April 15, 2015
Getting to 2020: the Finance Function
by David Foster
An EY survey finds the finance function trying to become a much better business partner -- but lacking the right data and analytics.
Even as economies recover, the insurance sector continues to face many competitive pressures and regulatory challenges. Yet a new drive for growth is emerging. The 2014 EY Global Insurance CFO Survey captures the priorities and challenges for finance and actuarial teams as they seek to support business growth strategies while addressing regulatory and cost pressures.
Delivering more value to the business through performance measurement and improved decision support is the top priority for the finance function through 2020. Among senior finance professionals participating in the survey, 71% indicated that “being a better business partner” ranked among their top three priorities, with 35% placing this as number one.
As insurance companies around the world continue to invest in data management and analytics capabilities, the role of finance and actuarial functions has become even more critical. The processes and systems supporting these functions are key to developing deep insights into business performance, as well as customer needs, preferences and behavior. In response, finance leaders have been increasing their efforts to improve the capabilities of their organizations to meet the new demands. In the survey, 89% of respondents stated that they have either begun a change program or are in the planning stage.
However, the drive to better insights is not without challenges. Among the issues is the impact of continuing regulatory compliance demands. According to 35% of those surveyed, implementing new regulatory and financial reporting requirements was the highest priority for finance and actuarial organizations; 56% ranked this among their top three. As a result, the ability for these organizations to strike a balance between delivering value to the business and meeting daily operational demands will continue to be a challenge.
Not surprisingly, the current data and technology footprint will require significant change to meet the challenges of the finance function of the future. Across the finance operating model, survey participants scored data as the least developed capability on average, while technology recorded the greatest gap between current and required future state.
Other Key Findings
- Top three business drivers: #1 growth, #2 managing costs and #3 regulatory changes
- Two-thirds of respondents rank data and technology issues among the top three challenges facing finance and actuarial functions; participants on average score data as their least developed capability
- By 2020, the most significant shifts in maturity levels by operating model will be in data management and technology capabilities
- Respondents expect onshore shared services to support transaction processing functions, with outsourcing selectively used for payroll and internal audits
- Decision support and controls are expected to account for a larger share of finance and actuarial headcount by 2020
What insurers must do
We see three key areas where insurers can take action:
- Modify current reporting processes by developing an efficient reporting solution architecture.
- Deliver timely and relevant management information and link strategic objectives to performance indicators.
- Improve finance and actuarial operational performance by using the right skills and processes to strike a balance between effectiveness and efficiency.
For the full survey from which this excerpt was taken, click here.