It wasn’t long ago that cloud technology was emerging as a potential disruptor to most industries. In the beginning, many didn’t foresee that cloud adoption would become so widespread, but now it’s becoming the standard. All startups and new business ventures are setting up cloud platforms during the formation period of their business. In most cases, entrepreneurs are opting for an accountant or bookkeeper that is well versed in connected applications (another great bi-product coming from our innate ability to reconcile!).
It’s not only startups, we’re also seeing well-established businesses choosing to make the switch away from desktop software. I guess everyone is in favor of avoiding multiple file versions and irreconcilable opening balances.
Now, there is chatter amongst a wide range of industries that we are facing an even larger potential disruptor: artificial intelligence (AI) and machine learning.
While the world continues to rationalize blockchain, AI and machine learning is providing practical solutions to industry frustrations.
As I shared at our first Canadian Roadshow, we are at another inflection point in accountancy. AI and machine learning is already powering the technology we use in our everyday lives. Software innovators are working through the many ways to effectively implement AI and machine learning to their platform’s user experience.
A new report by Asian broking firm CLSA studies six sectors that will see material changes where AI and machine learning may cause some disruption, highlighting short-term growing pains in the tech and accounting professions. It says that while we won’t reach broad adoption of AI-powered systems without a few bumps in the road,
“truly capable AI will be the most important development in all of human history.”
Machine learning systems have been making our lives easier for longer than we might realize. Typing the beginning of a query into Google and having the remainder anticipated is a product of machine learning. Suggestions from Netflix on what to watch next are also products of machine learning. When Facebook is able to recognize a friend in a photo we have uploaded, it’s another instance where machine learning has played a part.
In cloud accounting platforms, machine learning systems are already working in the background. Xero is applying machine learning principles to overcome the challenges faced by business owners and their trusted advisers.
For example, when business owners create an invoice, account codes can be automatically suggested which enables the majority of the reconciliation process to be predictable. From the adviser’s perspective, in addition to reducing the risk in an engagement with a client, this also saves us valuable time cleaning up any coding errors from manual entry.
Within the firm or practice itself, effective use cases of AI and machine learning include improving management frameworks for capacity planning, prioritization, job management and task delegation.
The Economist reports that AI-based systems are cutting the hours it used to take lawyers and loan officers to review contracts in the finance industry. Last year, JPMorgan Chase deployed natural-language processing software to sift through 12,000 commercial-loan contracts, reducing the time taken to do so by humans from 360,000 hours to seconds.
Assurance leaders at PwC envision a future where, with 100 percent of data available for analysis, as opposed to select samples, auditors will be able to study a business in its entirety. It’s only a matter of time before this technology is available in the accounting industry below the enterprise level.
CLSA’s report contends that a world where humans and AI are “bound together in a constant exchange of information and goals” is around the corner. By identifying the technology implementable in your firm that will help you and your teams, you can unlock capacity on a per client and per staff member basis. What you choose to do with that new capacity is entirely up to what your strategic priorities are for the practice.
Remaining up-to-date on technology developments to identify the best solutions for your firm is a powerful step forward to show customers and clients that you are capable and willing to inform them on how to leverage modern technology in their business. There is significant opportunity for firms to commercialize the inherent ability of finance professionals to connect and reconcile data points across business systems.
As we’ve said with cloud, with change comes opportunity. Advice is what has always set humans apart from technology, and we can continue to capitalize on this trait in our approach towards empowering our teams and our clients.