Ronan Donohue, Capital Markets and AI Consultant, Founder of Q4 Capital Advisors Organisation
CFOs must imagine AI in five years’ time and prepare accordingly
It is with both amazement and a hint of latent jealousy that I witness the routine automation of tasks that kept me late in the office night-after-night preparing pitchbooks as a junior bond markets banker. Tools I had once thought mesmerising in-and-of themselves such as the Microsoft suite of applications, especially Excel and Powerpoint, still required hours of input and configuration to bring to life a compelling proposition for time-poor prospective clients.
Today, not only do these products already come with various pre-loaded templates and reems of suggested configurations (which in my time required a lot of taming as both figures and graphics jumped around the page seemingly with a life of their own), but further advances in AI such as Microsoft Copilot have smashed together endless analytics and presentation possibilities to turbo-charge productivity in a way I could only have dreamt of. A lot more is happening besides. Those such as CFOs at the apex of financial decision-making have much to gain by taking a constructive view on what AI can do for their business.
It’s not AI that will take your job according to an oft-used phrase, but those proficient in its use. I believe the same can be said of corporations. Though many CFOs are doubtless well advanced in their investigations, others I believe remain on the sidelines of watch-and-wait. Embracing new technology at this stage does not have to mean reckless procurement or the acquisition of fixed overheads in some misguided demonstration that the firm is ‘on it’, but at the very least CFOs should consider establishing dynamic working groups to stay current and spot relevant opportunities as-and-when they arise.
Innovate to survive
According to McKinsey, “the best CFOs are at the vanguard of innovation”. AI offers the CFOs office a window on how best to deploy scarce capital and its return in a micro-specific way. Because AI should allow for more precise impact assessments, it will provide for the dial of liquidity and capital to be adjusted even modestly to optimise market share and profitability. This places the CFO at the heart of corporate innovation.
The financial forecasting and budgeting functions might offer early wins, but so too could better fraud detection and risk management more generally. No two firms are the same and so the way in which (ever-evolving) AI-driven value propositions present will be unique to each also.
Portfolio analytics and robo-investing for example, a field already considerably advanced in wealth management, could be deployed in the treasury space early on, providing generous room is left for add-ons and upgrades as this field develops. Predictive analytics could also play a strong role to better inform cashflow needs looking forward, considering subsidiary returns and requirements. Likewise, the role of dynamic pricing on the customer-facing side of the business could pay handsome dividends if shrewdly deployed.
In back-office functions AI-related solutions will vary enormously from company to company, but it would appear fertile ground for various efficiencies, not least in faster and more tailored coding to keep pace with the organisation’s direction of travel.
Effective presentation of group results is another area where AI already stands ready to help. Reportedly, search functions will become increasingly better at offering the CFO options on how best to deal with a typical question posed by say an activist shareholder or a trading-orientated hedge fund as opposed to a pension fund, the latter typically taking a more long-term view. It could offer alternatives on how best to answer and how to support replies with the most compelling data and graphics.
Buy-in before you buy
Getting to any target landing point will not be painless. A preamble of trial and error will be required to determine how AI-based offerings can fit like jigsaw pieces into various group functions. In each case, runaway advances in technology unsupported by a workforce keeping pace risks collision points developing in key business units, rendering much of the AI investment redundant. Preparing and training employees in new techniques is as essential as the AI-informed systems and practises themselves. As is the information transparency regarding the firm’s direction, thus avoiding unsettling insecurities among personnel running rife, a development highly corrosive to productivity.
Evaluating the various strands of empowering possibilities, one thing is clear. The role of CFO is set to be transformed from one dominated by mere financial management to one better characterised by strategic moulding of the firm’s commercial direction, almost as though the CFO and CEO roles have been fused into one. While I believe there are impressive AI-empowered gains available now, it’s the ability to intelligently imagine and prepare for the operating environment of five years’ time that will separate out the winners from the losers.
Do I occasionally reflect on the opportunity cost of those late nights? You bet! But there is not much to be gained by looking back. Forward-looking CFOs have already adopted a bias towards action.