AI has been making the rounds across the business landscape. It’s no secret to anyone that AI in the finance industry has been the talk of the town. We at EA recognizing this surge in AI popularity, have launched a series of publications. These aim to spread awareness and encourage healthy skepticism.
As with any new technology, we want to thoroughly evaluate, implement and seek continous adaptation to maximize its benefits. Plus this will also ensure successful integration into existing workflows.
While 2023 was certainly the year of AI in the finance industry. But AI is still far from being a well-developed and explored technology. There remains so many aspects that we can only speculate about based on the data we have.
AI has become an integral part of business, let alone the finance function. Nvidia released its State of AI in Financial Services Report last week. The information shows that 91% of financial service providers and professionals have integrated AI into their operations already. While many firms are planning to do so in 2024.
These numbers defy all expectations. Given that such new technologies often take years to win public approval and trust. Even so, the numbers speak for themselves. So all we can do is follow along and try our best to educate the masses about AI in the finance industry.
Let’s break down where we see AI in the finance industry going in 2024. Lots of data is floating around everywhere, so why not try and chart out the plausible trends for AI in the finance industry for 2024 and beyond?
Table of Contents
Key Insights for AI in the Finance Industry in 2024
The Prevalence of Generative AI
In Nvidia’s report, 55% of respondents pointed toward generative AI and Large Language Models (LLMs) as areas of interest in AI in the finance industry. Using AI, accounting and finance experts are striving for accurate and consistent synthetic data generation, report generation. This means pretty much anything to do with processing and categorizing large amounts of data.
On top of that, the pros in the finance sector also realize the massive potential for AI. Especially when it comes to customer interaction and enhancing customer experience. 34% cite the customer care aspect as a pain point artificial intelligence can address. Many have already implemented some form of AI chatbot or assistant to facilitate client relations.
This trend will stay on the rise through 2024. One of the big concerns is of course the dangers of data-bias, and privacy concerns. When it comes to surrendering to a program that we cannot guarantee is secure, millions of bytes of financial data in 2024.
Bolstering Operational Efficiency with AI
The finance function is the beating heart of a business. It falls to them to properly manage and deploy resources to get results. With AI, this job becomes far easier, and streamlined. By implementing AI strategically in key places where human intervention is at best mitigative and at worst destructive. Places like bookkeeping, accounts payable and receivable, financial forecasting, and cash flow projections, for example, are key processes that dictate operational efficiency. These processes are also very open to automation and AI integration. We have seen institutions, like Sage, report very positive results by implementing AI in their processes. Thus resulting in an overall business operational efficiency boost.
Finance services and firms in particular sang the praises of AI and its immaculate ability to speed up tasks like application development. Experts at Sage highlighted how they were learning newer and better coding languages in days thanks to ChatGPT. Plus the program was invaluable for developing their proprietary software.
So, we can expect going into 2024 much wider implementation of AI. There will be a lean towards using AI in the finance industry. This will bolster operational efficiency and create a sort of chain reaction. At first it may seem stressful. But these are all growing pains that firms have to endure in oreder to succeed.
Curbing Burnout and Staffing Shortage with AI
As highlighted in a prior EA publication titled “How Can We Make Accounting Cool Again in 2024?”, the accounting profession is approaching dangerous territory when it comes to staffing. 31% of accounting professionals plan to outright quit the profession in the next 12 months. There is really no recourse from this impending exodus other than improving industry conditions and fostering an environment conducive to accounting and finance work.
Artificial intelligence can do a lot of good as far as countering and eliminating dissatisfaction and burnout. With AI, all the menial tasks like manual data entry, bookkeeping, and financial reporting can be left to computers to handle. Leaving finance professionals with a much less physically taxing job and unveiling fertile soil to cultivate mental exercise. Above all else, finance professionals are hired for what insights and analysis they can provide. We depend on them to help with decision-making, and often, it comes down to the CPA in the room to approve or reject a business project.
Read more about Will AI replace accountants here.
Potentially Incoming Regulations
No surprise to anyone, despite being widely accepted and adopted, there still remains a lot of ethical ambiguity in the use of AI in the finance industry. Just take the matter of customer payment information for example. If that data was pushed into AI hands, who is to say it would not end up in the hands of malicious actors?
White House Office of Science and Technology Policy for this very reason laid out what they call the “AI Bill of Rights”, . This is a set of guidelines for the ethical use of AI and protections from AI that every American citizen has a right to. While these are more of a warning and boundary drawn by the government, we can expect a much heavier and legally binding regulatory act down the road for the security of financial data in 2024. For this reason, it may be prudent to limit AI to tasks like bookkeeping and forecasting that utilize publicly available data. This will prevent the need for significant changes should any strict regulation come forward, which is likely to be the case.
There is a lot we can glean about trends in AI in finance and accounting going forward. However, we must not lose sight of the fact that the technology is still largely in its infancy. A lot can change very quickly should a breakthrough or setback happen in 2024. Accounting and finance firms must maintain the delicate balance of AI integration. So that AI is more of an extra tool to boost efficiency on top of everything else and not the foundation on which the finance function is built. And for those who cannot leverage all these new, shiny, and expensive artificial intelligence and automation software, there is still the option of retaining outsourced accounting services to bring down costs and promote efficiency. Just because there is a new player in the game does not mean everything that came before is rendered moot. Keep doing what you are doing and above all else, stay informed.