Will robotics and AI start a revolution in the finance sector?

24 Nov

A major revolution seems to be taking place within the world of finance. New technology in the form of Robotic Process Automation (RPA) and artificial intelligence (AI) is being introduced and looks set to overhaul the way we work. 

Once confined to businesses’ IT departments to detect security breaches, user issues and to automate tasks, AI is currently used in financial services for stock trading, predicting fraudulent transactions and determining risks. However, this looks set to be the tip of the iceberg as organisations begin to realise the opportunities AI and robotics present to finance departments and the benefits it could bring, particularly through the use of automation.

There are several major benefits of RPA, not only does it perform tasks as accurately as a human user, but it does so faster and without errors. While the tasks themselves have to be simple and repetitive, this technology can allow for some of the more mundane tasks a finance team deals with to be automated. Though RPA is yet to be widely used in the finance sector, it presents the opportunity for financial professionals to automate tasks such as invoicing. This would see the hundreds of invoices usually dealt with manually automatically inputted and processed within the system, saving hours of time usually spent by individuals on the task. Similarly, there is potential to automate the processing of mortgage applications with automatic financial advice provided based on algorithms. Other processes that could be automated include processing bank mutations and compiling reports. All of these tasks are regular features within the sector.

Furthermore, jobs which have previously been automated will be able to go one step further. For example, it is currently possible to automate the process of segmenting customers into groups based on established rules. Thanks to new technology, AI’s capabilities can now extend to improving the assessment of a customer’s creditworthiness. Previously, this assessment involved rules that were very black and white, with credit managers assessing any grey areas. However, AI can now be introduced to make new connections to assess these grey areas – making it easier for informed decisions to be made on credit risks.

 With RPA proven to have greater accuracy than people, its use could lead to increased quality and lower costs. Thanks to this accuracy and ability to carry out automated tasks, financial professionals will find that they have more free time which they can spend on bigger tasks. This would allow them to focus more closely on making a difference to their organisation and customers, rather than on the smaller but time-consuming tasks.

Benefits for credit managers

AI and RPA could also improve the transparency of financial processes for credit managers, particularly that of the order to cash process. One of the main processes in a financial firm is the order to cash chain – a collection of business processes for the receipt and processing of orders and ultimately their payments. Without this process, continuous cash flow is not possible, and this has consequences for an organisation’s survival. This is one particular area that AI and RPA could be put to good use, allowing for some of the simpler, more repetitive tasks to be automated and for finance professionals to focus only on exceptional cases that can’t be processed by RPA. Additionally, the technology will ensure all financial information is up-to-date and comprehensible in real-time so that finance professionals can focus on analysis and strategy.

This new technology will also make it possible to achieve much more with data that is being collected by finance departments. One such example is performing reliable predictions based on the past. For example, AI can analyse data in software solutions and determine if there are any patterns in order to predict events, such as which customers will fall into payment arrears. This will allow credit managers to determine when action should be taken and whether to approve credit. In turn, this is likely to increase cash flow as finance teams have an increased awareness of which customers should or shouldn’t have their credit approved. Predictions made by AI can also be applied to other processes, such as the invoicing method, as AI can predict which payment method will result in the invoice being paid quickest, and transferring customers to collection agencies.

 The future for financial professionals

It is clear that a large number of the benefits of AI and robotics in this field stem from the ability to automate processes which reduces time spent on them and increases the potential of financial professionals to spend time on more important tasks. These technologies also remove risks of human error, which in the financial sector can be costly, and can improve job satisfaction as workers get to look at the bigger picture issues while machines deal with the more mundane day-to-day tasks. However, despite these many benefits, there is another way in which RPA and AI could instigate a revolution within the sector – and this one might be a harder pill to swallow.

Unlike humans, robots are productive 24 hours a day, seven days a week; they never tire and are never sick. They are also getting smarter and more affordable. Ultimately, they sound like the ideal ‘employee’ and this could have a wider impact on the sector with research suggesting 230,000 finance jobs could disappear by 2025[1]. Although this presents a major concern for financial professionals, it will be up to them to create new jobs which can be added to this new world of robotics and algorithms. While this is concerning, it has parallels with the Industrial Revolution. Looking back through history, the Industrial Revolution meant many jobs were wiped out as machinery took its place. Although not on the same scale, and replacing brainpower rather than physical labour, financial professionals should look to this period for inspiration and begin to create new jobs.

That said, job losses are just theoretical at this stage and in the immediate future new technology presents the financial sector more benefits than it does risks, allowing individuals to focus on the more interesting aspects of their jobs while tasks such as invoicing are automated. Despite the concerns, AI isn’t about replacing workers but about aiding them to do their jobs better. It isn’t a surprise that workers feel slightly vulnerable, however, the introduction of these technologies should be viewed as a net positive.

There is no doubt that robotics and AI will revolutionise the finance sector in the coming years thanks to its ability to automate, simplify and increase the speed of processes. Change is undoubtedly a risk but failing to change is the bigger risk and failing to adopt these new technologies is likely to mean being left behind by the competition.

Afbeeldingsresultaat voor artificial intelligence

Source: https://ibsintelligence.com/leaders/will-robotics-and-ai-start-a-revolution-in-the-finance-sector/

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