C.V.O. CA'S NEWS & VIEWS

Compiled by:

VOL. 23 - NO. 6 - JANUARY 2020

CA Rajiv Gangji Gada

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Traditionally and to a major extent Chartered Accountants [CA's] are focused on professional opportunities in

Audit, Finance, Accounting, Tax [Direct / Indirect] and consulting. Also within consulting opportunities their

core value add is related to above areas of strength. Last couple of decades have seen increased percentage of

our fellow CA's move to Industry, capitalizing on their core strengths in related functions.

Changing landscape and increased use of technology everywhere has motivated and forced us to adopt tech

in every aspect of work and life. Today every business demands speed, accuracy, quick time to market,

differentiation from competition and connectivity with the world [Global Market place] and this is not possible

without adoption of technology. Hence being Tech Savvy from business view point is not a choice but necessity.

In last couple of decades CA's have also been moving to technology related careers like:

Implementation, Development, Testing (Quality Assurance - QA) and Support in below areas:

Enterprise solutions in Manufacturing / BFSI like SAP, Oracle Financials, NetSuite, etc. In house for a

business entity or with System Implementer [ Software companies ]

Industry specific licensed software solutions like Finacle, Flexcube [ Banking ] , Credence , Kastle,

Murex, Calypso, etc.[ Treasury and Capital Markets – Multi Asset ] , ODIN, Omnesys [Share Trading

Software ], MFund, MoneyWare [ Asset Management ], etc.

Custom Software development incl. solutions for Risk management, regulatory compliance, reporting,

dashboard, etc.

Aspects and Strengths of CA's which have enabled this logical transition of their careers are:

Sound Base Knowledge of Finance, Accounting, Audit, Tax [Direct / Indirect], Treasury Operations

Exposure to Multiple industries – Banking, Manufacturing, Capital Markets, IT, etc. and business

processes within each industry

Regulatory and compliance Knowledge – Local [RBI, FEMA, SEBI, FIMMDA, etc.], Global [SEC,

GDPR, Dodd Frank Act, MiFID II, EMIR, PSD2, etc.]

These above areas today also represent a huge opportunity for CA's to venture into these aspects of technology

and make successful global careers.

However the pace of change of technology is electrifying. We all have experienced Digital, Omni Channel and

newer buzz words like Automation, Blockchain, Artificial Intelligence [AI] / Machine Learning [ML], Natural

Language Processing [NLP], FinTech, etc. keep on haunting us. These newer aspects of technology represent

tectonic shift and also present an enormous opportunity for CA's, which is elaborated in detail in below

sections:

World of Technology – Automation, Digital, FinTech and Chartered Accountants Opportunities: Infinite

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Automation – Robotic Process Automation [RPA]

I am sure everyone has heard of RPA, BOT's, etc. but what does that mean. In simple terms in the world of

Data / Process Automation, RPA is a standardized short form used to explain a creation of BOT i.e. Automation

Robot – with the help of technology and software that helps in automating certain business process so that

data / tasks can be carried out automatically on software's without human intervention. To explain in lucid

language, these bots work on the GUI / display layer of software and process data seamlessly as if any Human

being would do. Only exceptions are alerted for review and human intervention. The advancement of

Technology and availability of software's that enable easy of creation of BOTS are available today. Few

Examples of companies that have licensed software's that enable RPA are Automation Anywhere, Blue Prism,

UI Path, etc.

Advancement in this technology to have intelligence [Which these days is termed as AI – Artificial Intelligence]

built into these software's for prudent and multiple decision making is increasing and error handling

capability have increased the adoption and adaptability of these software's.

Today anything that a human being can do / process on software's can practically be attempted by creating

BOTS for a particular function.

So are we right in assuming that everything we do today will be taken over by BOTS. Not exactly, since in any

Business decision, creation of BOTS for handling a particular function is a software build activity with the use

of licensed software products and involves time and effort. Hence maximum advantage or ROI for this can be

realized by creating BOTS for processes which are repetitive and voluminous. In addition speed, accuracy, no

human error, 24 x 7 availability and scalability are other advantages.

Some example in the financial world where RPA is implemented are:

Invoice Processing – Accounts Payable – Accounting / Finance Function

Customer On boarding / Know your client – KYC - Banking

Loan Application Processing – Lending Function – Banking / NBFC

Trade Processing / Trade Reconciliation – Capital Markets

Policy Issuance / Claims Processing – Insurance

Trade Finance - Banking

Logical steps in implementing RPA and those steps marked with $$ are where CA's can immediately get

involved and @@ are those where based on CA's interest, can learn the RPA Tools - BOTS creation and venture

into entire chain of RPA

Based on cost benefit analysis and ROI, determine the processes that need to be Automated $$

Create an as is scenario / current state - Documentation of this process $$

Standardize the process and steps which can handle this function covering various permutation

combinations and freeze before implementing RPA $$

Conduct a Proof of Concept [PoC] with Multiple RPA product vendor to find out which product is best

suited with your processes and software. @@

Implement RPA – Create BOTS @@

Run Business as usual $$

Blockchain – Distributed Ledger Technology [DLT]

As soon as you hear of Blockchain, people start thinking of Bitcoin – Cryptocurrency and relate to it. But that is

not true, since the underlying technology or backbone of Bitcoin or any Cryptocurrency is Blockchain or

Distributed Ledger Technology [DLT]. Blockchain loosely is also interchangeably terms as Distributed Ledger

Technology [DLT]. However in strict parlance every Blockchain is DLT but all DLT are not Blockchain.

Blockchain is a distributed database to record transaction / data, which is spread across different computers

on a network. The data is stored in blocks and all blocks are connected to each other using a unique

cryptographic sign called # Hash, thereby creating a chain. Technically there are Permissioned Blockchain

where users have specific permission w.r.t. to actions and access to specific set of data and Permissionless

Blockchain which operate publicly available applications.

Some advantages of Blockchain technology which has made this popular:

Single records of truth – Centralized single database, thereby eliminating maintain multiple data sets

and hence No errors / discrepancy across entities.

Immutability – The records cannot be altered/ changed / tampered – Since everyone is connected in a

chain via Hash and hence requires multiple level of authorization for alterations.

Substantial advancement in Blockchain Technology in last couple of years has attracted higher focus and

attention from industry participants to experiment this and have operational use case:

Higher Performance – Transactions at greater of 10000 tps

Enhanced Security

Interoperability – Industry collaborations leading to greater success of PoC

Permissioned Blockchain

Investments by VC's in Blockchain and related Start Up's in 2018 has been substantial.

Regulatory approval and recognition by Multiple countries

Establishment of Regulatory Sandbox

Today due to the above highlighted aspects, Blockchain use cases are being experimented across industries

like Banking, Financial Services, Capital markets, Logistics, Real Estate – Land Records, etc. Just to highlight

a few cases concentrated on Capital Markets can be:

Trading [Real Time Trades and Settlement – Tokens, Coins, etc.]

Settlement [Smart contracts, Post Trade, etc.]

Issuance of Securities [Multi Asset Issuance – Bonds, SME Private Companies, etc.]

E Voting – RTA [ Corporate Actions ]

E Kyc

Smart Contracts - OTC Derivatives Contracts

Custody – Digital Assets / Token

Payments

How can CA's participate in this revolutionary technology:

Identification of use cases with their areas of operation where Blockchain DLT can be used

Business Requirement Specification [BRS] Preparation for Use Cases

Close collaboratio with Development team during development phase for domain orientation and

clarifications

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Functional / User acceptance testing of developed application

Business as Usual – Run in live environment post development

Data Science – Business Use of Big Data – Artificial Intelligence and Machine Learning

Data science is the practice of extracting meaning insights and knowledge from multiple data sets Structured

and unstructured - Using scientific algorithms, processes and systems. Today importance of data is like Oil,

for coming decades. Competition and corporate battles will be won based on collection, availability and

interpretation of Data and its optimal use.

This field uses the latest concepts of Artificial intelligence along with machine learning to extract

information which is helpful in making various business decisions. This science has advanced to make

predictive analysis in regard to human behavior patterns, decision making, sentiment analysis, etc.

To give you a an example, these days there are custom applications developed in advanced economies which

listen to listed companies management calls and discussion and based on their various aspects of confidence,

promptness, clarity of response, detailed data shared, etc. give different predictions about the company's

future.

It will be hugely advantageous for young CA's to develop a data lead decision making mindset and while they

definitely need to know Excel Macros, its use, etc., but also short courses done in Python and R language will

provide additional advantage in Data Analysis.

In Capital Markets, algorithmic trading / High Frequency trading is an excellent example of Artificial

intelligence and Machine learning.

CA's will be called in every aspect of their work to get involved with teams to suggest what are criteria to extract

relevant data sets for determining a particular outcome / decision.

FinTech – Startup – Entrepreneurship

CA's interact with a wide variety of audience during their professional life and are banked for providing advice /

solutions for many aspects where software's fail.

Hence FinTech can be an entrepreneur opportunity. The key is to identify a gap in the current offerings

available in the market and design a solution to cater it.

Today you would have heard of multiple startup disrupting many established businesses and models and

some of the areas of focus for FinTech are:

Payments – Flip given by NPCI post release of UPI 2

Wealth - Robo Advisors - Auto Portfolio Construction based on Risk Profile

Lending – Micro Loans - Finance / SME finance / P2P lending

Regulatory - Reporting

Aggregator Model – Market Place for BFSI products

While it is undisputed that importance of CA's and its core domain of Audit, Tax and Accounting are the

immediate opportunities.

But changing times call for an open mindset to embrace the digital and data mindset, within its own areas and

also opens up plethora of opportunities to contribute to this sunrise industry either as consumer, service

provider, applications owners and entrepreneur and embark on this journey into the world of infinity.