Why apply AI in your business?
What you need to know:
- Finance and accounting teams can use fintech tools to cut costs and streamline operations, delivering significant productivity improvements.
What is the big deal about fintech solutions? Financial technology (Fintech) aims at improving the traditional financial methods in the delivery of financial services. True, Fintech driven companies like Jumia have seen double-digit growth in transaction numbers and volumes during the pandemic, and the ensuing period. And digital banking surged during Covid-19, with 35 percent increase in consumers using online banking services more.
As businesses explore fintech’s potential, they find even more uses for it, uses that disrupt traditional business practices. Some finance and accounting teams also discover that fintech tools could help cut costs and streamline operations, delivering significant productivity improvements.
One way for finance teams to create efficiencies is through spend reconciliation, an area where innovation has been slow.
And in companies, spend reconciliation and payment authorisation is still highly labor-intensive, absorbing considerable amounts of accounting time, which could be automated by artificial intelligence (AI).
But fintech tools can automate much of these processes, such as the three-way matching necessary to approve incoming invoices from suppliers, as well as the more complex and highly fragmented area of travel and expense spend, with its proliferation of employees’ receipts for miscellaneous goods and services.
Fintech tools can also help provide greater visibility into what employees are spending, delivering control, real-time flagging of out-of-policy expenditures, and automated analytics. And tools that automatically link expenditure to individual employees and functions can greatly simplify and speed up time-consuming manual budget allocations.
The upsides don’t end there. During the pandemic, some financial services organizations invested heavily in artificial intelligence (AI) and natural-language processing to streamline their business even more. Chat AI that interprets customers’ questions and requests can help make companies’ financial professionals more efficient by automating tasks that involve answering basic questions about invoice payments and expense processing.
Organisations lose more than 5% of their revenue every year due to fraud. The typical fraud case causes a great loss to the company and lasts some time before detection. And lack of internal controls contributes to nearly one-third of all fraud cases. Unfortunately, fraud proliferates during recessions and times of economic instability. And the current recession is a “perfect storm” to facilitate fraud.
Here’s where fintech comes in. The AI and machine learning (ML) algorithms in fintech software are designed to understand the normal patterns of your company’s finances over time and then flag anything new or unusual for review. While a traditional, rule-based approach can weed out some fraud, it doesn’t offer the same level of sophistication as AI/ML. These tools can search and compare data over time to find questionable correlations or other anomalies.
Integrating fintech innovations into your business technology infrastructure may involve challenges such as the requisite data to connect, processes to design, workflows to alter, and trainings to conduct. But fintech generally takes much less time to implement than the multi-year projects familiar to those with experience in large Institutions project implementations.
Adopting fintech requires adopting new ways of working, a distinct break from traditional ways of processing payments, and a different way of setting and monitoring financial policies. Instead of paper forms and familiar purchase-to-pay screens, fintech adoption requires learning and engaging with new and different digital systems.
These new processes may be leaner and more efficient, but they require employees and managers to change old habits and think in a different way. Having organizational change-management skills is imperative and the sure future for business.
The same advantages the financial-services sector has already gained from adopting fintech tools may help streamline other businesses’ finance practices as well. It’s just one of the benefits that comes from partnering with a trusted fintech provider, who can deliver aptly.
The writer is a career banker.