Many industry leaders are captivated by the prospect of Artificial Intelligence (AI), due to the potential it has to be applied in ground-breaking ways. However, some finance leaders remain cautious, perhaps because of the perceived threat of automation to finance sector jobs.
The more likely outcome is a positive one though. Going forward, AI will allow finance employees to achieve more on any given day. It will also lead to the creation of new (and more rewarding) roles as the job market continues to evolve. Finance leaders must prioritise investment in their team’s training, equipping them to deliver unique value that a machine can’t replicate.
The key to leveraging AI's potential lies in using it in the right ways and acting at pace. ChatGPT is an example of a cutting-edge innovation that has taken the world by storm. In this article, we’ll explore what it is, how it can be used in finance/accounting, and what business benefits it can bring about.
What is ChatGPT?
Rising to prominence in the past couple of years, OpenAI are a technology company/research lab based in the US. They are responsible for developing ChatGPT, an AI chatbot they released back in November 2022. It is based on their GPT-3 family of big language models and has been fine-tuned (a transfer learning method) using both supervised and reinforcement learning approaches.
At its core is transformer architecture, a revolutionary development introduced in 2017 that has since become the foundation for many of the most advanced language models available today. While chatbots have been around for some time, ChatGPT represents the next level of innovation in this rapidly evolving field.
It sets itself apart from other chatbot solutions by utilising cutting-edge artificial intelligence and natural language processing (NLP) technologies. Unlike traditional chatbots (which were rule-based and limited in their ability to provide nuanced responses), it uses the power of deep learning to generate real time responses that truly understand user queries.
Recent advances in ML (machine learning) have opened up promising new avenues for enhancing people's lives and expanding their capacities. This can also be said with regards to AI in finance and accounting.
Artificial intelligence shows the greatest promise for automating mundane jobs, freeing up time for employees so they can tackle more meaningful endeavours. For example, in customer service, Chat GPT can answer FAQs, while human employees focus on the more subtle and sophisticated conversations.
Use cases for ChatGPT in finance
There are several examples that immediately spring to mind when thinking about the ways ChatGPT can be utilised in the financial realm, such as:
Investment analysis & prediction
Its capacity to evaluate massive datasets in much less time than a human is one of its most important functions. This is especially helpful for analysing financial markets and forecasting outcomes.
ChatGPT is useful for analysts who are looking at market data, financial accounts, and other information that is used to inform important investment choices. They may make accurate financial projections by first training the AI on previous data, and then harnessing it to recognise patterns and make sound predictions.
Risk management & compliance
ChatGPT can potentially help finance departments to meet compliance and regulatory requirements by automating compliance checks and monitoring activities for potential violations. It might, for example, examine legal papers to ensure businesses are following the rules.
It can also detect and evaluate emerging risks, which allows companies to take the relevant preventative measures. This technology can accomplish this much quicker than a person, and access much more data while doing so.
Identifying financial variables
Training on data and conversational analysis of findings may aid in pinpointing which model parameters have the greatest weight on the outcome. ChatGPT can be trained on various financial data, including historical financial statements, market data, and economic indicators.
This allows it to identify correlations in the data that might be difficult for a human analyst to identify. As soon as it identifies the key variables, it can provide suggestions for adjusting the model to account for them.
Reporting outlines
ChatGPT may be instructed to generate summaries of financial data, making it useful for report preparation. This is especially helpful when a large amount of information must be presented in an organised and digestible manner. In this instance, it just needs a blank template to start generating professional-looking reports in minutes.
Customer service
ChatGPT's use of chatbots allows for 24/7 service, ultimately resulting in a better customer experience. In addition, chatbots can provide reliable answers to customer questions. Unlike humans, they don't experience fatigue, boredom, or distraction. Therefore, they can maintain a high quality of service for more extended periods of time.
This is particularly helpful when responding to common or repetitive queries, since chatbots can do it quickly and accurately without the need for human resources in this area.
Portfolio management
Successful investors will recognise the importance of excellent portfolio management in maximising returns while limiting risk. Portfolio managers may benefit from ChatGPT's real time information and analysis of market movements/financial data throughout this process.
Macroeconomic statistics, firm profits reports, news headlines, and the mood of social media users are all examples. With this information at their disposal, portfolio managers can make calculated investments, fine-tune their portfolio allocations, and capitalise on developing market trends.
Financial auditing
ChatGPT can help auditing procedures by looking for possible anomalies or mistakes in financial accounts. By automating compliance inspections, it ensures regulatory compliance and boosts audit efficiency.
With ChatGPT it is possible to uncover fraud and malpractice by looking into historical consumer behaviours that contributed to fraud previously. It is also possible to predict potential fraudulent activity as early as possible by identifying suspicious behaviour.
Errors and mismatches that are detected in real-time could guarantee better internal auditing and decrease the amount of personnel needed for this task, freeing up auditors for more complicated analyses.
What are the benefits of ChatGPT in finance?
ChatGPT provides finance teams with many advantages, including increased productivity, better customer support, and lower expenses. The variety of ways in which it can be utilised make it a valuable resource for businesses looking to maintain their edge in the market and provide clients with the best possible service. Here are a few more of the benefits it creates:
Improved data-driven decision-making
Its speed and accuracy in processing massive volumes of data will enhance the quality and precision of jobs like risk assessment. By analysing large datasets, the AI can identify trends that might otherwise have been missed, enabling finance professionals to make more informed and accurate decisions.
Cost savings
By allowing existing employees to achieve more, ChatGPT can help to diminish the costs associated with manual work and recruiting new personnel, thus saving the business money. It also provides customised services via data analysis and individualised suggestions, which may increase client happiness and loyalty.
Time saved
The AI chatbot can facilitate the automation of routine finance tasks that are otherwise time-consuming for employees in the sector. Its speed in processing makes it ideal for the finance industry given the importance of the work they do.
Data input is just one example of a manual process that can be automated, using ChatGPT to improve efficiency and reduce unwanted errors that would significantly impact productivity and profitability.
The risks and potential disadvantages of using ChatGPT for finance tasks
False information: Large language models are known for their ability to fabricate false information that appears legitimate. To ensure information is accurate there needs to be a thorough check. Instead of concentrating on end-to-end automation, organisations should emphasise AI augmentation to combine the advantages of tools with workers' critical thinking and creative abilities.
Data security and privacy: When using ChatGPT, protecting the confidentiality and information of client data is essential. Sensitive information entered chat interfaces needs to be protected by organisations against unauthorised access or publication.
Contextual understanding: Many experts have suggested that models like ChatGPT are incapable of comprehending a customer's background in a nuanced way. In the context of finance, organisations place a lot of emphasis on understanding ever-changing customer behaviours, so models will need further training on the language being used by customers.
Teams fearing job insecurity: Tasks that are routine and repetitive can already be automated by artificial intelligence. 90% of firms want to embrace AI in some capacity, according to a Microsoft survey. Outdated finance software is likely to be replaced by new AI tools. Drive-by ideas of the accounting profession's destruction have found it easy prey since several accounting operations, such as journal entries and month-end reporting, are regarded as manual or repetitive.
However, AI is unlikely to replace accountants, for a number of strong reasons, chief among them is the intuition necessary for successful accounting.
These human intuitions include the ability to recognise subtleties, the possible significance of seemingly unconnected factors, and the recommendation of actions based on partial or ambiguous knowledge. These higher-value duties and activities are the main reasons against AI completely or significantly replacing accountants because they can only be acquired and implemented after years of training and professional experience.
Example ChatGPT prompts for finance teams
Effective prompts are the best way to get exactly what you’re looking for from ChatGPT. Here are a few prompts finance teams want to utilise in relation to the use cases we identified earlier:
Risk management
- "Are there any market risks we should be aware of in our industry?"
- "Can you help me identify any inconsistencies or anomalies in our financial transaction data?"
Financial reporting
- "Can you help me create an outline for our quarterly financial report based on these data points?"
- "Generate a comprehensible summary of our annual financial performance using this data."
- "Create a draft outline for our revenue and expenditure report for this fiscal year."
Customer service
- "Generate a response to this common question about our way of working."
- "Create an informative answer to a customer's question about our shipping process."
Portfolio management
- "Can you help me to analyse the impact of recent macroeconomic trends on my portfolio?"
- "Generate a summary of industry trends based on recent financial news headlines."
Is there an AI specifically designed for accounting?
There are several AI-based tools out there that can help streamline certain tasks. These tools can help with tasks such as manual-data entry, tax calculations, predictive analysis and more. However, they need access to accurate data to generate positive results. The modern finance team needs to embrace AI but also remain vigilant in protecting their customers’ data.
For this purpose, there are innovative Cloud accounting solutions like Advanced Financials, which should be embedded within the business operations of any forward-thinking finance function. With this digital transformation, businesses can more easily monitor key KPIs related to revenue, cost, and profitability. This information allows finance teams to plan, predict, and budget more effectively.
Cloud-based accounting software, unlike on-premise solutions, is accessed remotely via the internet. This ensures your sensitive data is more secure, as it is stored on an offsite server and backed up regularly. It also means employees can get their hands on important information, whenever and wherever they need it. By staying on the cutting-edge of innovation, organisations can attract the best talent within their respective field.
