Artificial Intelligence (AI) is a disruptive application of new technologies (including machine learning algorithms and machine learning (ML)) that represents a new twist on financial businesses operating system practices and the way a business implements its business model. It is what I call an Activity-Based information collection system. The application of AI is now becoming a Strategic Continuous Improvement Core Process in many accounting and financial organizations. The use of AI practices produces knowledge and insights which are the foundations of business growth, important for knowing when to pivot.
“The application of AI practices increases the communication, insight, foresight and business decision making capabilities of businesses of all sizes”
AI produces the ongoing capability to determine how a business can be operated better…I call AI a tool to ensure better “Perpetual Planning (PP)” strategic decision making.
“AI represents a transformational process improvement that can be operated from the office of the CFO in businesses of all sizes“
Applications in Finance
AI application usage is a rapidly growing transformative method…to name a few applications:
- Keep an eye on customer and marketplace developments
- Increase insight, knowledge, efficiency and cost reduction
- Enhance decision-making capabilities
- Establish and check performance against benchmarks and goals
- Prepare intercompany business unit performance comparisons
- Automate routine tasks and workflows
- Perform feasibility analysis
- Build predictive models
Note: In all cases, data and information derived from AI applications needs to be validated and verified.
AI produces the ongoing capability to validate and verify business model rationale…I call AI a tool for “Evidence-Based Substantiation (EBS)”
AI Usage Benefits
Benefits are numerous…to name a few:
- Improve timing of decision-making
- Enhance real time business model performance evaluation
- Validate product/service feature/function feasibility design and validation
- Facilitate forecasting and predictive analytics
- Enhance fraud detection capabilities
- Check regulatory compliance
AI produces the ongoing capability to be ready to pivot before and when change happens…I call AI a tool for Just-In-Time Transition Planning (JITTP)
Areas of Concern
The use of AI has introduced discussions around ethics…concerns are around such issues as information bias, fairness, transparency and especially privacy. Anticipate continual scrutiny from regulators as the AI industry develops.
The Future of AI
AI has proven to be an increasingly popular enabler to increase and maintain a competitive advantage. In addition, banks and the financial service industry will be able to modify how they deliver their services. AI readiness will increasingly become a corporate priority in the financial community as needed to optimize business performance and ensure resiliency and long-term durability.
Final Thoughts
Implementation of AI technology solutions is an expenditure I consider mandatory for a business to increase insight, knowledge and foresight. Business plans and budgets need to include full consideration for hiring professionals with knowledge in the finance / accounting AI capabilities fields plus investments in software and other assets needed to operate a value-added AI operation. AI capabilities represents an initiative that will be beneficial for all businesses in their pursuit of short-term and long-term relevancy, resiliency and durability.
