How AI and Automation will change the future of finance

How AI and Automation will change the future of finance

Artificial Intelligence (AI), using machine learning (ML) has the potential to change the nature of the finance department in a profound way. While many analysts’ commentators believe the mass implementation of these programmes is still a decade away, its potential to redefine business and boost profitability will ensure its speedy adoption by most enterprises.  

The motive for fast acquisition is simple economics, according to Accenture Consulting, robotic process automation can help financial service companies reduce costs by 80 per cent and the time it takes to perform tasks by 80 – 90 per cent. RPA used together with artificial intelligence can remove the human bias in the financial processes, augment finance teams to perform a process more innovatively and increase business agility.  Our Office of Finance benchmark research finds that a large majority (71%) of companies that apply a high degree of automation in their close can complete the process within six business days, compared to just 23 per cent that applies little or none. So, if CFOs want their organisation to remain competitive in the short term and prevent them from becoming completely obsolete in the longer term, they will be obliged to pursue this technology as a priority. 

 The financial services industry has been a testbed for this technology, due to its large volumes of historical data which algorithms can utilise, however, the benefits of tech innovation will undoubtedly creep into all sectors and CFOs in a wide range of industries should be eyeing not only AI but other solutions such as columnar databases, in-memory processing, and conversational computing. These programs are expected to have a more profound impact on how finance functions over the next 10 years than technology has in the last five decades combined.  

Artificial intelligence is the application of machine learning algorithms, that can change (learn) as more data and outcome is observed.  

What can AI do for finance? 

  • Automating financial close tasks, such as routine journal entries, can speed up the close process. The quality and accuracy of output data and financial statements will be improved with the absence of human error.
  • Eliminating boring repetitive work will raise employee morale and productivity. Intelligent tools will free up personnel to focus on value-added work such as strategic decision making, modelling, and scenario planning.
  • AI can create dynamic, real-time models to pinpoint trends and identify risks.  Automated forecasting will enable continuous improvements to the quality of the forecasting through the continuous training of the machine learning model as more datasets are updated. 
  • As technology becomes more widespread in the organisation it can be used to understand and predict customer needs and demand.
  • AI can now go beyond the routine number-crunching tasks and robotic programmes can apply judgments in data and process handling and can analyze analyse unstructured data. By scanning and processing keywords and phrases in research, records, or external feeds such as news and social media, it is possible to identify trends within the industry. 

As we develop smart machines and automation becomes more widespread, the role of the accountant will evolve to become one more of judgement and providing guidance. CFOs will be able to lure the best talent as organisations can offer professionals more interesting roles. The organisation will become a more attractive employer to millennials and Gen Z professionals who have grown up with technology and expect to see the latest innovations in their workplace. 

Software vendors are incorporating AI and machine learning into their solutions and we can expect this to become a baseline in the coming years. 

Conclusion – To remain competitive, CFOs must take a fast-follower approach to technology acquisition, adopting IT capabilities for their business purposes as soon as the application of the technology becomes practical.  

If you want to see practical illustrations of how modern cloud finance software incorporates AI into planning and forecasting processes, why not book schedule a 45 demo for CCH Tagetik – the Finance Transformation Platform.