created by the ECB’s rate cut cycle.”

 

J.P. Morgan and Oracle expand partnership to streamline treasury, trade and commerce payments 

J.P. Morgan Payments has announced new and enhanced product integrations connecting to the Oracle ecosystem, which aim to make it easier for clients to streamline their payments across treasury, trade and commerce.

Since 2021, J.P. Morgan Payments and Oracle have been partnering to provide mutual corporate clients functionality and connectivity. These new integrations build on the J.P. Morgan Payments’ Banking Services integration into Oracle Fusion Cloud Enterprise Resource Planning (ERP), which deliver turnkey connectivity for reporting and payments. The new and enhanced product integrations include:

• Banking services: Deliver real-time cash balance visibility through J.P. Morgan Payments to help corporate treasury make informed and smarter decisions.
• Touchless expense: Create expense reports faster using near real-time transaction authorisation data through J.P. Morgan Commercial Cards and Oracle Fusion Cloud. After a 12-month pilot with Oracle, this integration is available for all corporate clients.
• Supply chain finance: Unlock working capital by optimising payment terms with vendors delivered by J.P. Morgan Trade and Working Capital financing platforms integrated with Oracle Fusion Cloud.
• Commerce suite: Streamline in-store merchant payments by connecting J.P. Morgan Payments’ in-store payment application with the Oracle Payment Interface to accept point-of-sale (POS) payments consistently across J.P. Morgan Payments’ terminals. This includes two Oracle products across industries: Oracle Simphony for food and beverage and Oracle Xstore for retail, both of which will be available soon.

Details about the new integrations will be available through the J.P. Morgan Payments Partner Network, which combines J.P. Morgan Payments' solutions with third-party integrations to help clients build, implement and optimise their payment strategies. Clients leveraging these integrations are able to go live quicker, with little to no IT lift, and are able to access J.P. Morgan Payments offerings directly from Oracle Cloud applications. The pair plan to introduce additional product integrations over time in response to evolving trends and client demand.

 

90% of Hong Kong's import and export businesses embrace fintech for cross-border operations 

Over half of import and export traders operating out of Hong Kong are grappling with rising business costs, as the majority eye fintech solutions and market expansion into Northeast Asia and Southeast Asia to stay competitive, according to the inaugural Airwallex Hong Kong import and export trade report. 

Hong Kong’s prominence as an international trade hub is well established, with 75% of respondents highlighting the city’s tax-friendly environment as a major draw. Nearly 70% also value Hong Kong’s strategic proximity and access to the mainland China market, with over half appreciating its robust financial infrastructure, including the free flow of capital and liquid financial markets. 

Building on these advantages, numerous companies are strategically establishing themselves in Hong Kong as a gateway to new markets. In fact, 82% of the respondents indicated plans to trade with at least one new region within the next six months, with Northeast Asia, Southeast Asia and Europe at the top of the list.

Global supply chain disruptions and inflationary pressures have posed significant challenges for trading businesses as they strive to remain competitive. 55% of the respondents identified rising operational costs, particularly in supply chain and logistics, as a top concern. Additionally, 51% reported increasing difficulties in managing local and international cash flow, especially when cross-border transactions are complicated by varying regulatory requirements and currency risks.

In response to these challenges, nearly half of the respondents are actively seeking ways to cut costs associated with logistics and inventory, professional fees, office rent and utilities, and financial market volatilities, including banking fees, payment transaction costs and foreign exchange fluctuations. 

Businesses recognise the potential of emerging technologies and solutions and plan to invest in the automation and digitisation of finances, global e-commerce platforms and marketing and CRM technology over the next three years. Notably, 40% of respondents identified their companies as pioneering innovators eager to experiment with new technologies to enhance their operations. 

Among the three in four respondents already using fintech for payments, 92% expressed satisfaction with the pay-in, pay-out and FX services provided by fintechs, demonstrating the effectiveness and reliability of these solutions in enhancing financial operations. As cross-border trade accelerates, the advantages of digital payment and fintech solutions are becoming increasingly evident for SMEs’ bottom lines. An overwhelming majority (90%) are open to incorporating more fintech solutions for FX and international transfer services.

 

AutoRek and Calastone to simplify fund manager reporting for investment firms

AutoRek, an automated financial controls platform, has partnered with Calastone to improve and simplify the consolidation and reconciliation of fund manager data, through the use of Calastone Reporting, helping investment firms to save time and costs.

The partnership aims to help firms reduce risk and operational inefficiency in their business by providing a seamless, end-to-end reporting and reconciliation solution. Monthly reconciliation processes can instead be completed on a daily basis due to the removal of resource-heavy data preparation steps, allowing for exception items to be identified and resolved much faster.

As a result, firm assets will no longer be tied up for a month, pending completion of the next reconciliation cycle, thus improving balance sheet liquidity.

The partnership will see the Calastone Reporting solution consume statements of holdings and transactions directly from fund managers and transfer agents. The multiple and varied sources are then consolidated by Calastone into a single structure which is provided as the reporting output.

The AutoRek platform has created a pre-configured data ingestion solution to automatically load the Calatsone Reporting output and pass records into corresponding reconciliations. Reconciliation data sources and formats are reduced from multiple disparate fund managers and transfer agents, into a single standardised source from Calastone’s Reporting solution. The ongoing maintenance and management of automated reconciliations is greatly simplified as a result.

 

First Citizens Bank customers can now receive instant deposits 

First Citizens Bank has announced that its business and consumer banking customers can now instantly receive secure payments in their savings and checking accounts via a national instant payments network called the RTP network.

By joining the RTP network, First Citizens says it is enabling its customers to receive payments in just seconds – far quicker than alternative electronic payment channels such as ACH and wire transfers. This instant payment capability is available to customers around-the-clock, seven days a week.

The 24-hour availability of the RTP network outperforms other electronic payment systems that have time-based cutoff restrictions. Another feature of RTP is that payments can be accompanied by electronic messages that carry details about the transaction.

Potential uses for real-time payments include the ability to instantly transfer cash into First Citizens savings or checking accounts from other RTP-enabled deposit sources, such as digital wallets or sports betting accounts.

Business customers can also transfer in funds from outside accounts for cash management and daily reconciliation purposes. They can receive immediate payment for their goods or services, helping improve cash flow. Some might even offer their customers a discount for paying instantly via the RTP network.

 

Boost enables cross-border payments with US-issued commercial cards 

Boost Payment Solutions has introduced a solution that allows enterprise buyers to use their existing US-issued commercial cards to pay suppliers in more than 180 countries. The new Boost 100XB also enables financial institutions and program managers who issue commercial cards on US-based BINs to expand the reach of those programmes into cross-border payments,

When using Boost 100XB, companies don’t have to establish secondary banking relationships in their suppliers’ countries. The solution also allows buyers to set payments terms, provides end-to-end automation and security for buyers and suppliers, and offers supplier enrolment support at no additional cost.

Boost Payment Solutions plans to continue to extend the capabilities of Boost 100XB by expanding its global partner network and adding new receiving corridors.