Advice and Information for Finance Professionals

PwC AI Predictions: Are You Ready for Finance’s Digital Future?

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By Mike Baccala, PwC Assurance Innovation Leader & Ed Ponagai, PwC Finance Consulting Principal

When it comes to automation and artificial intelligence (AI), the future is now for the CFO.

It’s not because AI is upending the structure of the finance labor market; that effect likely won’t be felt for many years, as we point out in our AI predictions for 2018. (See our first prediction: AI will impact employers before it impacts employment.)

And it’s not because finance functions are struggling to hire computer science Ph.D.s with machine learning expertise. That’s a deep challenge for many corporations, but it’s not necessarily on the CFO’s plate.

The future is now because all finance staff, not coders, need to make a big adjustment. Automation is the future, but professionals are the present. If finance teams stick with the familiar tools they know and love, they won’t be fit for purpose for a finance function built with next-generation technology, such as intelligent process automation (IPA), AI, and beyond. So the finance team is on the critical path to the future of the profession.

Not Your Father’s Spreadsheet

For finance professionals, the transition to new automation tools and AI will be like the adoption of spreadsheets on PCs in the 1980s. Programs like VisiCalc and Lotus 1-2-3 sparked a mass transition to electronic spreadsheets that left green-striped ledger paper in the dustbin of history. In the process, accountants and other finance professionals learned a new “language” of spreadsheets. By the 1990s, ERP was also the norm. Every finance professional became conversant in spreadsheets and ERP.

Today, entire departments—including more than a few financial planning and analysis (FP&A) groups—are made up of spreadsheet jockeys. Even those who use specialized tools also use spreadsheets to fill the “gray space” between applications; they export data from one application to a spreadsheet, manipulate it in some way, and then import to a second application. We’ve all done it. 

But we have to get over it. Spreadsheets are going to be tomorrow’s ledger paper. Finance professionals will need to speak the language of data analytics, IPA and AI.

Bilingual in Finance and Data

The low-hanging fruit is using IPA to automate repetitive tasks, such as transaction processing, and integrating data visualization with analytics. For example, payments have traditionally been a high-touch process requiring scanning of invoices, matching them with purchase orders and eventually issuing payments. Applications like Oracle ERP Cloud use IPA to scan and enter invoices into the system automatically, reducing human effort and error rates. Additionally, it frees up resources to take a more strategic look at vendor management, visualizing the data and identifying key trends from the ERP system.

They’re not automating just to make a pretty picture. The right visualizations convey stories very quickly, immediately uncovering patterns that might otherwise have gone unnoticed, such as an unusually high number of postings just below authorization limits in a particular month. Of course, “unusual” doesn’t mean something’s wrong. Auditors and tax professionals make their own judgments on the anomalies, once they’re made aware of them. Humans are still in the loop.

Coding and visual design aren’t in the typical skill set of a 2015 accounting graduate. Acquiring analytics-enabled talent will be challenging in the coming years, for all professions.

With more analytics-enabled finance talent, it won’t be long before FP&A departments use data science principles to dive more deeply into data from multiple systems. Today, finance professionals spend half their time gathering data rather than analyzing it, according to our Finance Effectiveness Benchmarking Report 2017. In the future, instead of spending time manipulating exported worksheets in pivot tables, they’ll apply critical thinking to the implications of the data and test “what if” scenarios that will improve, say, pricing or inventory decisions.

Finance professionals are numbers-oriented and analytical, but that doesn’t mean they’re skilled in IPA, AI, and visualization. They won’t need Ph.D.s in computer science to learn commercial IPA tools or visualization software. But they will need training.

Those Who Can, Teach

Then, there’s the question of AI. Machines aren’t born smart; they’re built with the capacity to learn. Someone with real expertise has to train them. The judgment that goes into making revenue recognition decisions, for example, aren’t strictly rules-based; it requires years of experience to make determinations, considering the timing of payments, knowledge of contracts, legal interpretations in different jurisdictions, and other factors.

That’s something that AI can also accomplish—but not overnight. Training machines is an iterative process in which experts give algorithms feedback to help the machines get smarter. The deeper the functional expertise, the more fine-tuned the feedback becomes and the better the machine learns.

Those kinds of teams—accountants side by side with data scientists—are becoming more common. And it’s why we predict AI-savvy specialists like these will be so critical to the success of AI in business—that’s where our prediction on why functional specialists, not techies, will decide the AI talent race, comes in.

Finance organizations are adapting to this new staffing and teaming paradigm. And it works: in our experience, we’ve found that CPAs and Ph.D. computer scientists work quite well together. They’re why the future of the finance function comes down to people, not machines. 

Read more about PwC’s AI predictions, and look for additional blogs in this series covering other predictions and what they mean for finance professionals.


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