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Why AI-enabled finance will be critical to sustaining competitive advantage

10/01/2019

Matthias Thurner, Chief Product Officer for Unit4

 

Smart machines are on the rise, and they are already helping CFOs make better, data-driven business decisions to outpace the competition

 

The business benefits of AI are common across industries: eliminating manual processes, making business nimbler and more responsive, and supplying insights in real-time.

AI and its machine learning technology can already replicate some finance processes and actions. They can analyse data, take over complete tasks, and generate reports. Given sufficient data and processing power, AI-powered corporate performance management (CPM) promises to do almost anything a human finance pro can do now – but faster.

AI-powered CPM is already able to examine in a few minutes multiple complex financial models – heavy brain work that a finance professional might need days to work through – and uncover variances in seconds.

Used effectively, these capabilities can supercharge finance processes and help CFOs deliver new business agility and market responsiveness to their companies.

Gaining new insights faster is the key. At period end, CFOs are the first to notice when sales of a product are up or down. What if they could also see the relevant customer behaviors that signal a coming rise or decline?

Are there recurring problems with certain products that generate more returns and refunds? What are customer support tickets and PoS feedback telling us about purchase satisfaction? How quickly are we able to fulfill online orders versus our nearest competitors? By putting AI tools to work, CFOs are better positioned to answer these questions and recommend course adjustments.

 

AI in finance today

Smart assistants like Apple’s Siri can already handle questions on stock quotes and weather. What if you could ask a finance digital assistant on your smart phone to list product categories that have fallen short of forecast in the latest financial results? The bot would allow you to have a ‘conversation’ with the CPM system, and tell you where the anomalies occurred.

And there are digital assistants that can already answer queries in seconds that would take a human hours of analysis. Which of our products is likely to miss budgeted unit sales this quarter? Is business unit Y on-track to reach its cost-of-sales target? Compare the profitability of the following regions in February and March of 2018.

Like Siri or Alexa, these assistants can take these queries by voice or text and provide replies in natural language.

This is one way in which AI can augment the finance function and make it better. In the future, chatbots will work in the background to help CFOs improve performance, not just measure it. Rather than process data on request, AI-powered CPM systems will automatically consider finance and other business data in real-time as it arrives in the system. It will note potential problems and, for example, suggest measures to reduce costs where they look to be over-running.

While finance teams at a competitor’s HQ continue to apply more established (and reactive) ways of improving cost efficiency and effectiveness, finance teams leveraging AI will be delivering insights that help sustain profitability and identify potential issues in the market before they impact revenues.

 

Preparing for the future

This shift from augmenting finance decisions to driving them is already underway. But as with any new technology, there will be early and late adopters. The leaders will have a critical advantage in terms of responsiveness to changing economic, sales, and market conditions. While CFOs who sit too long on the side-lines risk falling behind.

The first job of finance is to get the numbers right, and the arrival of AI technology won’t change that. In the relentless drive to improve efficiency and stay ahead of the competition however, AI is a new set of tools with the potential to transform the finance function.

In the months and years to come, AI-based advances to CPM software will offer new ways to automate human processes and deliver business insights faster than competitors using traditional systems. Future thinking CFOs should start evaluating how to be at the forefront of AI-powered finance today.

 

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Finance Derivative is a global financial and business analysis magazine, published by FM.Publishing. It is a yearly print and online magazine providing broad coverage and analysis of the financial industry, international business and the global economy.

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