The AI Dilemma
In modern businesses, the automation of processes is a given. This includes tasks ranging from physical robotic processes to recording data, decision-making systems, and predictive analysis. The capabilities and applications of automation are continually advancing.
Artificial Intelligence (AI) is increasingly being used in various industries to enhance productivity and efficiency at a lower cost. According to a study from Oxford University, it is predicted that over 40% of jobs will be automated by 2033.
The finance and accounting sector, typically seen as a specialized field, is quickly adopting AI technologies. While some are uncertain about the impact on jobs, the potential of AI differs from common projections.
AI Ascending Through FP&A
In recent years, AI has become increasingly influential in finance and accounting. Its capacity to analyze large amounts of data, identify patterns, and make predictions has proven beneficial for businesses. Some companies are even combining FP&A and AI in their software services.
Here are some ways AI is making a significant impact on FP&A:
Data Processing and Analysis
AI-powered algorithms quickly analyze financial data, offering insights and predictions much faster than human counterparts. It enables predictive analysis by considering various factors to identify patterns.
Risk Management
AI excels at evaluating risks and assisting businesses in making real-time, informed decisions—especially crucial in the unpredictable financial landscape.
Fraud Detection
AI systems identify suspicious transactions and patterns, playing a vital role in preventing fraudulent activities.
Automation of Repetitive Tasks
Mundane tasks like data entry and reconciliation can be automated, allowing professionals to focus on more strategic responsibilities.
Customer Service
Chatbots and virtual assistants are increasingly handling customer queries, enhancing efficiency, and reducing operational costs.
Human Involvement in FP&A
Despite these advancements, concerns arise about job displacement in finance and accounting due to AI. Will these professions become obsolete as AI takes over all tasks? Not necessarily. AI was initially created to simplify complex tasks. However, many tasks and jobs still require human involvement.
Making Tough Choices
AI is excellent at analyzing data and making predictions, but when it comes to complex ethical and strategic aspects of finance and accounting, it falls short. Human professionals play a crucial role in making important decisions, especially in high-stakes situations.
Thinking Outside the Box
AI relies on existing data and patterns, lacking the ability to generate new solutions or innovative strategies. This creativity and innovation are essential in adapting to ever-evolving financial landscapes.
People Skills
Professionals in finance and accounting regularly engage with clients, colleagues, and stakeholders. The personal connection, empathy, and communication abilities of humans are irreplaceable for building relationships and trust.
Keeping Up with Regulations
Financial regulations are constantly changing, and human expertise is necessary to interpret, adapt, and ensure compliance.
Will AI Replace Accountants?
Accountants won't disappear in the future. Instead, their role is expected to change as AI is integrated, but they won't become obsolete. The increasing use of AI in accounting will relieve accountants from routine tasks, allowing them to concentrate on strategic, advisory, and client-oriented responsibilities. The crucial aspects of the accounting profession require human expertise and judgment. Although AI is great at handling large amounts of data and automating repetitive tasks, it lacks the human touch, intuition, and the ability to grasp the complexities of the business environment.
Finance and accounting professionals are not likely to be replaced by AI; instead, they will likely work together with AI in a mutually beneficial way. This collaboration can boost productivity, reduce errors, and be advantageous for both individuals and organizations. While AI is changing the finance and accounting field, completely replacing human professionals is not on the immediate horizon. Adapting to this change will help finance and accounting professionals grow and succeed, thanks to the combined strengths of human expertise and AI.
AI and FP&A Collaboration
The rise of automation in finance and audit has expanded the role of FP&As. They now focus on high-level thinking, analysis, and intricate human interactions. Automation has significantly reduced the time spent on sorting records and data, saving up to 80%, and allowing them to focus more on advisory services.
Although technical skills are less in demand due to technology, there is an increased need for social and people skills. Across various domains, automation contributes to improving human efficiency, whether in delivering customer experience or conducting marketing activities such as gathering quality leads for businesses.
Enhanced Compensation for Employees Proficient in AI
According to a recent study by AWS, having AI skills could increase salaries by at least 35%. If you're a company, it's recommended to provide training for your employees, and if you're an individual, consider getting trained in AI. The study, conducted by AWS and Access Partnership, involved 3,297 employees and 1,340 organizations in the US.
The findings indicate that AI can enhance productivity by 47%, and 42% of employers actively seek individuals with AI qualifications. However, 75% of employers are struggling to find qualified candidates. This challenge spans across age groups, as over 80% of younger employees (including Gen-Zs and Millennials) express interest in acquiring AI skills. Even among older workers, around two-thirds of those over 55 (Boomers) would enroll in an AI course if offered by their company, despite being close to retirement. Now is the opportune time for both companies and individuals to invest in AI skills.
Leveraging AI
As AI becomes more common in FP&A, professionals need to stay relevant by continuously learning and embracing new AI technologies such as the following:
Blockchain Technology
Could fundamentally change how finance departments process and verify transactions.
With its decentralized nature and cryptographic security, the technology provides end-to-end visibility and traceability.
Big Data
Handles vast and complex data sets, providing deep insights for better decision-making.
AI integration automates financial forecasting and risk analysis, expanding the possibilities for FP&As.
Internet of Things (IoT)
The combination of IoT and AI technologies with interconnected devices enables real-time tracking of transactions and ledger entries.
Helps FP&A monitor financial activities more closely and efficiently.
Cloud Computing
Cloud computing changes how data is stored and accessed.
Services like SaaS, PaaS, and IaaS provide flexible and cost-effective solutions.
AIaaS outsources AI, making it accessible for individuals and companies at a minimal cost, benefiting businesses in various ways.
Conclusion
The modern business landscape witnesses the pervasive integration of automation, ranging from physical processes to data recording, decision-making, and predictive analysis. AI plays an increasingly crucial role in various industries. While concerns about job displacement exist, particularly in finance and accounting, it's evident that AI complements rather than replaces human professionals.
AI signifies their evolution into more valuable contributors and relieves accountants from routine tasks, allowing them to focus on strategic, advisory, and client-oriented responsibilities. The collaboration between AI and FP&A not only streamlines processes but also highlights the key to success in the evolving financial world.