In retail banking, two types of companies are actively marrying technology with financial service products to win over consumers: legacy companies such as banks and telecom companies that are rolling out mobile apps and digital products to make it easier for their consumers to pay bills, lend money, or invest; and new entrants like fintech startups that are chipping away at traditional players’ market share and margins. WorldRemit is one such startup.
Backed by Accel Partners, a venture capital firm that invested into Facebook, Slack, Dropbox, and Spotify, UK-based WorldRemit is a mobile app and website where users can transfer money between many countries.
Ruzan Ahamed, ACMA, CGMA, and WorldRemit’s country director of Sri Lanka, India, and Nepal markets shares in this FM magazine Q&A his first-hand experiences on how giving customers a digital interface — whether it’s a mobile app or a website — alters the role of the finance function. (Editor’s note: This conversation has been lightly edited for clarity and brevity.)
What is your role at WorldRemit?
Ruzan Ahamed: I’m responsible for the revenue and profitability of the three markets I manage. So, my work involves working with regulators, building our brand, and building partnerships with banks, telecom operators, and other institutions, because our services include money transfers to bank accounts and digital wallets, as well as the traditional method of picking up cash from a cash-out point.
How do you compete with big players in the international money transfer market?
Ahamed: Being a pure digital company on the send side, we have an edge over traditional remittance companies, because customers don’t have to stand in long queues at agent locations. Another is speed, because our transactions happen in real time.
Price is another factor when it comes to competing with banks and other financial institutions. The inherent problems or disadvantages for banks are their high costs, because of physical assets and staff.
All those barriers are eliminated with models like ours by going directly to the consumer. Compared to the banks we are in a much better position to give those cost savings back.
You’ve also worked in incumbent companies — a traditional bank and a telecom company. How did financial technology change the finance department’s role?
Ahamed: The main change is a shift from a pure financial focus to a performance focus. In my previous role at Dialog Axiata [the largest mobile network operator in Sri Lanka], I was part of a team that launched the country’s largest mobile money service called eZ Cash. What that meant was that millions of people who have mobile phones could perform financial transactions with us and other merchants.
To facilitate these digital payments, we had to make sure that the electronic money supply in the ecosystem was managed efficiently. Not adequately funding eZ Cash’s ecosystem will lead to failure of customer transactions, and overfunding will increase the opportunity cost for the company, where the money could be put to better use elsewhere.
My work required a deeper understanding of how money circulates in an economy and analysis of trends that drive customers’ demands for electronic money to pay merchants. This is similar to how a central bank manages the cash supply in a country. Rather than managing costs, or accounting for and forecasting revenues, we had to be proactively involved in the day-to-day decision-making.
Does this mean that the usual accounting and forecasting activities are less important?
Ahamed: They are still important activities. But it’s about business priority. The biggest advantage a company gets by engaging with customers digitally is getting insights into consumer behaviour. Loads of data need to be analysed and used within a short time period to make effective business decisions. These analyses take priority over routine activities such as preparing performance reports. And with the availability of technology tools, routine activities can be automated.
What other changes do you see?
Ahamed: Digitisation changes the mindset of people in the organisation. Because some companies’ interactions with customers are in real time, the responses also must be in real time. This challenges everyone to find faster and more effective ways to do their jobs. Over time, the existence of many routine processes gets questioned and ultimately non-value-adding activities — activities that don’t help the business grow or the cost incurred is greater than the value it generates — get automated or eliminated.
Is this why data scientist jobs are in demand?
Ahamed: Yes. If you look at five years ago, a financial analyst’s role was very precious. Whereas today, a data scientist’s role is even more precious, because that is an avenue where you can generate more business.
What is a digital mindset? How do you define it?
Ahamed: It’s the ability to foresee technological developments in the digital space and apply the benefits of those improvements to create value for customers. When that mindset is established, you automatically become more consumer-centric and think of how things can be simplified, be it adding a new feature to your product or re-engineering an internal process.
How should traditional financial service providers see digitisation?
Ahamed: I feel the biggest change that a traditional financial service provider needs is a change in attitude toward digitisation. Because digitisation is not something that ends when a bank or a telecoms company launches a mobile app or places kiosks at its branches. It’s a beginning of a new journey. And a new way of thinking needs to run deep in people’s minds at every level of the organisation.
This requires support from the top while keeping ears to the ground. In today’s financial services world, it is simply impossible to create real value without collaborating with other teams and organisations, be it a large company or a startup. There is no doubt that people and roles will be challenged during this process.
How will a management accountant’s role continue to evolve in digitisation?
Ahamed: I think digitisation is a great opportunity for a management accountant to be relevant and make sense within the organisation. The metrics that you analyse, that you put in your presentation, to drive your management to a decision, it’s very different from what it used to be. It’s not only about the balance sheet, return on investment, and traditional financial metrics but also about metrics to understand the customer. This will allow a management accountant to broaden his or her scope and contribute to product-level decision-making.
— Alexis See Tho (Alexis.SeeTho@aicpa-cima.com) is an FM magazine associate editor.