Effective communication is important when dealing with employees and outsiders, such as vendors and clients, but it holds even greater importance with regards to your accounting department....Read more »
The Finance Industry is Primed for AI. Here’s Where We’re Headed
Artificial intelligence is impacting all areas of our world – including the world of finance. While it is still in its infancy stage in our industry, AI and automation are definitely seeping into the financial profession, and we are just seeing the tip of the iceberg with regards to the benefits to our industry. What type of impact will AI ultimately have on our industry? To a large degree, that remains to be seen.
One thing we know for sure is that our reliance on massive data sets makes our function a prime candidate for change. Many of the things we currently do manually will be automated in the future. We are beginning to see this transition now as more processes are becoming paperless and moving to the cloud. One big advantage of this change is that it will allow us to focus on higher level functions, like analysis and strategy, because lower level activities will be automated. This illustration shows how this transition is likely to shift our focus over time.
Our Processes Now and In the Future
Where AI is Headed
Much of the change to date has been in the lower level activities, like transaction processing and reporting. These tasks are more routine and repeatable and are therefore, good candidates for automation. The advantage to automation is greater speed, accuracy, and scalability to handle large transaction volumes. Currently many tools are available to automate things we have done manually in the past. Some examples include:
- Receipt scanning tools to automate expense processing
- PDF data extraction tools to automatically pull data from PDF files
- Applications to help you manage your email
- Customer contact management tools
- Tools to help you manage your investments
- Tax preparation and planning
In the future, we will see artificial intelligence increasingly employed, which will allow even greater automation. Machine learning will drive much of this change. Machine learning is an area of artificial intelligence where algorithms are used that enable machines to interpret data from the world around us to predict outcomes. Ever increasing processing power and the ability to write software to understand and manage large data stores make this possible. As it sees more data, the software will learn and then be able to make even better predictions. As mentioned earlier, as tasks like transaction entry and coding are automated, our role will shift to higher level functions, like analysis and strategy.
Our jobs will become more interesting and challenging as repetitive tasks shift to machines. Finance professionals who embrace change and can work with these new tools and understand how to extract and manipulate data will be in high demand.
Mike Moore, CPA is a Director on Fahrenheit’s Finance & Advisory team. He has served as client’s fractional CFO and is an Accredited in Business Valuation (ABV) accountant, a credential which allows him to perform sophisticated analyses of businesses’ value. You can reach Mike at email@example.com.