As digitization, innovation, and AI continue to make headlines, one subject that has sparked deep discussions in recent times is disruption. A running theme that affects industries, governments, and individuals worldwide, disruption isn’t just a change in products, market trends, or economics; it carries consequences for new-age customers, shaped by changing demands, behaviors, and needs. And one of the prime examples of disruption right now is the shakeup of the corporate accounting sector thanks to more sophisticated AI. Let’s take a closer look at how AI disruption is reshaping the finance industry and what this means for the future of the staid industry.
What’s the general consensus?
Censuswide conducted a survey for BlackLine, the accounting automation software service. The responses of 78 percent of financial personnel indicated AI’s role to be “significant” while 29 percent believed the role would be “very significant.” The responses show that people in financial vocations realize the increasing power of artificial intelligence tools as well as the outcome AI disruption will have on the functioning of the accounts department.
So, expect workflow processes and job roles to change drastically in the coming years as technological usage becomes more common. This will also provide accountants with the opportunity to switch roles, going from regular tasks to jobs that add more value to their respective businesses.
However, according to a third of survey respondents, AI tools will apparently be responsible for economic decisions. This begs the question — who is liable for choices that lead to a fine, drop in share price, or regulatory non-compliance? The opinions differ wildly and must be considered carefully at the board level before software is allowed to make major financial decisions.
This is the same thing the auto industry is grappling with. Who is at fault if a car being operated by a computer runs into another car and it is the computer-operated car’s fault?
Big Data explained
Computers have always been terrific at gathering and storing data, and the dwindling prices of storage is an indicator for financial firms to store more information than ever in the past. Just don’t store too much information with Facebook — we know what they do with your information! But let’s get back on topic.
It’s a bit difficult to make sense of all the details, especially when you consider how hard it is for people to handle Big Data sets. On the other hand, AI with the support of machine learning does a stellar job of locating minute signals in large sets of data. The resulting information may prove essential in competitive fields, such as the finance sector.
A separate approach to analyzing outcomes
More often than not, economics functions on the basis of the assumption that companies and people will make the right choices. But irrationality is rife in the field. Owing to this, any assumption relying on rational behavior is unable to offer realistic outcomes. But machine learning and artificial intelligence are capable of analyzing data without any preconceived notions that decisions will always be made rationally.
Moreover, this may lead to the creation of counterintuitive details that nobody can discover. Taking irrationality and uncertainty into account maximizes the financial technology. Soon, more advanced computer analysis will produce economic models to represent the real world better.
How AI disruption will ensure smoother operations
The financial sector is full of complicated laws and regulations. To ensure compliance, proper reporting is needed and AI can help automate the process. Moreover, firms may use computers to make sure every aspect of the business carries on operations and detects any deviations from the norm so that companies can discover possible problems and react likewise.
Audits, for example, both optional and mandatory, can now be supplemented with specialty software for the sake of compliance.
Don’t you just hate it when you dial customer service and encounter an automated system? The truth is, systems in the past were not streamlined and it was quite frustrating for callers to listen to unending menu options. Thankfully, artificial intelligence is slowly changing all these platforms, especially on smartphones and web browsers.
The virtual custom service bots nowadays feature sophisticated language parsing and can offer actual value along with more realistic text-to-voice technology. There are, in fact, many individuals who prefer computer-based customer service if they can serve as worthy substitutes for humans.
AI goes customer-centric
Servers are at the heart of the financial industry’s work in AI. But firms have begun to invest in customer-facing technology. Look no further than smartphones that are being used almost like personal assistants. When businesses provide financial advice via the smartphone, customers improve their economic habits for the better.
Just like a personal assistant, these smartphones help users make positive decisions, especially where money is concerned. And the entire industry benefits from the experience as well. Due to improved customer reliability, the business becomes more stable on top of this, and programs supporting more rationality help develop a more resilient economy.
The markets of the world are already ruled by advanced trading algorithms. Stock trading, for example, now happens at blinding speeds thanks to computers. While automation is the name of the game in the trading world, even the most complicated algorithms adhere to basic AI reasoning.
It’s only a matter of time before machine learning gains traction and places emphasis on making informed choices rather than trading theory. With the passage of time, it is possible for the systems to have trained themselves to increase efficiency and pick up small signals better for improved optimization.
Fraud detection methods
Fraud isn’t committed by brute force; it requires skills and smarts. When it comes to financial fraud, another key ingredient is paper trails that appear legitimate to the public. But AI is always checking for signs humans cannot. Thanks to AI, financial organizations can monitor suspicious activity in the initial stages and prevent fraudulent activity in the future. If wielded properly and regularly, these tools are more than capable of warding off evil fraudsters later on, increasing the stability of the financial industry.
Nothing to fear
Nobody likes the idea of disruption, but instead of being a topic to fear, AI disruption has plenty of potential to offer the finance industry. As long as the staff has the support of intelligent tools, they will be able to divide their attention between higher-level strategic tasks and low-level processing. So, there is little doubt that the finance sector in the future is going to be a whole new place.
Photo credit: Flickr / Pictures of Money