The Future-forward CFO: Harnessing Generative AI in Finance

Artificial Intelligence (AI) has transformed the finance function by automating processes, optimizing operations, enhancing enterprise visibility and providing data-driven insights. However, the emergence of Generative AI has unveiled a vast realm of possibilities for enhanced decision-making, customer satisfaction, employee experience and risk monitoring. This transformative technology is re-defining the CFO’s role, positioning them as the Chief Future Officers.

In a research report titled, ‘The economic potential of Generative AI,’ McKinsey notes that Generative AI has the potential to add USD 2.6-4.4 Trillion in annual value across industries.¹ Gartner believes that CFOs should spearhead the adoption of this powerful technology – taking proactive ownership rather than solely relying on their IT departments – to ensure that it aligns with the business strategy and full range of company operations.²

Source: Global CFO Survey by Everest Group, supported by WNS

The New Advisor in the CFO’s Office

Generative AI elevates the decision-support capabilities of traditional AI, such as accurate planning and forecasting, as well as fraud and revenue leakage detection, to unprecedented levels.

The Potential of Generative AI in Finance & Accounting Operations (FAO)

Let’s dive into a few use cases of Generative AI in finance:

1. Advanced Financial Modeling

   Generative AI can create sophisticated financial models that consider multiple variables, scenarios and market conditions. For instance, it can augment AI-generated reports with recommendations on capital markets (using sentiment analysis and new classification) to increase ROI on investments.

   Such recommendations can be leveraged in market analyses to optimize the cost of capital and identify potential buyouts by analyzing financial statements and annual reports of targeted companies.

2. Strategic Risk Assessment

   Powered by Large Language Models (LLM), Generative AI can analyze massive amounts of historical and incoming data, market trends and emerging patterns to provide real-time reports on potential fraud and revenue leakage.

   Further, it can provide voice-based alerts to financial controllers and internal auditors, enabling proactive action to mitigate risks and uncertainties. The system can also flag repeat defaulters and delayed collections, facilitating early or preventive action.

3. Conversational and Interactive Decision Support

   While AI tools provide predictive insights, Generative AI takes this capability to unparalleled heights. CFOs and treasury teams can now interact with audio-based conversational AI to query the daily cash position of the company, upcoming large payments, working capital shortfalls, Forex exchange exposure, hedging requirements, cash forecast and other Finance and Accounting (F&A) requirements. These conversational AI systems generate responses in real-time, presented either as audio outputs or in the form of text / images, depending on the nature of the user’s query.

4. Compliance and Regulatory Intelligence

   This conversational capability is invaluable in handling various accounting conventions and its interpretations (including International Financial Reporting Standards (IFRS) and local Generally Accepted Accounting Principles (GAAP)), policies and control frameworks. Generative AI can also alert CFOs on new regulations and produce summarized tables of all regulatory changes.

   Apart from ensuring compliance and reducing associated risks, Generative AI can streamline onboarding processes by assisting in the analysis of customers, suppliers and partners through comprehensive reports containing essential information, including background information, financials, sanctions and Anti-money Laundering (AML) checks.

5. Simplified, Enhanced Reporting

   Generative AI can enable CFOs to access daily views of the income statement and balance sheet, with interactive drill-downs that offer insightful interpretations of reported numbers. In addition, the tool can generate notes and disclosures on the financial statements based on the variances between budgeted and actual figures.

   The time and effort expended in producing annual reports, board papers, accounting policies, whitepapers, investor analyses and executive packs can be drastically reduced, significantly easing the burden on finance teams during internal and external reporting cycles.

6. Integrated Business Partner

   Generative AI empowers CFOs to become strategic partners to other business units. It can create a real-time report summary for cost center managers and business partners – analyzing revenue and expenses and trends, patterns and insights for accurate planning, budgeting and forecasting. With such insights, CFOs can contribute to cross-functional decision-making processes, identify growth opportunities, optimize resource allocation and drive business performance.

Building Effective Safeguards

While Generative AI gathers momentum and its positive impact is unquestionable, ethical concerns about potential biases, lack of interpretability and increased vulnerability to adversarial attacks remain. According to Harvard Business Review, 79 percent of senior IT leaders in a recent survey reported having security concerns around this technology and another 73 percent were concerned about biased outcomes.³ Without clear ethical guidelines in its design and deployment, Generative AI in accounting operations can lead to unintended consequences and pose significant risks to the organization.

There is also a need to ensure change management for better outcomes. Effective communication and training will be important for organizational readiness. Change management strategies must focus on building processes to address employee concerns, foster collaboration between humans and AI systems, and promote a culture of continuous learning and adaptation.

Contact us to know how WNS can help your business harness the power of Generative AI.

References:

1. The-economic-potential-of-generative-ai-the-next-productivity-frontier-vf.pdf (McKinsey & Company)

2. CFOs should lead adoption of generative AI: Gartner | CFO Dive

3. Managing the Risks of Generative AI (Harvard Business Review)