The future of finance: Man or machine?
The world of finance is undergoing a seismic shift, driven by the relentless march of technology. This transformation is touching every corner of the industry, including finance and reporting, auditing, and investment management. Towards the end of 2022, the existence, and capabilities of Artificial Intelligence (AI) entered public consciousness in the form of ChatGPT. Although AI has existed for years, this manifestation resulted in a renewed awareness of the size and extent of the technology shift in recent years.
My professional journey through the corridors of a large audit firm and a boutique investment firm provides a unique vantage point from which to envision the transformative impact of AI on finance. I believe that the continued adoption and evolution of AI will have a more nuanced impact on shaping the practices and strategies of these distinct segments of finance than may be commonly believed.
It is indisputable that AI has come a long way from its early days as a concept. It has evolved into a powerful tool with the capacity to process datasets, identify intricate patterns, and execute complex tasks. Technology, in the form of robotic process automation (RPA), is relieving finance staff from mundane and repetitive tasks. For example, RPA fares much better at tasks such as data entry and reconciliation, which are not only tedious but also prone to human error. Within the realm of auditing, AI software enables auditors to pinpoint areas in financial data that demand the most scrutiny. Through sophisticated data analysis and risk assessment, AI identifies anomalies and patterns, facilitating the efficient allocation of staff to high-risk areas. AI has an unmatched ability to leverage data to identify potential fraud, predict market trends and assess credit risk. In the investment sector, AI is taking on various roles, such as automating routine operations, making data-driven predictions and optimising investment strategies.
While AI is exceptional at data processing and providing data-driven insights, strategic decisions often involve a myriad of factors, including long-term goals, company culture and complex market dynamics. Humans bring judgement, intuition and experience when weighing these considerations. For example, a key consideration in investments is frequently the governance systems in place and the credibility of management, which are qualitative factors that AI is incapable of assessing. Furthermore, AI algorithms, while powerful, lack the ability to make value-based judgements or evaluate ethical factors. Chatbots can efficiently handle routine inquiries but cannot replace the human touch in building and maintaining client relationships.
Therefore, my view is that the future is not a world where humans are replaced by machines: it is a world where humans have access to smarter and faster tools to make better decisions. In a landscape where traditional differentiators become increasingly commoditised, the firms that successfully integrate AI stand to gain a significant competitive edge. While AI can unlock immense productivity and cost-saving potential, institutions must navigate beyond the AI hype to fully realise these benefits. In this endeavour, recognising the technology’s potential is important, but remaining cognisant of the enduring significance of human involvement is equally so. AI brings unparalleled capabilities in data analysis and automation, but it is human involvement that brings the necessary judgement, ethics, domain knowledge and empathy required to navigate our multifaceted world. Consequently, striking the right balance between man and machine will be the key to future success.
