- Westpac’s latest Industry Insights report looks at the future of New Zealand’s accounting services industry
- Technology is driving change, and smaller firms – even audit services, may not survive in their present form
- The ability to leverage technology and deliver new solutions are critical to remain relevant
New Zealand's accounting service industry is looking down the barrel of radical change. According to Westpac's Industry Insights report, three key drivers are at work - the need to comply with statutory reporting requirements, an increasingly complex commercial environment, and most significantly, rapidly evolving technology.
The report finds that some accounting services providers have simply buried their head in the sand, ignoring the impact of technology. Others are increasingly leveraging off cloud based technologies to move into higher margin advisory services. Some larger firms are investing in technologies that allow them to extract extra value through data mining, analytics and exception reporting.
Technology is also re-shaping skill sets. Strong relationship skills are essential to complement technical and ethical competencies. Problem solving abilities, a strong business acumen and a strategic mindset are highly sought-after competencies. To access these skills, accounting services firms are increasingly hiring people from disciplines other than accounting.
The consequences will be significant for accounting services providers that cling to the tried and trusted.
Technology - the key driver of change
Cloud based accounting software is still not the norm in New Zealand but Westpac predicts it will become so, completely replacing traditional desktop technology. This will eliminate the role of accountants in all aspects of traditional accounting work – and it could happen sooner rather than later.
The consequences will be significant for accounting services providers that cling to the tried and trusted. They won't be able to compete with new software that can prepare financial statements and tax returns faster and at a fraction of the cost.
Hardest hit are likely to be smaller firms that either lack the resources to change or the will to do so. Eventually, Westpac predicts, most will go out of business or be acquired by other firms looking for specific competencies.
Auditing and assurance services could feel the pinch too. Medium term, advances in technology could see audit become largely automated though still requiring human intervention. Further out, the situation could be more extreme, with integration between fully automated accounting systems run by firms and those operated by the authorities resulting in a situation where there is no need for either auditing services or human intervention. In essence, the systems would run themselves.
Critical success factors
Westpac forecasts that the accounting services industry as we know it will no longer exist in New Zealand. It will instead sit within a broader advisory/professional services sector. But this does not mean the end of accountants.
Accounting firms of the future need to be entrepreneurial, actively looking for new ways to improve revenues and be willing to shed those services that limit revenue growth rather than cling to them for dear life.
Several factors will determine success. Foremost is the ability to leverage new technologies to deliver new solutions to customers at lowest cost.
Firms will also need to improve their situational expertise and offer competencies and skills not traditionally related to accounting. The focus will increasingly be on being a trusted partner (rather than an advisor) who understands all aspects of their client’s business, strategically, tactically and operationally.
The final critical success factor is having a clear vision of which market segment and service offering will maximise profitability.
Industry Insights 2018
Understand how you can survive the future.Read the full Westpac report here