New research from International highlights the remarkable integration of artificial intelligence (AI) in finance functions, showcasing significant returns on investment (ROI) and a variety of benefits like improved data quality, faster insights, reduced costs, and enhanced operational efficiency.
Key Findings
- High ROI Expectations: 57% of finance leaders report that their ROI from AI initiatives exceeds expectations, compared to just 29% of their peers.
- Diverse Applications: While financial reporting remains the most prevalent use of AI, its application is expanding to include treasury management, risk management, and tax functions.
- Responsible AI Usage: Nearly 75% of leaders have established principles and guidelines for the responsible use of AI in their organizations.
The report reveals that organizations are leveraging machine learning, deep learning, and generative AI, with many reporting that their ROI from these technologies is meeting or surpassing their expectations. This research, which surveyed 2,900 organizations across 23 countries, builds on earlier findings from 1,800 organizations in 10 countries. A maturity framework categorizes respondents into three groups: 24% are classified as Leaders, 58% as Implementers, and 18% as Beginners.
Growing AI Deployment and Focus on Generative AI
Currently, 71% of organizations utilize AI in their financial operations, with 41% applying it to a moderate or large extent. This figure is expected to rise to 83% within the next three years. Since the first research wave, the adoption of traditional AI has increased from 40% to 45% in the original 10 countries surveyed.
Generative AI is also gaining traction, with the percentage of companies not planning to use it dropping from 6% to just 1%. A significant 95% of leaders and 39% of other respondents anticipate adopting generative AI selectively or widely in financial reporting over the next three years.
Global Adoption Patterns
The research underscores the widespread use of AI across the globe. While companies in the US, Germany, and Japan lead in AI adoption, countries like Italy and Spain lag behind. Similarly, in emerging markets, China and India are at the forefront, while Saudi Arabia and several African nations are still catching up.
For CFOs and finance departments, building AI capabilities has become essential in today’s digital landscape. It is crucial to recognize AI as a capability rather than just a technological product. Organizations must embark on their AI journey to enhance their capabilities effectively.
Transforming Financial Reporting
AI is revolutionizing financial reporting by enhancing accuracy, efficiency, and providing real-time insights. This trend enables predictive analytics and data-driven decision-making. Upskilling and retaining talent is vital during this transformation, and organizations must prioritize continuous learning to equip their workforce with the necessary AI skills, fostering innovation and adaptability for sustainable growth.
AI Usage Across Finance Functions
AI is being adopted in various areas of corporate finance. Financial reporting is the most common application, with nearly two-thirds of companies piloting or using AI for reporting, accounting, and financial planning. Additionally, nearly half of organizations are implementing AI in treasury and risk management, leading to improvements in debt management, cash-flow forecasting, fraud detection, credit risk assessment, and scenario analysis. However, tax management lags, with less than one-third of companies currently using AI in this area, although about half are in the planning stages.
Leadership in AI Adoption
Leaders are significantly ahead, with 87% utilizing AI in finance to a moderate or large extent, compared to just 27% of others. Leaders are rapidly advancing, having developed an average of six AI use cases, almost double that of other organizations. Key areas of focus include research and data analysis (85%), fraud detection and prevention (81%), predictive analysis and planning (78%), and using generative AI for document creation (75%).
Common challenges faced by companies include data security vulnerabilities (57%), limited AI skills (53%), inconsistent data gathering (48%), and costs (45%). However, leaders are better equipped to navigate these hurdles, facing more advanced challenges such as integrating AI with existing tools and overcoming staff resistance.
Achieving ROI and Benefits
As AI adoption in finance expands, organizations are reaping increasing benefits. Initial implementations yield two to three benefits, while leaders report an average of seven benefits from their AI strategies.
The potential for ROI rises with increased AI usage, with 57% of leaders indicating that their ROI exceeds expectations, compared to nearly one-third (29%) of less advanced adopters.
AI is reshaping the finance function, creating both opportunities and challenges. Robust AI governance is crucial for meeting regulatory requirements and ensuring ethical usage.
