Companies Harness Generative AI to Supercharge Financial Operations

Generative AI Transforms Finance Function, Freeing Up Capacity for Strategic Work In a bid to optimize financial operations amidst ongoing uncertainty, companies are increasingly turning to generative artificial intelligence (AI) tools. These innovative technologies have the potential to revolutionize the finance function by automating mundane tasks and freeing up time for more strategic work. According to Andrew W. Lo, Charles E. and Susan T. Harris professor and director of the Laboratory for Financial Engineering at the MIT Sloan School of Management, large language models (LLMs) and generative AI tools can support everyday tasks such as generating quarterly reports, communicating with investors, and formulating strategic summaries. "LLMs can't replace the CFO by any means," Lo said, "but they can take a lot of the drudgery out of the role by providing first drafts of documents that summarize key issues and outline strategic priorities." Generative AI is also being explored in treasury functions, with applications including cash, revenue, and liquidity forecasting. This technology has the potential to enhance decision-making and improve financial planning. The finance function has traditionally been a labor-intensive area, with CFOs often spending a significant amount of time on routine tasks. However, generative AI can help alleviate this burden by automating repetitive tasks and providing valuable insights that inform strategic decisions. Background research suggests that the use of generative AI in finance is still in its early stages, but it has already shown promise in various areas. For instance, a recent study found that companies using generative AI tools experienced significant reductions in time spent on financial reporting and analysis. While some experts caution that generative AI should not replace human judgment, others argue that it can augment the finance function by providing valuable insights and automating routine tasks. "Generative AI has the potential to transform the finance function," said Lo, "but it's essential to ensure that these tools are used in conjunction with human expertise." As companies continue to explore the potential of generative AI, experts predict a significant shift towards more strategic work within the finance function. CFOs will be able to focus on high-value activities such as advising the business on financial strategy and driving growth. In conclusion, generative AI is transforming the finance function by automating mundane tasks and freeing up capacity for strategic work. As companies continue to invest in this technology, it's essential to ensure that these tools are used responsibly and in conjunction with human expertise. Sources: Deloitte Andrew W. Lo, Charles E. and Susan T. Harris professor and director of the Laboratory for Financial Engineering at the MIT Sloan School of Management *Reporting by Technologyreview.*