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Bo Harald

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Bo Harald - ZEF, Transmeri, Demos, Real Time Economy Program

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Automating away a 1 billion cost in Finland?

04 March 2010  |  3755 views  |  0

The ministry of Employment and the Economy has published an extensive study on cost of administrative burden. Some quotes (my emphasis):


"The aim of the study was to chart statutory information obligations based on legislation regulating financial reporting, and to assess the related administrative costs and burden imposed on enterprises.
Administrative costs are costs incurred by companies due to the statutory obligation to collect, edit and supply information of various types to authorities or third parties, such as employees or consumers. Administrative burdens arise through the compilation of information purely in response to statutory requirements but unnecessary to meeting the enterprise’s business needs.
...
The study identified the financial-reporting-related information obligations with the highest administrative costs and collected qualitative feedback from enterprises on why these obligations are so heavy. 

....
The study reveals that the total administrative costs imposed on enterprises, due to financial reporting obligations measured, total some EUR 2 billion. Of this sum, the administrative burden’s share totals EUR 256 million, equalling approximately 8 per cent of total administrative costs."

Taking the Finnish figures to EU would mean 140bn and 18 bn per year. Finland has rather high labor costs - but then a fair share of processes are already automated. 

The question is now how soon we can cut this in half - by automating accounting and accounts based reporting, VAT reports and so forth - with the help of e-invoicing (bringing also a long list of other benefits).

But the cost saving is only one dimension - add to that the value of having a real time view of financials, freeing up resources for income generating work, product development, customer service and so forth.

When banks join in with innovative "extended payments" solutions halving the cost starts in earnest. 

 

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