Over the past 3 years, artificial intelligence has advanced and developed significantly in the financial sector. AI’s role in Accountancy and Finance has continued to evolve and expand, becoming an everyday function for many.
Whilst AI has proved to be an advantage within the industry by enhancing processes and spotting risks, it also holds risks of its own. In this blog, we’ll discuss the drawbacks and the value of AI within the finance world, and how AI is continually evolving within the Accountancy and Finance industry.
AI as a Financial Advantage
AI is now automating repetitive and mundane tasks within the finance space, such as data entry, reconciliation, and basic financial reporting. This automation allows those working in the industry to focus on other tasks and is a cost-effective change as time can be spent elsewhere.
Additionally, when using automation to handle high-frequency repetitive tasks, the risk of human error is reduced significantly. Global consulting firm EY, reports that the implementation of AI can result in up to 70% cost reductions for these types of human-error-prone tasks.
With the ever-present threats of fraud and scams, the accountancy and finance industry faces many challenges in detecting and reducing these risks. AI-powered tools are now able to assist with detecting and reducing fraud and scams by analysing patterns and abnormalities within financial transactions. This helps organisations identify these risks more efficiently than their previously used methods.
AI has enhanced the customer's experience within financial institutions by using AI-driven chatbots, virtual assistants and adding the ability to personalise recommendation systems. This has enhanced the customer service experience as it provides instant and tailored assistance to customers by handling any queries, providing advice and overseeing any other transactions ensuring the experience is streamlined.
Is AI Causing Financial Drawbacks?
As the use of AI grows and advances, the risk and rate of unemployment also increase. With automation now being able to perform tasks within the accountancy and finance industry, jobs previously performed by humans are being replaced. “The fear is that AI-driven automation will eliminate more jobs than it creates, leading to a higher unemployment rate.”
Anything on the internet is susceptible to cyber threats and attempts of hacking, and AI systems are especially vulnerable to this. Financial institutions that use AI systems are even more vulnerable because there is a lot of sensitive and confidential data within their walls. If a security breach were to occur, it could result in significant financial losses and reputational damage.
Using AI within the finance industry can become a bit of a financial burden as developing and implementing AI solutions can tend to require a significant cost to initially set up and maintain.
What’s Next for AI in Finance?
The future for AI within the accountancy and finance industry looks to continue to have the potential for vast improvement and increased growth. According to LatentView, AI is anticipated to drive transformative changes in the finance industry by continuing to automate routine tasks, improve fraud detection, provide personalised financial advice, and enhance risk management.
There will still be challenges regarding security, ethics, and cost-to-value ratio. Overall, the changes that artificial intelligence has brought to the finance industry have made positive strides that vastly outweigh the negative challenges.