As technology has become more advanced and sophisticated, companies have turned their eyes on artificial intelligence (AI) as a way to solve a whole range of issues for them. New AI applications are being developed to automate a wider range of tasks, from customer service to fraud detection. One place where AI can have a real impact is automating manual tasks, especially in finance.
According to IT services and consulting company Accenture, up to 80% of finance processes can be automated. If done correctly, this can clear 65% to 70% of staff time, which can then be redirected to more non-administrative, albeit productive tasks.
So how should financial administrations go about automating their finance processes?
There are many potential advantages to be gained from applying AI in finance. Perhaps the most obvious is that replacing manual work with technology-enabled automation can help streamline financial processes. This leaves employees with more time to focus on tasks that need creativity and decision-making skills.
AI can also make financial processes more efficient. For instance, machine learning algorithms can detect fraud and conduct credit scoring. This reduces the time and resources spent on doing these tasks manually.
On the side of customers, AI might be able to resurrect their failing trust in banks and financial institutions. A study has revealed that consumer trust in financial service providers has dropped from pre-pandemic 43% to an all-time low of 29% post-COVID 19 pandemic. Consumers drive the change to digital solutions and automation, which will ultimately spill over into how things are done in B2B companies as well.
Hence, many businesses have responded by providing increasingly convenient, fast, and secure ways to purchase and transact online. Companies in various industries, even conservative ones such as banking and law, are now turning to AI to help improve customer service and the overall customer experience.
When automating finance processes with artificial intelligence, you first need to identify the parts that are sensible to automate. Reviewing the components of each task and step will help you to determine whether it is a suitable candidate. Financial administration processes like data entry, processing, and analysis, can be streamlined with AI. Doing so frees up time for employees to focus on more strategic tasks.
However, some functions are still better suited to do by hand. For example, decision-making that calls for human judgment and experience are still in your hands. The technology is not advanced enough to take those away from us. At least not yet.
When considering AI automation, it is important to first understand the task at hand. What level of human involvement does it need to be carried out effectively?
As mentioned, strategic thinking or creativity is not a good candidate for automation. Consider as well the potential risks of automating a particular finance process. Certain systems run the risk of becoming opaque and difficult to understand when automated with AI. This could lead to errors or misuse of the system.
Alternatively, a rules-based task that is repetitive is usually ripe for automation. When deciding if a process should be automated, consult with employees who are familiar with the process. They will be able to provide insights into how well the process could be automated and the risks to be considered.
Ask yourself and your team the following questions to get a better understanding of the task at hand:
Your answers will help you determine whether a particular finance process is a good candidate for automation. If you're still unsure, you can always consult with an expert to get their opinion.
Ultimately, there are no hard and fast rules on the exact processes you should or should not automate. What may work for one firm may not be suitable for another. Thus, it's important to carefully review each one and make a decision based on your organization’s specific needs and goals.
Potential applications for AI in the finance industry are promising. According to The Organisation for Economic Co-operation and Development (OECD), AI, machine learning (ML), and Big Data can be applied in many areas of finance.
From asset management to blockchain-based finance, there are several processes that can be automated using AI. The OECD identifies four key financial market activities where AI can be utilized effectively:
AI is particularly useful in automating portfolio allocation and buy-side investment. This includes tasks such as portfolio construction, risk management, and investment decision-making.
Loan approval, fraud detection, and credit scoring will greatly benefit from automation. It can be done by allowing AI to analyze historical data and identify patterns that can help predict future behavior.
Order execution and market making can be simplified with an AI-assisted automated process. Analyzing market data enables accurate and swift decision-making on when to buy or sell a security.
Blockchain is a distributed ledger technology that allows for secure, transparent, and tamper-proof financial transactions. AI can be used to automate the process of blockchain-based finance, which includes tasks such as KYC (Know Your Customer) and AML (Anti-Money Laundering).
Now, as we are experts in how AI automation works in accounts payable, here’s a more specific look at accounts payable invoicing.
Automating accounts payable invoicing could be done by AI through posting and routing non-purchase order (PO) invoices. Realistically, up to 90% of non-PO invoices are processed manually. That’s a stark example of how much work automation can take off the hands of human employees.
By using AI, companies can easily manage the following:
Every time we meet with financial administrators about automating their processes, they have one clear goal: to automate routine manual tasks. Some companies have clearly understood that making financial administrators and experts in business units to do repetitive routine tasks is not a sustainable road. It is mind-numbing work and takes up a huge amount of resources the company could use for a more valuable work. Automating that work not only will you make their working lives easier and happier, but you also save your company time and money.
The Snowfox.AI service can route and post your purchase invoices automatically with artificial intelligence. You no longer have to worry about manual tasks.