Artificial intelligence has been in place since the year 1956, but considering the recent momentous acceleration in the accounting and finance industry it has become the vital topic in business. It plays a foremost role in the way the functions are performed in an organisation. Recently, Artificial Intelligence has revolutionised the efficiency, quality and time taken to accomplish these functions in contrary to manual performance. In fact, the very same difference has sparked controversial debates.
There is no doubt the structure, working mechanics, required skill level etc. is altogether transforming with the operation of Artificial Intelligence to remain profitable in the economy and competitive in the market. In support to the well-known theory, the survival of the fittest, now professionals and employees are also expected not only to work in par with technology but also to control them. This, largely affects the attitude of individuals working in an organisation. Also, it is a discerning move from the management to manage the cost, learning curve and all other uncertainties.
Therefore, this paper mainly focuses on the aspiration of understanding the use of Artificial Intelligence in Accounting and Finance industries which in turn assess its effectiveness and performance. Since, employment is another major factor affecting our economy it is also essential to comprehend their value and their knowledge regarding the recent developments. Thus, this paper would be imperative to analyse the attitude and expectation of the professionals and also, the efficiency and evolution of these industries with the employment of Artificial Intelligence.
Artificial Intelligence (AI) implies to the simulation of human intelligence that are programmed to think like humans and impersonate their activities. It presents opportunities to complement and supplement human intelligence and enrich the way people live and work.
India being one of the fastest growing economy and having second largest population in the globe has a substantial stake in the revolution of AI. It is not distinctive when it comes to the significance of AI in Accounting and Finance Industry. AI is more than merely robots that comes into one’s mind when trying to picture the word. It has been transforming these industries through various applications available, such as, data collection, chatbots, personal assistance, consumer interaction, risk assessment, cybersecurity, etc. without emotional and psychological factors affecting them. All the applications can be classified under the different categories of Artificial Intelligence – weak or strong or general centred on its capabilities and reactive machines, limited memory, theory of mind, self-awareness based on its functionality. Whatever maybe the application or the category of AI used by the industries, the aim of AI includes, 1. Learning, 2. Reasoning, 3. Problem solving, 4. Perception and 5. Language.
With technological advancements, AI has been evolving to beat its own previously set benchmarks and benefits. Since, the world seems to be transforming with AI, it is no doubt that it has created a fear of employment and replacement among the people as. In contradiction, it is also said that AI is only to eliminate tedious mundane jobs enabling professionals to perform more higher-level tasks, lucrative analysis and counselling. Also, it is believed that new jobs will be created through micro-economic and macro-economic effects. As of October 2019, a joint research conducted by the National Business Research Institute and Narrative Science stated that only about 32% of monetary service providers have adapted or embraced AI. In addition, a joint survey conducted by EY and Invesco stated that the adaptation of AI is expected to be 64% in the ensuing two years. Thus, AI has become the inevitable by gaining constant attention from everyone including the Government of India. The Indian Government conducted and published a discussion paper on National Strategy for AI with the help of NITI Aayog. Therefore, it is imperative to recognize the level or degree of impact AI has on these industries and the work force to analyse the current work environment and the future.
CONCEPT OF ARTIFICIAL INTELLIGENCE USED
Almost all the industries are now aware of the existence of AI and the possible benefits they could gain from its application if due care and diligence is taken. The following are some ways in which this fast-moving technology has been put to use for everyday activities by the accounting and finance industry. To begin with, AI based invoice management systems helps in payment/receiving process by saving time, cost and errors. Secondly, AI can examine a supplier’s tax details and credit scores all by themselves without a need for human hand and provide the suppliers with required data by setting up query portals. Thirdly, with the use of application programming interface, records maintained in different systems can be processed together which helps avoid massive amount of paperwork. Fourthly, with digitalization financial transactions can be both recorded and audited. It has highly improved the efficiency and productivity of an organization by helping them meet their goals and make better judgements. It also helps in acquiring and securely consolidating financial statement. If any breach or fraud has been committed then the AI is powered to alert the management. Fifthly, the most recent development is the introduction of chatbots. It has been made user friendly that consumers find their queries solved within minutes rather than waiting in line for customer care services.
AI also helps companies in making smart credit and underwriting decisions which helps them reduce predicted risks and losses. It also helps them review a client and provide loans more securely and avoid the issues of non-payment. Machine learning, a subset of AI is also used to create models which helps in forecasting and prediction of data. AI is also used in identifying large data sets and analysing patterns that can be used to make strategic trades. It has been used by financial institutions and especially brokers. Most important of all, AI is a major key to improve cybersecurity and fraud detection since everything is now stirring online. Thus, AI has become a necessity.
IMPACT OF ARTIFICIAL INTELLIGENCE
With the rise of neo banking and never-ending expectations of consumers spread around distinct geographical locations accounting and finance industries started gracing AI at the staff level which has steadily climbed the ladder and tends to continuously do so. It has greatly transformed and impacted the industries in the following manner;
Positive Impact of AI
- It has enabled hyper-personalisation which helps them provide customised services suitable to every individual needs. AI has shaped these industries by enabling self-service which provides customised solutions to them anywhere and anytime. This led to the rise of online banking and e-trading etc. Also, the organisations method of consumer interaction has vastly changed. No longer are there queues to get basic questions answered or phone calls on hold. Chatbots and online query services which are accessible 24/7 has changed the game.
- It has created a provision wherein the back-office operations can be fully automated which reduces the human requirement in those areas. In fact, it has been augmenting the human work. The industry has also witnessed a shift in talent from financial institutions to service providers. Also, large cost was involved in this shift from human intelligence to artificial which in turn allowed organisations to chase high margins and advance innovation and growth.
- The scale of operations has highly increased as large volumes of data can be recorded, classified and analysed much faster than done by man. AI is also being used to keep track of consumer behaviour in online platforms which further changed the way in which data is collected and analysed regarding apps usage, pattern, fraud, anomalies etc. Moreover, with rapid use of AI, e-technology has started to normalise traditional metrics like price.
- There is an upcoming uniformity in the manner in which tasks are performed across institutions as they are now able to consume the same capabilities and hunt new differences. Conferring to the WEF report, only 7% of professional services respondents said that advances in AI and machine learning are making it possible to automate knowledge-worker tasks that have long been regarded as impossible or impractical for machines to perform.
- AI has created a whole new market where innovative and creative entrepreneurs step up and bring in a whole new level of financial institutions such as Fintech’s.
Negative impacts of AI
- Mid-sized firms also faced a negative impact as they became less profitable and a prey to the large-scale players. Usually, small scale firms follow the lead of large firms. The cost involved males it difficult for them to compete in the market.
- It’s being predicted that AI may replace about 9% of incumbent financial service jobs by 2030 while on the other side of the coin Fintech anticipates AI to expand their workforce by 19% within the same period.
- AI has also shed light on new skill required by the workforce. In case of skill deficit, institutions spend on trainings and sometimes individuals are put out of work.
- The calculator, using research by the University of Oxford, said accountants have a 95% chance of losing their jobs as machines take over the number crunching and data analysis.
PERCEPTION OF FINANCE PROFESSIONALS TOWARDS ARTIFICIAL INTELLIGENCE
Employment has always been a ride through the hills and job security is considered in the human minds as its safety belt. AI has been making drastic changes in the world that it has caused a sense of doubt regarding the future of jobs within the minds of not all but some employees.
Many have been open and approved the idea of AI in their work environment. While some feel that it is just the beginning of human intelligence replacement. Yes, AI might be the reason for some labour turnover in an organisation but it is also said be the reason for job creation. To elaborate, AI can remove jobs at the lower level which requires no human intervention and is repetitive in nature but there is still not enough progress to completely take over judgement-intensive, advisory or consultative jobs. Artificial Intelligence and Human Intelligence are said to be complementary to each other for instance, AI can collect and analyse data but individuals are required to interpret them according to the requirements and make a decision.
It is the responsibility of the organisation and human workforce to work together in breaking the common misconception of AI taking over and replacing individuals and bringing in positive attitude towards it. AI has created a transformation in the skills to be adapted by the work force. More refined and advanced are now required to work alongside with AI and also use them to their advantage such as increase productivity and efficiency thereby saving cost and time. Thus, adequate training, learning and understanding of AI will be huge step towards successful implementation of AI.
OPPORTUNITIRES OF AI
The disruptive potential of Artificial Intelligence are as follows:
- Cloud based technology is being used for storing and transferring data as it enables constant monitoring while Blockchain technology is gaining momentum by simply enabling users to get to the fine records, create smart contracts etc.
- Cost saving is definitely a core opportunity for companies setting expectations and measuring results for AI initiatives. Also, AI creates opportunity for achieving revenue enhancement goals including creation new products and enhancing existing ones.
- It has increased transactional and account security and is highly capable of reducing or eliminating transaction fees due to avoidance of intermediary. Whereas, face recognition using real-time camera images and advanced AI techniques such as deep learning can be used at ATMs to detect and prevent frauds/crimes.
- Cognitive computing helps digital assistance and apps to improve themselves.
- The level of transparency can be increased with AI and more systematic check systems can be implemented.
- AI can completely transform the procurement process which is a major step towards paperless entries. It simplifies accounts payable and receivable process thus enabling efficient accounts and proper audit reports. It also helps maintain the financial statements of the firm and make a possible comparative analysis with rival firms.
- It enhances marketing through real time analysis which provides the firms opportunity to target ideal clients and pursue new markets.
- Personalized portfolios can be managed by Bot Advisors for clients by taking into account lifestyle, appetite for risk, expected returns on investment, etc.
CHALLENGES OF AI
Artificial Intelligence can be challenging too which is elaborated as follows:
- There is a need for computing power which is difficult for start-ups and small businesses.
- The assessment and forecasting abilities are dependent on the inputs fed into its system. If there is a bias there’s a chance for it to stay hidden.
- Though AI is said to replicate the human mind the algorithms, if, are designed for a specific task it does not deviate.
- AI is not given full autonomy in an organisation as there still lies the question of responsibility when things go wrong.
- AI implementation requires huge capital investment but the returns are slow at the initial stages.
- The professionals no longer can sustain themselves with only accounting knowledge but also require additional skills and knowledge in information technology.
- Data volumes and quality are crucial to the success of AI systems. Without enough good data, AI models will simply not be able to learn.
- AI poses a global risk for all the incumbents as they can be beaten in competition by large firms.
- There’s the risk of privacy and security of information stored in automated platforms.
Thus, AI has its own share of opportunities and challenges in the accounting and finance industry which are still be explored and overcome.
The impact of AI on accounting and finance industry has been revolting. AI has proved its efficiency and productivity through various benefits provided by its very own applications. It acts a support system to the human minds in completing the tedious, repetitive tasks without much or no intervention. It has transformed the level of work done by the professionals in an organisation elevating them to do higher level tasks. It does hold certain drawbacks regarding the employee morale, learning curve, advancements and cost involved which might get sorted out over time.
The opportunities and challenges presented by AI is immense over all areas of work. This has only led to further research and progress of the present technologies. Also, AI replacing the human intelligence is a myth. Though it might lead to some basic level job losses it also creates sophisticated skilfully refined jobs. The scope of AI is only said to widen as institutions continuously try to remain competitive and profitable in the market.
Thus, it can be concluded that the challenges and risks of AI needs to be combated as artificial intelligence has overall created a positive impact on these industries and has set the future path for them as well.