Generative AI: The Future of Finance

The finance function is undergoing a transformative shift, primarily influenced by the integration of Gen AI tools and other technologies. These tools are set to redefine core finance processes, enabling more efficient operational workflows and strategic decision-making.

The implementation of Gen AI promises to enhance forecasting accuracy, risk management, and operational effectiveness, setting a new standard for businesses and professionals.

Why Generative AI is the Future

Generative AI stands out due to its ability to process and create complex text and numerical content, which augments traditional finance functions like drafting contracts and conducting detailed financial analyses.

As Gen AI technologies evolve, they are expected to work alongside current AI systems to offer comprehensive financial insights, forecast financial scenarios, and recommend strategic decisions.

This collaboration between generative and traditional AI is crucial for the future of finance, driving significant advancements in efficiency and quality of decision-making processes.

The Difference Between AI and Generative AI

Traditional AI in finance focuses primarily on numerical data analysis, used extensively for forecasting, risk assessment, and other quantitative tasks.

In contrast, Generative AI specializes in generating human-like text and performing initial data analyses, which includes drafting documents and processing complex information.

While traditional AI excels in tasks that require precision and repetitive processing, Generative AI introduces versatility in handling diverse data formats and generating coherent narratives, essential for strategic planning and communication.

Boston Consulting Group recently published an article where they described the different use cases in Finance based on traditional AI and Generative AI:

A few more common and specific use cases that may take care of the bulk of work in typical Finance functions are listed below:

1. Drafting Contracts: Generative AI can automatically produce preliminary versions of financial agreements and contracts, which speeds up the drafting process and frees up time for legal and financial teams to focus on more complex negotiations.
2. Credit Reviews: In credit management, Gen AI can help compile and analyze customer data, augmenting traditional credit checks with more comprehensive digital searches to quickly flag potential risks or issues, thereby streamlining the approval process for lines of credit.
3. Month-end Closing: Generative AI assists in the generation of financial reports by drafting initial insights and analyses for month-end closing, reducing the time Finance employees spend on compiling and reviewing financial data.
4. Audit Checks: For audit compliance, it can automate the creation of detailed audit checks and reclassification requirements, which ensures greater accuracy and consistency in financial reporting.
5. Variance Analysis: This involves using Gen AI to perform ad-hoc analyses of structured and unstructured data, such as comparing actual financial outcomes against forecasts or budgets, which helps identify and explain variances.
6. Reporting for Business Partners: It also helps in creating detailed reports that explain financial results to business managers, improving transparency and strategic decision-making.

5 Steps to Rescue You from Lagging Behind

While most of the leading companies are moving forward with digital transformation at lightning speed, a large number of organizations and their CFOs remain ignorant of this critical change and are significantly lagging behind.

If you happen to be in such companies, do not become a victim of getting left behind. Your career is your responsibility, not your employer’s. This is the time to take matters into your own hands.

Don’t wait for your employer to offer the necessary training and prepare you for the future. The best they would do when the time comes is to fire you and hire trained employees who could do the job.

To rescue yourself from lagging behind, at a minimum, you must do the following and do it Now:

1.     Jumpstart using ChatGPT or other Gen AI tools. Even if your employer has not provided any clear guidelines about the use of Gen AI tools, use them in your own time on your own devices. If you do not do it now, it may become a little too late.

2.     Attend an online course on ‘Prompt Engineering’. There are many short courses available that are completely free and you can learn the basics in a few hours.

3.     Look at the above use cases and look at your own job contents. See where you can use the ChatGPT or similar tools to save time and improve your productivity. Just a caution; these tools are still not perfect. You must double-check any output you get from these tools before using it further.

4.     Utilize your time saved by using these tools in tasks that require higher cognitive skills, e.g. strategic thinking, creativity, and complex problem-solving. Collaborate with other like-minded professionals who are on a similar learning path. If they are from the same workplace, even better. Learn from each other.

5.     Join a formal 6-12 month training/ coaching program that will help you transform from a traditional Accounting and Finance professional into a Digital Finance talent. This will require you to integrate your technology skills with your business insight and leadership skills.

Future is full of challenges and opportunities. Whether you will face more challenges or more opportunities, it all depends on how prepared you are.**

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