- 1 agosto, 2023
- Posted by: Armando Nuricumbo
- Categoría: Finance & accounting
Opportunities and panic
In recent months, the emergence of artificial intelligence (AI) has been a major and disruptive topic in the business world. AI makes it possible to automate tasks and processes that previously required full human intervention, which can lead to greater efficiency and productivity in various areas. AI-enabled machines can perform complex tasks faster and more accurately, freeing up humans to focus on more creative and strategic pursuits.
AI has the ability to process large amounts of data. This enables more informed, evidence-based decision-making, which can be especially helpful in business, financial, medical, and scientific environments. Machine learning is a branch of AI that relies on algorithms and models so that machines can learn and improve from data. This has enabled significant advances in areas like speech recognition, computer vision, machine translation, personalized recommendations, and more.
AI has fueled innovation in a wide range of industries, including e-commerce, healthcare, manufacturing, logistics, transportation, and customer service, among others. It has allowed the development of new products and services, as well as the optimization of existing processes. On the other hand, AI has improved the user experience in many aspects, from virtual assistants and chatbots that provide instant responses to queries, to systems that make recommendations, offering personalized content tailored to the individual tastes.
However, it is also important to mention that the emergence of AI has raised concerns and challenges, such as the ethics of its use, data privacy, the impact on employment, and the growing skills gap. Addressing these issues responsibly is necessary to fully harness the potential of AI and ensure that its benefits are distributed equitably.
Artificial intelligence (AI) can have multiple applications in the accounting profession. For example, AI can fully automate some routine accounting tasks, such as account reconciliations, invoice processing, or the generation of some financial reports. AI can also analyze large volumes of financial and accounting data to identify patterns, trends, and anomalies. This will help accountants to perform deeper analysis and make more informed decisions.
Using machine learning techniques, AI can help accountants make more accurate financial forecasts and evaluate different scenarios. This can be especially useful for budget planning and strategic decision making. AI can also help in identifying fraud in financial transactions or accounting information. By analyzing patterns and anomalies in data, AI can alert on potential irregularities, enabling early detection and rapid response.
Even AI systems can provide recommendations and advice on financial and tax matters. By analyzing financial and accounting data, they can provide insights into tax optimization strategies, financial planning, and asset management. AI-powered chatbots can provide quick and accurate answers to common accounting queries, offering constant information support. In addition, AI-based personalization can help provide accounting services tailored to individual client needs.
The largest accounting firms have already announced the use of artificial intelligence in their operations and services. For example:
– PwC has announced a billion-dollar USD investment in artificial intelligence technologies with the aim of developing AI-based solutions. For example, it is creating AI-based audit tools to improve audit quality control and make its fraud detection process more effective.
– Deloitte has also announced the implementation of AI in its accounting and consulting services. They are developing data analytics platforms and machine learning models to help clients in areas like risk management.
– KPMG has announced a $2 billion USD investment with Microsoft to strengthen its Artificial Intelligence capabilities, in particular to make its audits more efficient and focus on audit quality control.
– EY has announced an alliance with IBM to explore opportunities to integrate AI and Quantum Computing into its audit and consulting processes.
There are some interesting examples of private companies, particularly start-ups, that are using the possibilities offered by this technology in areas that can greatly help business accountants. An interesting example is a Canadian company (www.uplinq.co) specialized in the application of AI to credit risk management, arguing that SMEs globally face two very strong problems: their inconsistency or instability in the production of reliable financial information, and a negative bias from banks due to being considered a high-risk sector. This company has developed a model, based on the analysis of credit information of SMEs at a global level, which allows to determine the payment capacity of an SME, quantifies its possibility of bankruptcy, and even predicts the moment in time in which it is most likely that this could happen. It is a model that learns every day based on new information available, and self-rates the confidence percentage of its own predictions, based on the behavior it is observing in the market. Its application can help banks to evaluate the credit risk of SMEs in a more objective and efficient way, or the CFO or chief accountant to evaluate the credit risk of clients. This company recently won the “Fintech Startup of the Year-Lending” award at the 2023 Banking Tech Awards USA.
Another interesting example is Vic.ai (www.vic.ai), a company whose mission is to “reimagine the future of accounting and finance”. The company was founded in 2017 by Alexander Hagerup and Kristoffer Roil, both Norwegian entrepreneurs. Before co-launching Vic.ai, Hagerup founded the Online Backup Company, a European provider of backup and disaster recovery services. Roil spearheaded the founding of Telipol, a wireless operator in Norway that was later acquired by the Hudya Group, a Nordic fintech company. The company’s main product is an Accounts Payable processing solution that uses artificial intelligence. The company proposes to bring any semi-automated accounts payable process to full autonomy, improving the productivity of vendor invoice processing by 355%. The company has raised $52 million in a Series C funding round led by GGV Capital and ICONIQ Growth, with participation from Cowboy Ventures and Costanova Ventures. This new investment brings Vic.ai’s total capital raised to $115 million. The company has indicated that it will use this new capital for customer acquisition in North America, add capabilities to incorporate purchase orders, payment processing, and include a “spending intelligence” module.
The incorporation of artificial intelligence (AI) into the accounting profession has the potential to change the way certain tasks and processes are performed. It is difficult to accurately predict the exact number of jobs that could be lost due to the introduction of AI in accounting, as this depends on several factors, such as the time of adoption of advanced technologies, as well as the ability of accounting professionals to adapt to these changes. Goldman Sachs estimates that approximately 300 million jobs will be partially or fully automated in the next five years. OpenAI has estimated that 80% of workers will have at least 10% of their activities automated in the next decade. ChatGPT puts the accounting profession as one of the ten professions that will suffer the greatest impact from the implementation of AI solutions, along with the legal profession and teaching.
However, many experts suggest that instead of eliminating jobs, AI will surely lead to a transformation of roles in the accounting profession. This implies that accountants will need to acquire additional skills in areas such as data analysis, interpretation of results and strategic financial consulting to remain relevant in the future.
The accounting profession involves various responsibilities and skills that go beyond repetitive tasks and require human judgment, data interpretation, and decision making. AI will not be able to replace the relationship and direct communication that accountants have with their clients and colleagues. Today more than ever, continuous professional development becomes essential to keep us properly updated. Technological advances and new trends are constantly changing the job landscape. Ongoing training allows accountants to keep up with the latest knowledge, tools, and techniques relevant to our field. This allows us to offer optimal professional services and remain competitive in the labor market.
Professional development allows accountants to improve our existing skills and acquire new competencies. This undoubtedly leads to better performance at work, greater efficiency and a higher quality in the delivery of results. Training helps us achieve our career goals and objectives, and allows us to stay motivated and interested at work. Accountants have always known how to embrace and take advantage of new technologies, from the first IBM adding machines in 1914 to the introduction of the first version of Excel in 1985. I am sure that the accounting profession will know how to evolve to incorporate the enormous possibilities of Artificial Intelligence.
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Article written partially with the help of Artificial Intelligence.