To start with, emerging technologies refer to new and innovative applications that are being developed or in vogue. Emerging or innovative in a sense also means the creation of new and improved products, processes or services that can solve existing problems or meet new needs. Successful innovation is birthed from creativity, knowledge and willingness to take risks. One of the industries which is experiencing remarkable transformation with the integration of new technologies is the accounting and finance industry. Some of the examples of emerging technologies are Internet of Things(IoT), Blockchain, Artificial Intelligence(AI), Big Data, Cloud Computing, Drone Technology and Software robots or robotic process information (RPA). This article discusses current developments regarding these technologies.
Internet of Things(IoT): It means the collective network of connected devices and the technology that facilitates communication between devices and the cloud, as well as between the devices themselves. The global market size for industrial Internet of Things (IoT) was over $ 544 billion in 2022 and projected to reach some $ 3.3 trillion by 2030. Aside from that, the consumer sector is projected to dominate in terms of the number of Internet of Things (IoT) in 2030 with 17 billion connected devices worldwide. The major factors which will spur the growth of the Internet of Things (IoT) market include access to low-cost, low-power sensor technology, availability of high-speed connectivity, increase in cloud adoption and use of data processing and analytics.
Internet of Things(IoT) can be applied as an enabler in accounting to help track ledgers, transactions and other records in real time. It can also help to manage increased amounts of finance data that flows into various accounting systems. In business advisory services, it can equip professionals and places them in a stronger position to provide better advice due to more visibility over client financials and financial activity. This emerging technology in accounting makes accounting activities, such as auditing, much more streamlined and stress-free. Internet of Things (IoT) can also be used in manufacturing, logistics, and agriculture to monitor and control processes and optimize resource usage.
Blockchain Technology: As a digital ledger (internet-based book of account), it is created to capture transactions conducted among various parties in a network. One of its main attractions for accountants is that it can provide an accurate, continuously update and verify an accounting ledger. According to Markets & Markets, the global blockchain market was reasonably estimated to be about $ 7.4 billion in 2022. The market is projected to generate revenue over $90.0 billion by the end of 2027 at a compound annual growth rate (CAGR) of around 66.2%.
Demand for blockchain technology in retail, banking and supply chain is expected to spur market growth. Since users can access the blockchain in real time, they can create smart contracts and record transactions. Blockchain can also being used in healthcare to provide safe and transparent diagnosis.
Artificial Intelligence(AI): It has indeed lived up to its name with the ability to mimic the competencies of the human mind. Artificial Intelligence (AI) capabilities have been embedded throughout various industries’ standard business processes. The global Artificial Intelligence (AI) market size for 2023 is projected to reach $207 billion. The global Artificial Intelligence (AI) market was valued at approximately $87 billion in 2022 and expected to reach $407 billion by the end of 2027. This means that it will experience growth annually at a cumulative rate of around 36.2% between the period (2022 to 2027). The primary factor responsible for the market growth is the emergence of AI-based business models. Artificial Intelligence (AI) has been set up as the primary driver of robotics, big data and Internet of Things (IoT) technologies. In both the short-term and the long-term, and across back- and front-office applications, Artificial Intelligence (AI) has the potential to add value to business workflows, improve employee capabilities and harness the power of man and machine to improve customer experience. Apart from that, Artificial Intelligence (AI) is being used in healthcare, finance and transportation to improve decision-making and automate processes.
Big Data: Big data refers to datasets that are too large or too complex for traditional data processing applications. According to Statista, the value of the big data analytics market is expected to reach over $655 billion by 2029, up from around $241 billion in 2021. Big data is considered a real-time audit evidence based on its nature. For instance, its features in respect of volume, veracity (that data it can be verified for its accuracy) and velocity (that data can be generated extremely quickly and continuously) make a strong case for its relevance to the auditor.
Drone Technology: Drones are unmanned aerial vehicles (UAVs) that can fly remotely. A drone is usually equipped with autonomous navigation capabilities, high-resolution cameras and infrared rays that can scan large areas and determine their objects and contents. A drone can be used in large mineral deposits or mining operations for pictures and measurements. It requires vocal interaction, a friendly user environment and a simple and secure user interface to function effectively. The current Drone Industry Insights reveals that the global drone market size is forecast to reach $54.6 billion by 2030 with the commercial market growing at a (CAGR) cumulative annual growth rate of 7.7%. It has been established that the top industries for drone applications at the moment are energy, construction and agriculture. A drone can also be used in the accounting profession in areas concerned with inventory management, revenue recognition, cash flow management and risk management. Drone technology can be used in auditing inventories to confirm the existence and completeness of inventories and other assets. Indeed, adoption of a software based on the use of drone technology in conducting audit engagements can improve counting accuracy, increase reporting timeliness, reduce travel costs, increase fieldwork efficiency and provide more documentation. In the same vein, drones can reduce cost of labour and improve safety of staff who no longer need to be in high-risk locations
Identifying Emerging Technologies
It is striking to note that emerging technologies have some identifiable features associated with them in the digital space. These include:
They are rapidly evolving: Emerging technologies are continuously evolving at a fast pace and new advancements are always on the horizon.
The Potential is very High: Emerging technologies have a high potential for growth and development, which means that they can create significant opportunities for an economy, industry as well as individuals.
Uncertainty: These technologies are relatively new and not fully established, leading to uncertainty about their future prospects and the challenges that may arise.
Disruptive: Emerging technologies have disrupted and traditional industries and processes. They have created significant opportunities but also presented risks.
Rewards
By leveraging emerging technology, industries, accountants and other professions can benefit from a number of advantages such as:
Automation & Efficiency: Indeed, new technologies have enabled finance and accounting professionals to automate and streamline their processes, thereby improving efficiency, accuracy and transparency in their operations. Other applications such as accounting practice management software are empowering everyone to connect and collaborate. They enable greater flexibility and enable employees to work remote.
Security. Protect sensitive data from internal and external threats from cybercriminals through robust encryption techniques.
Cost savings. Technological innovations have reduced overhead costs associated with manual processes involving many individuals.
Data accuracy. This enables data-driven decision-making based on the accuracy of data gleaned from business operations.
Scalability. Emerging technologies can quickly be scaled up or down to accommodate exigencies of time.
Conclusion
It is evident to establish that these emerging technologies are transforming industries including the accounting profession. Business performance is becoming increasingly dependent on a company’s ability to leverage technology to drive efficiency and access new capabilities. For this reason, it’s essential for accountants to understand these emerging technologies and the opportunities and risks that come along with them. It is imperative that accountants develop new and specialized skills to increase productivity and to enable them to survive in their practice.
BERNARD BEMPONG
Bernard is a Chartered Accountant with over 14 years of professional and industry experience in Financial Services Sector and Management Consultancy. He is the Managing Partner of J.S Morlu (Ghana) an international consulting firm providing Accounting, Tax, Auditing, IT Solutions and Business Advisory Services to both private businesses and government.
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