Nowadays, most of us are using AI-based software in our daily activities. After all, the likes of Siri and Alexa are becoming an integral part of our life. Likewise, artificial intelligence has penetrated almost every industry, finance included.
According to artificial intelligence statistics, 75% of business owners believe that AI will open up new job positions. Similarly, 40% of business leaders are confident that AI will boost productivity. Although the AI will create 133 million jobs by 2022, it will make as many as 75 million positions obsolete.
The statistics also show staggering growth in the AI market. Of course, China and the US are investing the most in research and development of AI applications. Experts predict that global revenue from AI enterprise applications will grow up to $31.2 billion by the year 2025.
Nonetheless, the innate fear of the unknown is making some people concerned about the rise of AI. Are those fears justified, or should we jump on the bandwagon and accept AI as soon as possible?
Without a doubt, the effects of AI on the global economy are jaw-dropping. But how does that affect the FP&A sector? Do we need to worry about the rise of artificial intelligence?
The Effects of AI on the FP&A Sector
When it comes to the financial world, AI is slowly creeping in, whether we like it or not. The development of industry-specific solutions is both inevitable and unstoppable.
Even so, the role of FP&A professionals remains untouched. Since FP&A teams are the “eyes and ears” of the company, they have a vital role in the overall management process.
As of yet, AI tools and applications have not been able to reproduce human input when it comes to strategic planning. In other words, computer algorithms are not better than humans in predicting the future.
Elon Musk’s straightforward statement that “humans are underrated” adequately describes the current situation. Nonetheless, the ever-increasing amount of data could shift the balance in favor of AI applications.
What Are the Benefits of Using AI in Finance?
After all, AI technologies can provide companies with a wide range of benefits. For instance, artificial intelligence is efficient in handling large volumes of information.
As a result, we could soon have real-time dashboards available in the blink of an eye. In essence, computers will take over the manual work of analyzing data and creating meaningful reports.
By using these insights and metrics, FP&A professionals will be much more efficient in budgeting and forecasting. They will have more time to build business relationships and to do advisory work as well.
Risk assessment through the use of advanced software is already showing promising results across industries, and finance is leading the way. Likewise, AI can be more efficient than humans when it comes to fraud detection and prevention.
On top of that, AI-based applications will eliminate bias from the metrics. Of course, we will have to say goodbye to human errors as well. After all, computer algorithms do not get tired or sleepy, no matter how many hours of overtime they put in a week.
Improved data quality will result in better efficiency of FP&A teams, which is the end-goal of every such group. Better graphics and informative charts will lead to better decisions, as simple as that.
So, it seems that AI could bring lots of positive aspects to the world of finance. But is there more than meets the eye with AI tools and systems? Is AI the future of finance?
What Are the Risks of Using AI in Finance?
At the moment, most organizations cannot afford premium AI applications. The high-end technology is too expensive for the majority of fintech businesses out there, at least for now.
Yet, we are on the verge of entering a new decade, and things could rapidly change. Nonetheless, many renowned experts have issued warnings about the dangerous nature of artificial intelligence.
Of course, the primary axiom of these claims is that AI will make humans obsolete. Once computers develop their own intelligence, they will be unstoppable.
Nonetheless, the situation out in the trenches shows that this is nothing more than a myth. No matter how complex the algorithms are, they cannot copy our common sense. In other words, human intuition remains an elusive ingredient that makes the difference between robots and the human race.
Also, a lack of regulatory scrutiny could present a problem in the upcoming period. Only by fine-tuning the legislation and improving infrastructure management can we hope to mitigate the risks of cybercrime.
Misuse of data in the fintech business often results in colossal losses, and that is why the rise of AI needs to be accompanied by constant improvements in security procedures. The appearance of GDPR in the EU zone was a significant step forward when it comes to regulatory efforts, but the battle to reduce risks will never end.
The black box of AI comes with ethical and economic risks, so FP&A teams need to be ready to face the challenges and prevent malicious use of emerging applications and tools.
In other words, it is essential to think three steps ahead.
Chatbots and personal assistants are examples of how AI can successfully infiltrate our world and change it for the better. It is reasonable to expect that similar technologies will modify the world of finance in the upcoming period.
In other words, FP&A teams should join the gold rush and try to harness the potential of emerging technologies. After all, AI-based applications are essential for staying competitive in the ever-changing world of finance.