Digital Transformation in Financial Services and Its Impact on Audits

How Digitalization Impacts Financial Services Companies and Their Audits

Just as technology is transforming the operations of financial services companies, it is also revolutionizing the way their audits are conducted. The financial services sector is undergoing large-scale digital transformation that has widespread implications for how companies in this industry run their businesses.

New technologies such as blockchn, data analytics, and robotic process automation RPA are enabling banks, insurers, and other established financial institutions to overhaul their operations and identify different ways of serving their clients. These advancements also create opportunities for challenger businesses like payment services providers. Furthermore, these companies operate in a highly regulated environment, which requires them to manage digital transformation while simultaneously meeting demands from stakeholders for greater transparency and trust.

There is a strong tr toward upgrading legacy systems and implementing an agile way of working across business functions. Companies are looking to restructure their operatingso that they can become more agile and make efficiency gns. To meet customer demands, investments continue in innovative online banking, digital platforms, new insurance products valued by customers, and improved data quality to support accurate reporting.

Key technologies where financial services companies are investing include blockchn, data analytics, the internet of things IoT, and RPA. In addition to these, many institutions are turning to cloud infrastructure, which enhances scalability, security, and cost-efficiency.

By automating some procedures and embracing technologies such asand , both the administrative burden on companies during the audit process is reduced, and time for auditors to focus more on judgements applied. This aligns well with new accounting standards that require more scrutiny of judgemental aspects.

The digital audit in financial services is evolving alongside the industry itself. Auditors are continually innovating to reflect technological developments across all sectors. They understand the need to use technology to deliver high-quality service and adapt to changes in the broader business environment.

This evolution undoubtedly brings benefits for financial services companies. As auditors use technological tools to interrogate larger samples of data, they will be better positioned to understand a company's internal processes, apply professional skepticism effectively, challenge management, and assess risks more comprehensively. This helps develop an effective and efficient audit strategy.

Financial services firms are increasingly under pressure to build trust. The digital audit is one way to provide greater insights and perspectives on what companies do.

Summary

The financial services sector is undergoing large-scale digital transformation. New technologies are revolutionizing the way financial services companies operate as well as how their audits are managed. Companies need to prepare for a digitally transformed audit by understanding its benefits, leveraging technology, and preparing for changes in both operations and accounting standards.

About

Zeynep Deldag

EY Global EMEIA Financial Services FSO Assurance Digital and Innovation Leader, EMEIA FSO Financial Accounting Advisory Services Partner, Ernst Young Nederland LLP

Works with global banking and insurance clients on their CFO aga, including both Assurance services and advising on large-scale transformation programs. Gets energy from her two children.

Related topics:

• Assurance

• Audit

• Digital audit

• Financial services

• Audit quality
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