Will advanced AI software such as ChatGPT replace finance professionals?
Introduction
Pentagon Global Finance is a global professional services firm helping some of the fastest growing companies and SMEs in the world work efficiently and differently whilst reducing risk and delivering value at all times.
My name is Luke Clack and I work within the research team here at Pentagon Global Finance (UK).
We’re focused on enabling transformations through systems, re-organisation and people solutions, powered by analytics and insight to drive sustainable change. Whether you’re navigating regulatory changes, managing through a crisis, going public, or experiencing some other major shift in technology, we help put in place Change and Transformation strategies that are built with business results in mind.
Artificial Intelligence (AI) has been rapidly advancing in recent years, and its impact on various industries is undeniable. The finance sector is no exception, and many experts predict that AI softwares like ChatGPT could replace finance professionals in the future. However, the truth is a bit more nuanced and dowsed with hurdles of subjectivity.
The Challenge
From supplier onboarding to payroll to purchasing to reporting and even finance crime and risk management, the accounting and finance industry is making use of AI tools and technologies to drive rapid change and to add value to processes within respective organisations. But implementing these tools and working through their inherent challenges has proved difficult and at times controversial for some businesses and financial institutions.
The application of AI tools in finance is necessary for many businesses and institutions, and many plan to increase their budget to continue to implement these tools.
Sixty-five percent of 706 senior IT professionals in the finance sector plan to increase their IT budget in 2022, according to a November 2021 report by Enterprise Strategy Group.
Amongst the above noted budget increases, 62% of respondents say they will likely increase spending in artificial intelligence and machine learning.
However, since finance involves sensitive data from consumers and large corporations, some enterprises find themselves trying to strike that perfect balance between the benefits and risks of AI tools.
Technology and Innovation in the Finance Industry
The financial industry has always been at the forefront of technological innovation, and the advent of advanced natural language processing (NLP) models like ChatGPT is no exception. However, some finance professionals may view AI as a threat to their job security, believing that the technology will eventually replace them, this in my opinion is far from the truth because there are subtle functional nuances that has either been missed out or not taken into consideration. It is a known fact that AI is poised to revolutionize the finance industry by enhancing the capabilities of finance professionals, but not replacing them completely.
AI has already proven to be a valuable tool in finance, automating tedious and repetitive tasks and enabling faster and more accurate decision-making. It can process large amounts of data quickly and identify patterns that humans may miss, leading to better-informed decisions. For example today at Pentagon Global Finance we leverage AI to extract key data from source documents—names, dates, payments, etc embedded in our IFRS16 (ASC 842) Lease Accounting platform which eradicates the need for manual data extraction and reduces time it takes to read and interpret complex lease contracts and the overall cost of Lease Accounting management for our clients.
Data Insights and Financial Analysis
AI’s ability to process large quantities of data rapidly and identify insightful patterns which may have been missed otherwise by a human will undoubtedly free up time for FP&A teams to shift their focus towards completing more strategic and value-adding activities, such as building client relationships and
investment analysis. Crucially, exceptionally powerful AI, such as ChatGPT can also be integrated into customer service operations; allowing for 24/7 assistance to be available in addition to helpful answers to FAQs – thereby reducing the already large workload of customer service representatives.
The Understated Importance of the Human Touch
However, it is important to note that AI is not a silver bullet that can completely replace human professionals. While AI is excellent at handling routine tasks, it cannot understand the complexities of financial markets and the nuances of individual situations or carry due diligence tasks where findings and conclusions are not necessarily linear in nature. Furthermore, AI systems need to be trained by human experts, who must constantly monitor and adjust the algorithms to ensure accuracy and prevent biases.
Additionally, finance is a sector that heavily relies on trust, and clients often prefer to work with human professionals they can interact with directly. Many people also find it difficult to trust AI systems with their financial decisions, as the technology is still relatively new, and the risks involved are not fully understood.
Regulatory Compliance, AML and KYC
However, this technology will be invaluable for finance professionals and aid in AML and KYC compliance for its capacity both detect and prevent fraudulent activity. This technology will be crucial as it is preventative rather than reactionary, alerting finance professionals to potentially fraudulent activity and take the relevant actions to avoid incurring a financial loss. I will be covering the impact of AI and related Data Privacy concerns, risk identification and fraud prevention wins, and the concerns it poses to financial institutions and insurance businesses in a separate article.
Summary
In conclusion and with a reasonable dowse of certainty, it is expected and I believe that AI software and technology will not completely replace finance professionals anytime soon, but it will certainly change the way they work. Instead of being a threat to jobs, AI is likely to enhance and augment the abilities of finance professionals to be more efficient and effective value creators, enabling them to provide better and more insightful services to their internal organizational customers and external clients.
As AI continues to evolve, it will be important for finance professionals to stay informed about the latest developments and incorporate AI tools into their workflows where appropriate in order to stay ahead of the curve in a rapidly changing and evolving industry landscape.
For more information on how you can benefit from any our services, you can contact me directly on:
Email: luke.clack@pentagonfinance.com or teo.tansiri@pentagonfinance.com
Tel: +44(0)203 290 8500
