Technology
How AI is facilitating finance transformation
Global Banking & Finance Review®
Company
By Marco Torrente, Global CFO of WebBeds
In recent years we have been faced with growing economic and political uncertainty. Companies more than ever need flexibility and agility to compete in a fast-changing market. The shift to digitisation is an essential part of adapting during these challenging times – necessary to keep pace with the changing demands of the business world. It has the potential to be a game-changer at times of crisis, a base on which businesses can build their futures.
The advancement of AI is a key element of this. While some see AI as a threat, it can be used as a form of evolution when applied correctly. It doesn’t have to involve job losses. It is possible to create new, clearly defined roles for employees – that involve higher value work – within new structures, by providing the right training and incentives.
Ultimately, this can result in better outcomes for everyone. And more and more, companies are incorporating AI into their day-to-day functions. It is increasingly seen as a crucial element of building and modernising a robust and successful business.
Because the finance department has such a central role in any business, informing decisions across departments, AI can be used to great effect in finance transformation. It can improve efficiency and creativity, ultimately helping the business gain a competitive edge. It fits nicely into the broader finance transformation strategy. However, it should be introduced in a balanced way.
The introduction of AI can take place on the front line with the final consumer, while a lot can be done in the back office as well. In the future, increasing numbers of basic tasks and repetitive activities will be done by AI, leaving staff to focus on more complicated roles.
On the front line, a quicker and higher quality customer experience can be created through chat boxes, real-time answering and immediate reconciliation. In fact, all consolidation between supplier and customer can become automatic, while payments can become automatic as well. AI can even be used as a virtual travel agent, giving people advice and tips on specific destinations, for example the best restaurants and hotels.
And to make sure the finance department maximises the benefits of finance transformation, the integration of AI is also needed in the back office. AI can be used to reconcile all the transactions between suppliers and customers. By reducing the transactional activities, this frees up time for analytical reviews.
Machine learning – an application of AI – can also improve decision-making in the back office, for example through cash flow or automated revenue forecasts. These forecasts can help the company predict what its situation will be in six months or a year – in terms of revenue and profit, for example. The company can then take action to make sure it delivers what it needs to deliver to meet stakeholder expectations.
However, while AI can help decision-making, what it cannot do is make decisions for humans. It would never, for example, be able to predict Covid or the war in Ukraine. It can be used as a baseline, but humans must react.
Ultimately, the use of AI frees up the brain capacity of staff – who can spend more time analysing data rather than creating them, being creative and problem-solving, and adding value. By giving people more time to spend looking at data, creating scenarios and being proactive – rather than spending that time simply building and consolidating data – it greatly enhances the potential of the company. People are able to focus more on supporting strategic decisions for the business, such as entering into a new market or choosing the best partners, as well as day-to-day decisions.
Finance transformation and the introduction of AI is a challenging process. It requires a high level of resources, new technologies and systems being introduced – and is unlikely to result in any initial significant return. There must be an acceptance that the transition may take a number of years, so patience is needed. The role of staff will change – so training and upskilling programmes are required. There must be a shift in mentality and culture. Staff should be emboldened to try new things with AI – experimentation is an important part of this, although there must be the proper checks and balances in place. But, in the end, the benefits for the business can be vast.
Artificial Intelligence (AI) refers to the simulation of human intelligence in machines programmed to think and learn like humans, enabling them to perform tasks such as problem-solving and decision-making.
Machine Learning is a subset of AI that involves the use of algorithms and statistical models to enable computers to improve their performance on a specific task through experience.
Finance transformation refers to the process of reengineering financial operations and processes to improve efficiency, effectiveness, and adaptability in response to changing business environments.
Customer experience in finance encompasses all interactions a customer has with a financial institution, including service quality, communication, and the ease of accessing financial products.
Efficiency in financial operations refers to the ability to perform financial tasks with minimal waste of resources, time, and effort, often enhanced through technology and process improvements.
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