Zuzanna Pajorska

Your Guide to Digital Finance Transformation in 2024

The adaptation of digital technologies in the finance sector to improve overall business processes and customer service is progressing. According to the analysis, $1.5 trillion will be spent on global digital transformation in 2021. Global spending on this purpose will reach $6.8 trillion by 2023. The market absorption, as you can see, is significant. So how can companies operating in the finance sector prepare for digitization? What challenges will they face? What benefits will they achieve from the digitization of finance? Read the article to find out and learn about best practices.

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What is a digital transformation?

Digital transformation primarily involves a complete rethinking of entrepreneurs’ existing approaches to the processes in the company. Introducing these changes aims to improve the quality of activities, streamline workflows and simplify existing procedures.

These goals are achieved by introducing modern, innovative technologies into the company’s daily operation. As a result, the effect of this strategy should be increased efficiency of work, improved profitability, increased competitiveness in the market, and higher quality of customer service.

At the same time, it is crucial to remember that the digital transformation of business is not, as some people mistakenly perceive it, “turning upside down” existing operations or taking jobs away from employees.

Instead, it is nothing more than integrating the digital technologies used to date so that they are ideally suited to the business profile and, at the same time, the industry’s current level in general.

Improvements in finance departments

What is finance transformation?

Let’s go deeper into a specific field that especially needs digitalization in 2024 – finance sector. What exactly is financial transformation?

Finance transformation is the process of changing the finance department in a company to make it work better. This involves using custom software and modern technology solutions to do tasks quicker and changing old ways of working to save money and reduce errors.

The goal is to help the finance team provide better information and advice so the business can make smart decisions and prepare for the future.

It’s about improving the department that handles money so it can more effectively support the business and help it grow.

What benefits does the digital finance transformation provide?

Did you know that 89% of companies plan to adopt or have already adopted a digital business strategy, and the most significant users of digital business strategies include services with a score of 95%, financial services (93%), and healthcare (92%)?

Such a high level of interest in digital finance transformation should not surprise anyone. After all, companies implementing such a strategy achieve several tangible benefits.

Key among them are:

Efficient and effective customer service

Market analysis shows that as many as 76% of financial services executives recognize customer service as critical in digital finance transformation.

It is hard to disagree with this view. The widespread adoption of various types of applications, the use of smartphones, and seamless access to the Internet have made today’s customers familiar with the technology.

So they expect financial institutions to follow suit. In fact, through digital finance transformation, both parties can benefit – financial institutions through data collection and customers through access to personalized financial products and services.

Greater operational efficiency

Improved operational efficiency is the most significant benefit of digital finance transformation. This is what as many as 40% of respondents indicated in the survey.

Implementing an effective finance digitization toolkit improves almost all operational processes by automating manual tasks, accessing and quickly analyzing many data, reporting more effectively, and creating predictive analytics.

All this ultimately leads to savings in time and money and increasing revenues.

Data-driven decisions

Modern banking technologies based on artificial intelligence, machine learning, cloud computing, or big data are widely used in digital finance transformation.

Financial analyses made with their help enable faster decision-making in the capital markets. They also effectively support finance professionals in creating market-compatible and customer-oriented offers.

[Read also: Future of Business Intelligence]

Financial service providers

Digital finance transformation – main aspects and challenges

Digital finance transformation is a crucial business strategy.

The rapid development of innovative technologies and the changing needs of consumers make it necessary for the financial industry to modify its mode and scope of operation adequately.

It’s not just about replacing paired forms with digital ones but automating processes or consolidating data and group reporting. Regulators, policymakers, financial institutions, and other ecosystem participants must therefore work together to set an integrated approach that modernizes regulatory policies and addresses the security of financial modernization processes.

What are the challenges of digital finance transformation?

Adaptation of systems

Digital finance transformation is changing economic and accounting processes using modern technologies. For the entire financial ecosystem to work efficiently, there is a need to adapt IT resources and transfer knowledge to the new infrastructure. This involves costs and the need for access to the know-how of experienced professionals. Then the best results can be achieved.

Security and compliance

In the process of digitizing finance, it is essential to remember that this is an industry that deals with sensitive data daily – personal, transaction records, and currencies. So it is crucial to ensure their security and to create a digital system under the legal requirements in force in a given country or region.

Responding to customer expectations

Among other things, the goal of digital transformation in the finance sector is to offer customers better efficiency when using banking systems and applications, as well as a consistent experience across platforms. Thus, when planning the digitization of a financial entity, it is crucial to consider customer expectations regarding future system functionality.

Adapting changes internally

In the digital finance transformation, it is also a challenge to change habits among employees and the way they think. Working in new conditions often meets with a less-than-optimistic reception, which is associated with improving digital competence. Therefore, it is worthwhile to properly direct communication, with a clear definition of the benefits, so that adapting new technologies in finance becomes a long-awaited moment and not an unpleasant chore.

Manual processes replaced by automation

How is the finance sector using new technologies?

  • Automation and digitization of traditional processes – signing electronic documents using bank account authentication is becoming routine, as is sending money to a contact on a phone number.
  • Using biometrics to confirm identity and authorize instructions.
  • The growth of fintech – the adaptation of new technologies in the finance sector is developing digital services on many levels – from expense tracking and budgeting to chatbots to support efficient customer service.
  • Blockchain technology – a new way of identifying, recording, storing, and managing assets, as well as investing;
  • market sealing – machine learning technology can be used to detect financial fraud – including money laundering or credit card fraud;
  • no-code and low-code approach to build applications without coding. Learn more about the role of low-code in digital transformation.

[Read also: Off the Shelf vs Custom Software: Pros & Cons + Examples]

Technologies and software solutions that drive finance transformation

The technologies and software needed for digital transformation in finance generally focus on improving the efficiency, accuracy, and decision-making within an organization’s financial operations.

Let’s look at how different technologies and software address the critical aspects of financial transformation:

  • ERP Systems (Enterprise Resource Planning): They are essential for integrating various functions into one complete system to streamline financial processes and data across the enterprise. They ensure that all financial data is centralized, current, and accurate.
  • Robotic Process Automation (RPA): RPA software can automate repetitive and time-consuming tasks within accounting and finance processes, such as data entry or report generation, freeing the finance team to focus on more strategic activities.
  • Cloud Computing: Essential for a flexible and scalable finance operating model, cloud-based solutions ensure that financial data and applications are accessible anytime, anywhere, promoting remote work and real-time collaboration.
  • Data Analytics and Business Intelligence Tools: These tools are vital for the finance transformation roadmap, providing deep insights into financial data. They help in forecasting, risk assessment, and making informed strategic decisions.
  • AI and Machine Leanrning: I the realm of financial transformation, AI can predict future trends, identify anomalies, and provide strategic insights. Machine learning algorithms can improve over time, making the financial forecasting more accurate.
  • Blockchain: Although more nascent, blockchain technology promises to revolutionize finance processes by bringing in unparalleled security and transparency, especially in transactions and contracts.
  • Compliance Software: As finance operating models evolve, staying compliant with the latest regulations is crucial. Compliance software helps ensure that a company’s financial operations adhere to necessary legal and regulatory standards.
  • Accounting software: This is a foundational element in any financial transformation roadmap. Modern accounting software goes beyond basic bookkeeping to provide comprehensive solutions for tracking financial transactions, managing invoices, performing bank reconciliations, and generating detailed financial reports. It ensures accuracy and efficiency in accounting and financial processes. In addition, it often integrates with other systems and software used by the finance team, ensuring a cohesive and streamlined financial operating model. Whether it’s accounting software for small businesses or large enterprises, the right accounting software is essential for effective financial transformation.

Key statistics on digital finance transformation in 2024

  • Digital transformation spending: In Europe, digitalization spending is growing rapidly, with a compound annual growth rate (CAGR) of 16% projected from 2023 to 2027. From 2024, the fastest growing region will be the Nordics, particularly in the financial services and telecommunications sectors, highlighting the diverse investment opportunities across countries and industries.
  • Market size and forecasts: The digital transformation market is expected to reach $1,548.9 billion by 2027, with global spending on technology to enable the transformation estimated to reach $2.3 trillion by 2030. As of 2024, this trajectory suggests a sustained commitment to digital adoption, despite some technologies failing to meet expectations in previous years.
  • Financial Services Trends: The year 2023 was a pivotal moment for digital finance transformation, underscoring the urgency of accelerating digital initiatives as a strategic priority. As we move into 2024, the sector continues to navigate the complexities of balancing rapid digital adoption with the challenges posed by the economic climate.
  • IT spending growth: Global IT spending is projected to grow 5.5% in 2023, reaching a total of $4.6 trillion by the end of the year. As of 2024, this indicates a robust and resilient pursuit of business digitalization across various sectors, including finance, despite ongoing economic disruptions.

Sources: IDC, Markets and Market.

As of 2024, these figures and insights reflect a sector that is deeply engaged in technological innovation and is likely to continue to adapt and evolve rapidly. The focus appears to be on embracing new technologies, driving growth amidst economic uncertainties, and capitalizing on emerging opportunities across different geographies and subsectors within the financial industry.

How to plan digital finance transformation?

1. Define the goal and understand strategic objectives of digital finance transformation

Before embarking on a finance transformation journey, senior finance leaders must clearly define and understand the organization’s strategic objectives. This understanding helps ensure that the transformation aligns with the broader goals of the organization.

Next, consider what areas of your business you want to improve (streamlining financial processes, improving product offerings or financial reporting, introducing new pricing models, streamlining your customer service department by chatbot) and what tools you need to do so.

2. Characterize the roles of finance leaders

Successful digital finance transformation depends on correctly defining goals. In this context, defining how accounting and finance roles will evolve is crucial.

This is because you need to know that automation and data analytics in the digital finance transformation process will automate many traditional accounting tasks. This will create space to redirect specialists to work on other tasks.

So, determine what tasks are bottlenecks in your company’s growth, assess your employees’ competencies, and allocate resources. This will help you focus on strategic tasks, such as analyzing and interpreting data, forecasting, and identifying cost-saving opportunities.

Replace mundane and repetitive tasks by digital processes

3. Assess current financial and accounting systems

Evaluate existing finance and accounting systems to identify areas that need improvement, automation, or a complete overhaul.

This assessment should consider how well current systems support the organization’s strategic objectives.

4. Engage internal and external stakeholders

Successful finance transformation projects require input and buy-in from both internal and external stakeholders.

Engaging these stakeholders early and often ensures that the project considers all perspectives and needs, leading to broader acceptance and smoother implementation.

5. Define the scope of the transformation

Based on the strategic goals and the assessment of current systems, define the scope of the finance transformation.

This includes identifying which processes will be transformed, which new technologies will be implemented, and how these changes will impact the organization.

6. Develop a strategic plan

Create a detailed plan that outlines the steps necessary to achieve finance transformation. This plan should include timelines, resource requirements, risk assessments and milestones.

Senior finance executives should lead this planning and ensure that it is aligned with the organization’s strategic initiatives.

7. Typifying potential obstacles

The effectiveness of digital finance transformation depends on several challenges. To succeed, finance professionals must carefully pick out all potential roadblocks and develop strategies to overcome them.

One example is the lack of resources in the form of specialists and know-how.

In such a situation, it makes sense to outsource software services. At Stratoflow, for example, we have developed a high-performance, horizontally scalable cloud platform for financial applications that can process up to more than a billion financial transactions per hour in the cloud and check billions of balances in under a second.

8. Implement technology and processes

Begin implementing the new finance and accounting systems and processes. This may involve purchasing new software, retraining staff, or redefining roles and responsibilities within the accounting and finance organizations.

9. Monitor and Adjust

Once implementation begins, continually monitor progress against the strategic plan. Be prepared to make adjustments as needed to address unforeseen challenges or incorporate stakeholder feedback.

10. Measure success and iterate

Once the new systems and processes are in place, measure their performance against pre-defined goals.

Use these metrics to iterate and further improve the processes.

Success in finance transformation is not just about meeting initial goals, but about continuously improving efficiency, accuracy, and alignment with strategic objectives.

11. Maintain the right mindset for business digitalization

In digital finance transformation, it’s important to note to finance teams that transformation is not just about implementing new technologies for the sake of the idea.

What’s important here is to rethink how you do business in the first place so that you ultimately gain greater efficiency, effectiveness, and improved operability.

You will achieve successful digital finance transformation by following general digitalization trends and asking yourself how digital tools can improve the execution of repetitive tasks and other financial operations.

Digital technology revolutionized many aspects of finance function. Today, financial service providers have many options to attract customers and to best present their offer.

Will 2024 bring big changes to the finance industry?

The Finance 2025 report by Deloitte shows that:

  • contactless transactions will thrive due to the rapid adoption of automation and blockchain in the finance sector;
  • the requirements for employees in the finance industry will be evaluated, as their skills will have to converge with the technologies used in digital financial products;
  • the reporting system will change, as constant access to real-time data, analysis and charts will provide clear insights into the health of companies without the need for reporting intervals;
  • besides, the trend of IT industry support for companies and NGOs in digital transformation will continue strongly, as exemplified by the Tech to The Rescue project. Stratoflow has also joined this idea and has partnered with the NGO Otwarte Klatki.

Follow up reading: 11 Fintech Trends That Shape Financial Future.

Are you interested in delivering digital finance transformation with success?

Digital technology today plays a vital role in the functioning of finance organizations and finance teams. Undoubtedly, further digital finance transformation is inevitable, and the range of tools that can be used will increase. In fact, this trend also applies to many other sectors of the economy – digitization is advancing in the healthcare, manufacturing, logistics, and travel industries, as we wrote about in our previous articles: Digital Transformation in the Travel and Tourism Industry, Digitalization in Healthcare, Travel Technology Trends Emerging in the Tourism Industry, 5 Most Popular Healthcare Software Solutions.

We are Stratoflow, a custom software development company. We firmly believe that software craftsmanship, collaboration and effective communication is key in delivering complex software projects. This allows us to build advanced high-performance Java applications capable of processing vast amounts of data in a short time. We also provide our clients with an option to outsource and hire Java developers to extend their teams with experienced professionals. As a result, the solutions designed for our customers contribute to their business development. We specialize in travel software, ecommerce software, and fintech software development. In addition, we are taking low-code to a new level with our Open-Source Low-Code Platform.

Building a financial application or extending your development team?

🚀 We're here to assist you in accelerating and scaling your business. Send us your inquiry, and we'll schedule a free estimation call.

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