Page 34 - EducationWorld October 2020

Special Essay

Critical importance of new

financial technologies

ASHISH BHARADWAJ ANAND MISHRA

INANCIAL TECHNOLOGIES ARE NEVER It is no exaggeration that accounting
new, they keep evolving. From Mesopotamians
recording transactions on clay tablets to Roman and finance will be hugely disrupted
Femperors keeping accounts of state finances, from by technology. The existing financial
Chanakya writing arguably the first financial manage-
ment book for a sovereign, to Italians introducing the system is unsuited for technological
double-entry book-keeping system. The latter became advancement in business and finance
the foundation on which Scottish entrepreneurs invented
modern accounting and finance between the first two In-
dustrial Revolutions. At the peak of the second Industrial automation will reduce the time required to collate data.
Revolution (1870-1910), the Institute of Chartered Ac- Big data and visualisation tools will feed real-time infor-
countants was founded in England and Wales transform- mation in easily comprehensible formats. This will enable
ing accountancy into an organised profession. However, corporate leaders and entrepreneurs to further devise
the 20th century is really when accountancy and finance innovative business practices and transform governance
permeated the domains of business practice and econom- models into automated processes. For startups in par-
ics in academia. ticular, deep understanding of new financial technologies
As businesses evolve, so do commercial transactions specific to the needs of greenfield enterprises, is critical
which prompt new accounting, financial, business and le- for success.
gal practices. It is no exaggeration that accounting and fi- ontemporary India hosts the third-largest start-up
nance will be significantly disrupted by technology during Cecosystem in the world with the number of technology
the next decade. Already industry is witnessing disruption startups exceeding 9,000 countrywide. More than 30 en-
caused by cloud computing, blockchain, artificial intel- terprises have been conferred the status of ‘unicorn’, i.e,
ligence, digital payments, cryptocurrency and robotics. valued at over US$1 billion market capitalisation. These
Further disruption is inevitable. But thus far, financial budding entrepreneurs need to understand entrepreneur-
institutions have harnessed technology-induced business ial financial technologies that form the backbone of all
disruptions, and enabled entrepreneurial ideas to thrive. startups and new ventures.
However fundamentally, the existing financial system As educationists, we often meet students who aspire
is unsuited for technological advances in business and to become entrepreneurs. But because of lack of op-
finance services at a time when new technologies have be- portunity to acquire entrepreneurship education at the
come critical for startups and new ventures. For instance, undergraduate level, they take the beaten path of study-
digital money is already ubiquitous and has assumed ing commerce, finance and accountancy after completing
at least five forms including central bank digital cur- their school-leaving exams. We also often encounter risk-
rency, private cryptocurrency, B-money issued by banks, taking, innovative young school-leavers ready to abandon
electronic money offered by private business entities, and commerce fearing that cloud and block chain technologies
I-money issued by private investment funds. They pose will make traditional commerce and accountancy study
a regulatory challenge to central banks (such as RBI in programmes obsolete.
India) and an existential threat to conventional financial Yet conventional commerce and finance undergrad
institutions. programmes are valuable for foundational learning. But
Against this backdrop, there’s urgent necessity for the in addition, commerce graduates need to grasp financial
finance and accountancy profession to reinvent itself like technologies and tools required to thrive in 21st century
it did in the centuries past. However, reinvention is likely business environments. Aspiring entrepreneurs and those
to prove more arduous than before. For example, the who wish to shape innovative business organisations need
term ‘financial reporting’ triggers images of spreadsheets, skills of the future, i.e, new financial technologies and
charts, long tabulations and footnotes generated by tools.
armies of accountants and analysts who produce financial Currently, the model is to teach finance assuming stu-
statements for corporate leaders, promoters and investors dents understand entrepreneurship. The alternative model
to facilitate business decisions. is to teach entrepreneurship taking for granted that stu-
But the new reality is that cloud-based systems will dents understand finance. Both models are redundant and
render most financial reporting paperless. Financial a new imagination is urgently required.
planning, budgeting, procurement, expense-management
are already being automated by cloud-based software- (Dr. Ashish Bharadwaj and Dr. Anand Mishra are the dean and vice dean,
as-a-service (SaaS) technologies which are necessary in respectively, of the Jindal School of Banking & Finance, O.P. Jindal Global
fast-moving and early-stage businesses. Robotic process University, Sonipat)

34 EDUCATIONWORLD OCTOBER 2020