What is A.I and how it can transform the Finance sector?
“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 CEO of Google.
Brief about AI:
The capabilities of AI become well-known after AlphaGo Zero, an AI based computer program became mastered in Chinese famous board Game Go in 3 days after defeating other computer models which already beat best players of 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 & growth because of exponential rise in the digital data and limitation in the computing power of existing systems. At present, AI is bringing a considerable change in different industries including and not limited to Healthcare Services, Education Sector, Financial Services, Manufacturing and more.
Currently in Financial services, we are sitting on huge amount of data and a lot of time, people are clueless to understand the value of the insights that can be churned out and help one getting that competitive edge over others. AI in banking services for example is transform 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 reduce NPAs for the banks because of accurate analysis of credit worthiness of borrower.
Problems in Finance and Accounting:
- Dealing with huge amount transactions due to millions of data points
- Lots of time spend in manual & repetitive work
- Accuracy in keeping records of each and every transaction
- Lots of mundane transactional activities
- Lack of quick actionable insights
Benefits of AI in Finance and Accounting:
- AI in Finance in banking services can help professionals by giving them more time to focus on their primary work and counseling their clients rather than spending time on transactional activities
- Increase in productivity and high quality of results with high transparency
- Reduce work load of finance team professionals
- More accurate financial statement analysis
- Can efficiently complete tasks like extraction of data and structuring of the information
- AI in accounting saves time with the reduction of manual work
- Automate procedures of accounting
Functions of AI in Finance and Accounting:
- Can replicate human tasks:
AI can do the human tasks which take a lot of time like data entry & data reconciliation and also reduce errors. Bots are the new thing which are already prominent in customer service as well with chatbots and Voice bots.
- Reduce frauds:
Each and every transaction can be tracked more efficiently and any fraud activity is being identified more accurately. With AI in Finance, a professional can easily analyse different relationships and 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 lot of time. AI can automate the whole process of invoice processing and improve efficiency & productivity with zero percentage chances 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 categorization for effective vendor management.
- During Audit Processes:
Helps in the assessment of risk and tracking each & every record of transactions. With AI in finance, one can automate tasks (like data collection, following rules) and also find errors when deviating from pre-defined rules. AI saves time by helping in analyzing digital files with highest accuracy and improved analyzing capabilities.
- Reconciliation of data:
Reconciliation of data is of prime importance in places where highly confidential and sensitive data is being stored and are related to high value of financial transactions. For example, to maintain accurate accounting records or to 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 provide up to date reporting service according to requirements.
- During Company expense management:
Using AI, advance rules with exception management can be created in expense management which helps to keep the overall costs of an organisation in check.
- Follow-up process automation:
Tracking of outstanding invoices can be done and follow-up process can be automated with the help of AI driven Chat & Voice bot. Chatbots have also proven to be successful in handling customer service escalation or service management.
- Assessment of Risk:
AI can analyze vast amount of data and also make the processes automated to get the risk assessment done more efficiently. A very relevant use case is the risk assessment that happens during the underwriting process of a loan application which needs to compliment with the repayment capacity if the borrower in order to propose the correct sanction amount and condition for approval. An even more advance use case is to identify the probability of default of a borrower by advance AI and ML based models.
- In Trading field:
Prediction plays an important role in trading and I can do it by analysing the vast amount of past data. The prediction improves with time since AI with a 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), AI system can suggest when and what to buy or sell or to hold in an overall proposition to have a system recommended robotics based portfolio.
- Personal Expense Management:
AI driven system can help individuals to understand the spending behavior and help them to better plan for the future which can be aligned with a saving Goal as well.
AI in finance and accounting is still in the embryonic stages. However, we can say that AI has already started transforming Finance sector in a big way and the companies who will embrace the new AI age will flourish in coming times. Novel Patterns is a product driven organization enthusiastic to leverage the 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 reduce turn-around time leaving no room for the process being prone to errors. Know more.
As AI revolution is fast overtaking the traditional and tedious methods, we still cannot circumvent the human intelligence which will be required to supervise the technological marvels efficiently. The success mantra will be to pair AI machine and people together to get a more efficient and better future.