Financial institutions have grown in leaps and bounds thanks to artificial intelligence (AI) streamlining how companies manage their finances. For one, banks are looking to save up to $447 billion by 2023, thanks to the incorporation of AI tech into their services.
The applications of AI in finance are far-reaching, making it easy for credit bureaus to optimize credit risk assessments and even streamlining loan applications. Where loan reviews used to be a long and tedious process, AI fast-tracks the approval of applications based on patterns that it learns over time through machine learning.
AI and machine learning in finance can also be felt in the use of fraud detection, the automation of finance tasks, and even chatbot assistants, making it easy for financial institutions to be closer to their customers.
According to Insider Intelligence’s AI in Banking survey, most financial institutions (80%) are well aware of the potential benefits of AI. They are considering technological advancements, increasing consumer acceptance, and overall process improvements in their decision to implement AI in corporate finance.
Here’s a look at how AI is changing the future of corporate financial accounting.
Reducing Human Error & Redundancy
Banks and financial institutions are now adopting a new generation of AI technology to automate financial tasks, making it easier to complete operational tasks, wealth management, trading, and risk management.
Furthermore, as AI becomes more human-like and sophisticated, it will soon become the primary means by which banks communicate with their customers.
Strengthen Risk Assessment & Get Rid of False Positives
AI is beneficial in corporate finance as it can better predict and assess loan risks. AI technology like machine learning will help businesses increase their value by improving loan underwriting and lowering financial risk.
Many organizations are adopting AI for their back-office needs, such as analyzing customer data to identify high-risk customers. Banking institutions, for example, have already started integrating AI into their system to deliver personalized recommendations to their customers.
AI technology can also help businesses increase their value by improving loan underwriting and lowering financial risk as company accountants, analysts, treasurers, and investors work for long-term growth. AI can also reduce financial crime by advanced fraud detection and spot anomalous activity.
Improving Security & Fraud Detection
AI tools are used to deter fraud and money laundering and enhance customer service and rising protection. Cybercrime and financial fraud cost the global economy up to $600 billion each year, according to McAfee (2018). This number is expected to go down as AI technologies become more widely available.
To detect the risk of financial fraud, many banks and financial institutions currently use a two-layered detection process.
Enabling Frictionless, 24/7 Customer Interactions
Many financial institutions are increasingly embracing digital services due to rising customer demand for digital products and the challenge of tech-savvy startups. By 2021, global banks’ IT budgets would have increased to $297 billion.
The migration from conventional banking platforms to online and mobile banking is being driven by consumers opting for more digital channels. Millennials and Gen Zers are rapidly becoming the banks’ largest addressable target segment in the US. These younger customers favor digital banking platforms, with 78 percent of millennials saying they will never go to a branch if they can avoid it.
As a result, banks and other financial institutions are looking to increase their IT and AI budgets to meet the demand for more digital services.
Although the shift from conventional banking platforms to online and mobile banking has already begun before the pandemic due to the growing opportunity among digitally native consumers, COVID-19 accelerated the process. With stay-at-home orders being introduced around the world, many customers had to opt for self-service options.
By 2025, using AI in-office tasks can save North American banks up to $70 billion. Furthermore, the overall potential cost savings for banks from AI applications are expected to be $447 billion by 2023, with $416 billion coming from the front and middle office.
According to Insider Intelligence, online and mobile banking adoption among consumers will grow to 72.8% and 58.1%, respectively, by 2024, making AI implementation crucial for financial institutions looking to up their competitive advantage.
Driving Innovation with Performance Canvas
The only way for financial institutions to navigate an increasingly digital world is through innovation. Though chatbots are becoming more common in the financial service industry, more organizations are also looking for ways to differentiate themselves through personalization. This sense of individuality extends beyond product customization to include security.
Cybersecurity is a hot subject in the financial services industry right now, as is regulatory enforcement. In each of these areas, AI can be highly beneficial.
Performance Canvas can fill your business’s financial reporting, consolidation, budgeting, and dashboarding needs with an advanced business intelligence tool equipped with AI capabilities that can help drive automation and collaboration while offering better security and quick implementation.
Learn more about the different solutions it can provide your business today.