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How is Artificial Intelligence used in finance?

04/01/2023 minute read Nadine Sutton

Artificial Intelligence (AI) is helping finance professionals to keep tabs on their business spend, invest money in more efficient ways, and keep sensitive financial data secure. During the pandemic many CFOs accelerated AI adoption via the implementation of Cloud-based accounting technology.

However, our Business Trends Report highlighted that many CFOs are still seeing limitations with their organisation’s current technology. Despite this, when asked what their business priorities were for the next 12 months, technology was not seen as a central concern.

When utilising AI, finance teams can automate manual tasks such as reporting, while greatly improving the accuracy of data. This leads to more efficient financial planning and analysis.

Without adopting AI, CFOs will struggle to achieve business growth, particularly if they’re facing off against competitors who have already harnessed the power of this technology. Tools such as machine learning will continue to change the nature of finance and accounting going forward.

How is Artificial Intelligence disrupting finance?

When people think about AI or automation in the business world, the first thing that normally comes to mind is job losses. But this doesn’t have to be the case at all. AI essentially creates new jobs for employees, allowing them to make a positive pivot on their career path, and become a more highly skilled worker.

Artificial Intelligence is disrupting finance, but in a profoundly helpful way. It’s allowing those within finance departments to do more and have a bigger impact. For example, with AI, they are capable of processing far more data. A human being has limited bandwidth and must take regular breaks. Software, on the other hand, can process staggering amounts of numerical information.

Not only this, but it also allows them to draw more value from data. AI can spot patterns within financial data that a person would never see. This means they can make far more powerful and accurate forecasts. Finance teams are then able to make recommendations around aspects like investments, with fewer worries that they’re recommending the wrong thing.

This assists with risk management too. If AI is fed lots of information about past performance and external circumstances, it can flag financial risks well in advance. Businesses then have plenty of time to remedy the situation or put safeguards in place if something unpleasant is on the horizon.

The technology allows finance teams to do extremely detailed scenario planning, so they’re prepared for every eventuality and are always ready to complete the right action (at the optimum moment). Rather than simply crunching numbers all day, accounting staff can now let automation take care of this, while they dive deeper into tasks like analytics and scenario modelling, which are far more rewarding and impactful.  

Here's how innovative technologies will continue to shape finance:

  • Artificial Intelligence (AI) - The use of logic and analytics helps computers interpret information and make decisions like humans.
  • Machine Learning (ML) - Computers can learn from a set of data points and make decisions without human intervention.
  • Robotic Process Automation (RPA) - Automation of routine manual processes and rules-based activities, such as downloading an attachment, scanning the contents, and entering the information into a form.
  • Natural Language Processing (NLP) - Provides chatbots and virtual assistants with the ability to understand human speech, including contextualised requests and sentences.
  • Predictive analytics - Determines which scenarios are most likely to play out by analysing past data.
  • Data visualisation - Creates charts, graphs, and dashboards to represent data.

What is the role of AI in accounting and finance?

It's easy to get caught up in the supposed negative connotations of Artificial Intelligence. One such view is that it’s a threat to jobs. However, AI provides a way to reduce the workload surrounding traditional accounting activities.

This includes activities such as transaction processing, auditing, reporting, and maintaining compliance (around regulations like Making Tax Digital). In their current form, these activities prevent the CFO and finance professionals from being strategic business partners.

Implementing AI solutions can transform the way finance teams operate by facilitating:

  • AI-based chatbots
  • Automated tasks
  • Fraud detection
  • Personalised recommendations
  • Frictionless customer interactions
  • Reduction of repetitive work
  • Eradication of human error
  • Cost reductions

Inviting finance teams to participate in the implementation process can help CFOs to minimise negative perceptions. Finance professionals don't need extensive qualifications to harness the potential of AI. However, employee training sessions should be held so they can get the absolute most from this technology.

How is AI expected to change the future of finance?

Resource-intensive tasks like data entry and transaction processing are good candidates for automation. It’s important for CFOs to examine areas of inefficient resource use and ineffective processes, so they can identify more finance automation opportunities.

Activities that fall into this category include planning, budgeting, forecasting, financial reporting, operational accounting, and reconciliation. A new picture is emerging of a stronger, more strategic finance operation, enabled by new technologies, but still heavily dependent on skilled finance professionals.

1. Automation of manual tasks

When using outdated accounting software, finance teams are quickly overwhelmed with tedious tasks, such as maintaining spreadsheets, reconciling data, and preparing reports. The good news is that AI can take care of these tasks, providing a much-needed boost to workplace productivity.

On top of this, Generation Z are the future of finance and accounting job market. Having grown up surrounded by technology, they will expect their organisation to make use of the latest systems.

2. More time for value-adding work

Currently AI is unable to fully match human intelligence, especially when it comes to more creative work. But by automating the more numerical / data-driven activities, it gives people the chance to focus on compelling, rewarding, and value-adding work.

These workers then have the option to develop their soft skills too and get involved with strategy more often.  Thanks to AI they don’t have to spend all their time in spreadsheets and can spend more time building helpful relationships with other business departments (and external stakeholders).  

3. Scenario modelling in real time 

Finance teams must now contend with tighter and more frequent reporting deadlines. As a result of the pandemic and testing economic conditions, there’s a greater pressure from leaders who want regular updates on the latest budgets, forecasts, and scenario planning.

In order to meet this demand, finance teams must grow, or make use of more sophisticated tools like Cloud technology. With the amount of accessible data growing too, it makes sense to choose the latter option if companies want a realistic chance of harnessing this commodity. Software provides almost unlimited processing power, and the Cloud gives instant access to up-to-the-minute business intelligence, which can be used to meet the shifting demands of the market.

4. Reduce human error

Those using outdated systems are bound to suffer from the occasional human error, with numbers entered incorrectly here or there. This doesn’t happen with AI as calculations are completed automatically. And AI doesn’t need a break either, it can process numbers continuously. It can also be used for detecting errors, or spotting other unusual occurrences (rather than relying on an individual to spend hours combing through every single piece of data).  

5. Recognising the workforce’s potential

As AI is still a relatively new technology within organisations, employees of all backgrounds and experience have an equal opportunity to master this tool and safeguard the trajectory of their career path. This technology also provides an opportunity for more people to get involved with finance, rather than just those who have gone down the traditional education route.  

How can your business benefit from AI?

  • Enhanced productivity and efficiency thanks to automation
  • Fewer instances of costly human mistakes
  • Informed decision-making
  • Better understanding of customer behaviour
  • Spot revenue opportunities through data analysis
  • Fraud detection
  • Manageable growth
  • Cost reduction recommendations
  • Future proof processes
  • Improve talent retention

According to our annual Business Trends Report, only 37% of employees rely on automation during their working day. These numbers are likely to rise over the next year as businesses continue to invest in digital transformation.

Cloud-based digital solutions can significantly increase productivity, creating automated workflows to move through tasks quickly, taking care of repetitive administration.

Nugent Care, the largest education, health, and social care charity in Liverpool, adopted our Financial Management software with a need to save time for their finance department:

“We were introduced to Financial's by our account manager at OneAdvanced and were impressed by how user-friendly the solution was. The product fits with our Cloud-first strategy and we love that it is a Software-as-a-Service model. From the price to the support and the scalability of the solution, we could see it was perfect for us.” - Julia Shaw, Head of Finance at Nugent Care

Find out how we helped Nugent Care to put the fun back into finance.

Now is the time for employees to work with their Finance Manager and CFO to identify areas where automation could transform their processes. Unlocking the potential of AI could be the key for guaranteeing future business success.

Step into the future of success

The potential of automation for the finance sector is vast. But CFOs must remember any technology is as good as the individuals using it. They must continue to place great importance on their most valuable asset, people, if they are to draw maximum value from emerging technologies.  

At OneAdvanced, our expertise in AI, Machine Learning (ML), and Data Services ensures we can help you to mine as many insights from your data as possible. We specialise in data analytics and business intelligence projects and can work with you to meet your specific business needs.

With the powerful capabilities of Cloud-based accounting software, through our Financial Management solution, your finance department can become a strategic powerhouse within your organisation, both now and in the future.