“The last 10 years have been about building a world that is mobile-first however in the next 10 years, we will shift to a world that is AI-first.” quoted by the CEO of Google.
A Brief About Artificial Intelligence
The capabilities of AI become well-known after AlphaGo Zero, an AI-based computer programme that became a master in the Chinese famous board Game Go in three days after defeating other computer models that had already beat the best players in the world.
With the advent of Artificial Intelligence, a machine is made to learn and self-evolve from its current environment and adjust to become future-ready. AI has seen tremendous acceptance and growth because of the exponential rise in digital data and limitations in the computing power of existing systems. At present, AI is bringing a considerable change in different industries including and is not limited to healthcare services, the education sector, financial services, manufacturing and more.
Currently, in financial services, we are sitting on a huge amount of data and a lot of time. People are clueless about understanding the value of the insights that can be churned out and helping one get that competitive edge over others. AI in banking services, for example, is transforming the industry by automating a lot of manual and repetitive processes.
One such in-process example is the financial assessment automation that happens during the underwriting process of loans where accurate analysis is of more importance and helps reduce TAT and NPAs for the banks because of an accurate analysis of the creditworthiness of the borrower.
Problem In Finance And Accounting
- Dealing with a huge number of transactions due to millions of data points
- Lots of time spent in manual and repetitive work
- Accuracy in keeping records of each and every transaction
- A lot of mundane transactional activities
- Lack of quick actionable insights
Benefits Of AI In Finance And Accounting
AI in finance in the banking sector can help professionals by giving them more time to focus on their primary work and counsel their clients rather than spending time on transactional activities.
- Increase in productivity and high quality of results with high transparency
- Reduce the workload of finance team professionals
- More accurate financial statement analysis
- Can efficiently complete tasks such as extraction of data and structuring of the information
- Saves time with the reduction of manual work when used in accounting
- Automate procedures of accounting
Functions Of AI In Finance And Accounting
- Can replicate human tasks:
AI can do human tasks that otherwise take a lot of time. These tasks include data entry and data reconciliation. Using AI can also reduce errors that occur in these tasks. Bots are the new thing that has already become prominent in customer service as well as chatbots and voice bots. - Reduce frauds:
Each and every transaction can be tracked more efficiently and any fraudulent activity can be identified more accurately. With AI in finance, a professional can easily analyse different relationships, find out suspicious transactions and report it in a visual manner. - Invoices Processing work:
Downloading invoices after going through emails and then manual extraction of data takes a lot of time. AI can automate the whole process of invoice processing and improve efficiency and productivity with zero chance of error. This does also compliment AI in accounting to streamline and automate the complete process. CART, an AI-driven software, saves time and improve productivity by 100% accurate extraction of data and invoice processing. - On-boarding of suppliers and procurement processes:
AI can help in automated verification of tax details and in credit assessment so as to help in selecting the correct supplier. AI can also help in data segregation and categorisation for effective vendor management. - During Audit Processes:
AI can help in the assessment of risk and tracking each and every record of transactions. With AI in finance, one can automate tasks (like data collection, following rules) and also find errors in case of any deviation from pre-defined rules. AI can save time by helping in analysing digital files with the highest accuracy and improved analysing capabilities. - Reconciliation of data:
Reconciliation of data is of prime importance in places where highly confidential and sensitive data is being stored and is related to a high value of financial transactions. For example, to maintain accurate accounting records or generate required ABOR or IBOR reports for an asset management firm, reconciliation of data is very important. Genesis, a new age Investment Management platform, helps in data reconciliation and provides up-to-date reporting services according to requirements. - During Company expense management:
Using AI, advanced rules with exception management can be created in expense management that helps to keep the overall costs of an organisation in check. - Follow-up process automation:
Tracking of outstanding invoices can be done and the follow-up process can be automated with the help of an AI-driven Chat and Voice bot. Chatbots have also proven to be successful in handling customer service escalation or service management. - Assessment of Risk:
AI can analyse a vast amount of data and also automate the processes to get the risk assessment done more efficiently. A relevant use case is the risk assessment that happens during the underwriting process of a loan application that needs to complement the repayment capacity of the borrower in order to propose the correct sanction amount and condition for approval. An even more advanced use is to identify the probability of default of a borrower by advanced AI- and ML-based models. - In the trading field:
Prediction plays an important role in trading and I can do it by analysing a vast amount of past data. The prediction improves with time since AI, with its machine learning combination, self-evolves from its experience and results in even more accurate results. According to a person’s personality (high-risk taker or low-risk taker), the AI system can suggest when and what to buy, sell or hold in an overall proposition to have a system recommended robotics-based portfolio. - Personal Expense Management:
An AI-driven system can help individuals understand their spending behaviour and better plan for the future that aligns well with a saving goal.
AI in finance and accounting is still in the embryonic stages. However, we can say that AI has already started transforming the finance sector in a big way and companies that will embrace the new AI-age will flourish in coming times. Novel Patterns is a product-driven organisation enthusiastic to leverage AI and machine-learning techniques to solve real-life problems and build solid use cases.
One such product is Credit Assessment and Robotics Transformation (C.A.R.T), which helps in the automation of financial assessment happening during the underwriting process of a loan application, hence improving efficiency and reducing the turn-around time, leaving no room for the process to be error-prone.
As the AI revolution is rapidly overtaking traditional and tedious methods, we still cannot circumvent the human intelligence that will be required to efficiently supervise these technological marvels. The success mantra will be to pair AI machines and people together to get a more efficient and better future.