Digital Transformation Of Financial Services Sector

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Question :


Over the past few decades, what key process, product or organizational innovations have been introduced into the industry in which you anticipate developing a career? Why do you think these innovations have been introduced? Are these changes part of a wider social and economic trend? Are they likely to have (wider) significant effects outside your industry? Explain the effect of these innovations on professional practice in the relevant industry. Do you anticipate further changes or innovation? Discuss the likely effect of these? What (if any) professional practice or organisation level responses do you suggest to address the effects of the likely changes? Explain your responses with reference to TWO key concepts from the unit. 


  1. As explained above, you can really choose any industry you like – however this is an opportunity for those who anticipate joining a particular profession to examine its present and future practices with reference to innovation.
  2. Identify whether the relevant key innovations are process, product, organizational (or in some cases) marketing innovations or a combination of these.
  3. I have uploaded SOME entirely optional readings focused on accounting and applied finance related professions to get you started (These have been uploaded at the bottom of the Learning Materials section on VUWS –Folder name: optional resources for Essay Topic ONE ).  However these obviously do not apply to all professions. At any rate – even students using these readings are required to also to find and refer to at least FOUR other refereed scholarly readings.  If you are unsure whether a source is a scholarly reading – use the appropriate filter on the library catalogue page. These scholarly readings don’t have to all relate to your profession. They can theoretical or be used to make a more general point as part of your overall argument. 
  4. Depending on the industry you have chosen, you may not be able to answer ALL sections of the question equally fully. That is OK. The principle object is to analyse present or future PRACTICE in terms of TWO key concepts from the unit.  Depending on your chosen industry – the connection with key unit concepts may be more or less direct. Some suggestions from which – please don’t feel limited by these. You may find that your research leads you to doubt or question two key concepts from the unit. That is OK.  However it is important here to at least clearly explain the concepts you are questioning/doubting BEFORE hand. Here are some options from which to choose your two key concepts– however do not limit yourself to  these.

A) The motive for mechanisation (labour saving) and cost competition between firms. (Weeks 2 and 3)

B) The employment effects of mechanization (Weeks 5 and 6)

C) The impact of financialization on innovation and knowledge workers in organisations/work design and human resource management practices to enhance the productivity of knowledge and innovation workers (Week 7)

D) Comparisons and relations between small businesses (such as innovative start-ups) and large corporations (Week 8)

E) The impact of financialization on professional practice in financial and non-financial industries (Week 7)

F) Public policy and funding of innovation – its significance for or impact on your chosen industry.  (Weeks 10 and 11).

G) The impact if any of the intellectual property rights (patenting and copyright) revolution on your chosen profession. 

  1. It is VERY important that, when you chose these two key unit concepts that you show evidence of having engaged with the essential readings for the relevant weeks. You do not have to read ALL the uploaded readings. Here you need to refer to my uploaded guide to the key readings for the weeks you have chosen. This is an important part of the marking criteria. 
  2. Your answer should take the form of an essay or project – a guideline for essay writing is included in VUWS in the Assessment Section. Refer also to the marking guidelines and the criteria for individual projects in the Learning Guide. 
  3. It is CRITICAL that you reference fully and accurately. Please refer to the referencing guidelines in the Learning Guide. Essays which are unreferenced will fail. 
  4. You must upload your essay onto TURNITIN. We are required to report essays which show evidence of plagiarism as academic misconduct. Please double check the guidelines and rules in the relevant section of the Learning Guide and on the WSU website. 
  5. Please contact me directly attaching the appropriate supporting documentation before the due date if you require an extension.  
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Answer :

Technological Innovations in the Financial Services and Accounting Sector

Considering the financial sector and the technological innovations changing the nature and processes in the industry it can be said that it is not only a change but ‘disruption’ that resulted in some significant innovations in communication, service delivery, and processes performed in the industry. There was computerization of financial services since long, but a more radical transformation of the industry remained delayed due to benefits of traditional financial services providers (Rieker, 2018). Such advantages includes the developed trust between customers and service providers, barriers from regulations affecting the entry to banking and insurance sectors and supervisory approaches resulting in a biased environment towards internalizing of the value chains. 

However, the recent financial crisis in 2008 resulted in a loss of trust in financial institutions and the regulatory response to such crisis (Pwc, 2018). These situations resulted in increasing the cost of compliance and increased the requirement of capital making it complex for banks to lend. Such scenarios created an opportunity for less regulatory; technology enabled financial institutions and banks to thrive as they were in a position to offer cheaper services in an efficient manner as compared to big institutions burdened with legacy of infrastructure and regulation (Pwc, 2018).

Reasons of introducing technological innovation

Here, the digital transformation proved to be the key to efficient services and the route to rebuilding of trust with the customers. This was the basic need that gave rise of increase in digital transformation and technological innovations in the field of financial and accounting industry (Dapp, 2014). Here, it is also to be noted that a simultaneous digital transformation of other industries helped in making tech-based financial solutions more trusting and comfortable for the customers (Rieker, 2018). It resulted in increasing the demand for immediate and customised solutions from the financial services sector while making it more convenient to deal in shares, transfer money, borrow money, financial planning, investing and all these at a much lower cost for the customers as well as for the service providers. 

Therefore, it is clear that in the financial services and accounting industry there is a structural changes happening in parallel to the competitive changes in the industry (Dapp, 2014). In relation to this particular industry, there lies a complex relationship between the technological and competitive changes because of the multi-sided platforms of financial services where it is essential to focus on elements of network economies, subsidies and cross-price and quantity relationships (Joyce, 2018). 

Motives and Employment affects of the digital transformation of Financial Sector

 The motive behind digital transformation of financial services sector lies in the growing need of better and transparent communication and interaction with the customers. The financial services sectors are seriously affected by the advent of Internet and digitization of the working and private lives of people in the era of globalization.  This makes it necessary to offer financial services in a more flexible manner focusing on varied relationship with people catering to their diverse identities in the online and offline worlds. Such a change is responsible to influence the value creation in a continuous manner through experimental forms of participation and collaborating (Joyce, 2018). Therefore, digital transformation of financial sector was done to ensure moving ahead in collaboration with the changing social and economic lies and the way modes and routes of communications have changed and the way people have learned to handle their personal data in future (Joyce, 2018). 

The technological innovation have made it possible for the financial institutions to reduce cost of operations through leveraging technology for reinventing the business models of these institutions (Rifkin, 2014). The role of new advanced technologies is evident in their focus on strengthening customer engagement through innovation, and customised products and services. The technology in the form of block chain help in lowering down the real-time cost involved in transactions. Further, technology like machine learning results in automation of manual processes thereby reducing the cost in the form of reduction in chances of fraud, wrong calculations, reduced need of manual labour, saves time spent on manual processes and provides benefits of customer segmentation management (Joyce, 2018). 

 Also, the cost is reduced by streamlining of processes and end-to-end integration thereby improving the customer experience and ensures better engagement with them (Dapp, 2014). 

These technological innovations are sometimes criticised for their impact on employment as automation sometimes calls for layoffs and staff reductions. There are several financial and banking institutions where the need of manual labour is reduced leading to reduction in employment opportunities at several levels. However, it should not always be viewed as a bringing a reduction in employment opportunities for the workforce in this particular sector (Petersen and Rajan, 20012). The innovation in the form of technology, digitization, use of Software have allowed staff to get free of regular tasks and concentrate on more complex yet value-adding activities. Here, humans and digital labour can work together in a flexible manner to produce effective results ensuring efficient services and customer products to target customers of the sector. There is a change in demand for the type of skill and more people are required to work in the analysis departments, data scientists and those looking for innovative products and services to improve the value-addition for the customers (Rifkin, 2014). 

Digital transformation of financial sector is a part of wider social and economic trend

The changes or impact brought by the digital structural changes are macroeconomic in scale and therefore part of a wider social and economic trend. This is so as we can clearly see the influence of digitalization of personal freedom of information, offering more and better economic opportunities, making accessibility to different sources of education easy and driving technology and regulation of the Internet in a positive manner (Petersen and Rajan, 2012). The penetration of the Internet is experienced in every area and field making it necessary for the financial and accounting services sector to expand its horizons and move ahead with this changing economic trend of data-driven technologies (Dapp, 2014).

Impact of digital transformation of financial sector on society

The changing nature of financial services and accountancy sector is bringing some significant changes outside the industry too. Considering the role of Internet in the society, people are more interested in using online and mobile platforms to make financial transactions (Marr and Frazer, 2017). The role of manual accountancy is also reduced with the growing demand of automated software to meet the needs of small, medium and large business enterprises (Chua, 2013). There is a change in society where people are more comfortable in dealing with various financial transactions, selling, buying, transfer of money, lending and borrowing money etc. through online channels rather than contacting their financial institutions or bank for every small need and transaction. 

Future changes expected in the Industry

There are some of the big innovations expected in near future within the financial services and accounting sector. These innovations will be seen in the form of huge amount of information processing and several new delivery channels focused on implementation of big data in the industry. The future developments of changes can move towards a comprehensive digitization strategy for the financial services sector where between compatibility, interoperability and synchronization of processes will be made possible in an efficient manner (Marr and Frazer, 2017). There will me more synergies coming up in the form of efficient and productivity benefits while keeping the cost of operations at bay. 

Impact of innovation in the form of digital transformation on professional practice

The digital transformation bringing in innovations in the form of cloud computing, big data and mobile services, cyber security, digital service delivery, new payment systems and many more has transformed the professional duties and responsibilities of accountants. They are now expected to adopt every form of new technology and work in a manner where they develop sharp analytical and problem-solving skills to provide a financial insights required to guide customers, clients and the concerned financial institution also. The focus of accountants is required to be shifted only from the internal company matters to the end users also and bring some significant improvements in their communication and interaction patterns (Arseneault, 2018). The changing working patterns have resulted in better opportunities for accountants to automate and de-skills time-consuming and repetitive tasks and adopt working styles that are more flexible holding higher value work. This will help them to consolidate their role as advisers on finance and business that is necessary to sustain and move in a collaborative manner with the businesses they work. 


It is recommended that professionals in the financial services and accountancy sector become more proactive to make better strategic decisions with the aim of achieving a competitive edge at the workplace. They should focus on exploring the implications of a more engaged and connected businesses, advisers, regulators and customers to share data in an automatic manner. Instead of limiting their work to calculations and analysis of financial data, accountants should improve their abilities to provide a financial insight to business leaders and guide them towards better and efficient decisions.