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Between 2010 and 2020, finance departments across the country reduced their overall costs by an average of 30%, according to McKinsey & Company. In the years between 2020 and 2030, companies are faced with a new task: making their finance departments more effective without increasing costs. Finance leadership is in high demand as organizations look for new ways to improve, and the skills required to succeed in this career have evolved due to global digital transformation.
Aspiring leaders should hone seven critical technical skills in finance to help their organizations focus on value-added, data-centric activities without increasing expenses. An online MBA in Financial Services can teach students the skills and advanced concepts they need to thrive in financial leadership roles.
The 7 Most Important Technical Skills in Finance
MBA graduates gain access to several exciting and fulfilling careers in the finance field. Accounting, wealth management, and even chief financial officer (CFO) roles offer competitive pay, a fulfilling work environment, and exceptional job security. According to the U.S. Bureau of Labor Statistics (BLS), employment in business and financial roles is expected to grow faster than average between 2021 and 2031.
However, the digitalization of the finance industry has uncovered a significant skills gap, especially as it applies to technology. Many existing finance leaders went to school at a time before automation and software, and this lack of technical skills can put companies at a serious disadvantage. Closing that gap and improving the effectiveness of finance departments requires the specialized knowledge of leaders with a unique set of technical skills.
1. Data Literacy
Data literacy is the ability to interpret, analyze, and communicate data within its proper context. Finance leaders must be able to pull meaningful information from a variety of data sources to identify opportunities for growth and efficiency. Due to increasing digitalization, literacy also refers to the ability to use database and analytics software to work with numerous data types.
Almost all surveyed business executives — 97.2% — continue to invest in AI and big data, and those that successfully use big data solutions increase their profitability by about 8%, according to research compiled by Zippia. On average, these companies analyze somewhere between 37% and 40% of the data they collect. Data literacy is at the forefront of business operations, especially in finance departments.
2. Business Process Management
Business process management is an advanced skill that can improve a financial department’s processes and strategies. It is crucial for coordinating multiple finance-related business functions so that they work together cohesively. Modern business process management relies on cloud-based software and systems, with everything from vendor management to support under the same digital roof.
3. Technology and Automation
With advancements in robotic processes, machine learning, and artificial intelligence, more organizations than ever before are looking for new ways to implement automation into their finance departments. As such, finance leadership must be able to use advanced technology to eliminate manual, repetitive tasks like data entry in favor of value-added tasks that improve the organization’s effectiveness.
Roughly 65% of finance executives say they will adopt automation by the end of 2023, according to CFO magazine. Finance leaders should understand the roles of machine learning and artificial intelligence (AI) in everything from business management to budgeting. Not only does prioritizing automation expands leaders’ focus within their organizations, but it also demonstrates their impact.
4. Business Collaboration
Finance departments have been notoriously independent for decades, but this is changing. Lack of proper collaboration between departments may cause massive overspending, and the misallocation of resources could lead to understaffing or overstaffing, negatively impacting operations. Finance leadership must have exceptional business collaboration skills to keep every department in tune.
5. Generally Accepted Accounting Principles (GAAP)
An understanding of Generally Accepted Accounting Principles (GAAP) is one of the most overlooked and underrated technical skills in finance. This set of standards and rules for financial reporting is the very foundation of many finance careers, and it helps finance leaders better understand and communicate an organization’s overall financial situation.
6. Independent Research Skills
Finance leaders who possess independent research skills are experts at obtaining new knowledge in a data-driven world. As a result, they are better equipped to develop new processes that positively influence outcomes, and they can do so while keeping costs low. Because finance leaders are often at the forefront of change initiatives, especially as they relate to budgeting, research skills allow for more accurate predictions about how specific changes might impact people, departments, and the organization as a whole.
7. Software Skills
Anyone working in finance leadership should understand the most common software utilized by their organizations. Software powers everything these days, from business and data intelligence to financial modeling. Many organizations use Microsoft applications like Excel, but others use accounting software like QuickBooks or Xero and payroll management tools like BrightPay. Finance leaders should also understand how their software works together to make the most out of integration.
Start Learning Vital Technical Skills in Finance
Organizations are focused on improving their finance departments’ effectiveness in the coming years, so the demand for skilled finance leadership candidates is on the rise. Fields like accounting, information technology, marketing, and human resources management rely on strong leaders to leverage data, manage risk, and make important predictions about the future.