FP&A teams have a lot to handle: endless spreadsheets, tight deadlines, and the constant juggling act of answering every question the business asks. Luckily, AI software for finance is becoming more accessible to finance teams everywhere and helping to solve these challenges.
What Is AI in Finance?
AI in finance refers to the application of machine learning and advanced algorithms in financial processes to automate tasks, enhance forecasting, and support data-driven decisions. The generative artificial intelligence market in banking and finance is projected to grow from $1.29 billion in 2024 to $21.57 billion by 2034, representing a CAGR of 31.64%.
Leveraging technology in FP&A isn’t a new concept. It started with the 1st generation of on-premise solutions, moved to the cloud with sophisticated 2nd generation planning tools, before bursting out of the spreadsheet with 3rd generation FP&A platforms.
How does the 4th generation of AI in finance look like?
It’s the dawn of AI software for finance in everyday use by FP&A teams, reducing business risks, delivering more accurate insights, and making your work life easier and more productive.
Challenges & Best Practices
When implementing AI in finance, data privacy and regulatory compliance are top considerations. Organizations should ensure they handle finance data governance properly, storing sensitive financial information securely while adhering to relevant legal requirements.
It’s also crucial to acknowledge and mitigate potential algorithmic bias. Regular audits, transparent AI models, and continuous monitoring help maintain fairness and accuracy while establishing AI financial modeling best practices that build trust.
1. Automate Mundane Tasks
A significant amount of time is used up by repetitive tasks like data entry, report generation, and basic analysis. But the latest generation of FP&A tools are starting to embrace AI software that automates these mundane tasks. Now, in just a few clicks, you can:
Pull operational data from your CRM, HRIS or BI tool
Clean, sort and map the data instantly
Generate detailed reports
When you can do more basic tasks, faster, you increase productivity without putting any additional pressure on an already demanding schedule. Crucially, using AI in this way frees up your time to focus on more strategic, value-added activities that drive business forward.
Did you know that… two-thirds (66%) of finance professionals believe AI will save between 50 and 200 hours of work annually, enabling them to focus on more strategic activities.
2. Generate Strategic Insights
It’s one thing to sort, model, and clean up data. But analyzing and presenting that data in a way that’s useful to the rest of the business is another matter entirely. JP Morgan Chase generated $1.5 billion in annual business value through comprehensive AI implementation across their operations.
The good news is that AI is bridging the gap between raw data and strategic insights quickly. A modern FP&A platform like Abacum uses AI to:
Analyze raw business data
Find clear trends and correlations
Write a detailed analysis for you
With AI taking care of the heavy lifting, you can identify new business opportunities, optimize resource allocation, and improve overall financial performance. This puts you in a stronger position to embrace finance business partnering, armed with the deep insights into business operations that you need to contribute to the organization’s strategic goals.
3. Real-Time Risk Mitigation
Until recently, most teams have had to wait until month-end to spot any red flags and respond, which can significantly increase the cost of those risks. With AI, you have real-time analytics at your fingertips, providing you with up-to-the-minute insights.
FP&A solutions are now building the capacity to generate new forecasts based on simple data inputs. Approximately 70% of trading volumes in 2023 were executed using AI algorithms, with this figure expected to increase further. Abacum’s AI auto-forecasting handles complex scenarios and large datasets faster – and more accurately – so you can meet this rising demand.
No more waiting for end-of-month reports to make informed decisions. Automated financial reporting ensures finance teams stay proactive and responsive. Now, you can use AI to spot trends, identify issues, and make decisions much earlier, keeping your organization agile and responsive.
4. Enhanced Forecasting
Forecasting is the bread and butter of FP&A, but traditional methods can be time-consuming and often lack precision. There’s only so much time in the week, but demands for different forecasts from stakeholders increase every quarter.
FP&A solutions are now building the capacity to generate new forecasts based on simple data inputs. Abacum’s AI auto-forecasting handles complex scenarios and large datasets faster – and more accurately – so you can meet this rising demand.
Crucially, auto-forecasting uses machine learning models to optimize your forecasts based on historical data. This allows you to create more accurate forecasts, free of common biases that lead to over-committing or under-promising to align with broader business goals.
Use Cases of AI in Finance
AI software is already widely used to detect fraudulent transactions in real time, allowing organizations to minimize risk and protect customer data.
Credit scoring algorithms powered by AI provide quick, objective assessments, streamlining lending processes while reducing biases.
Advanced analytics can also support algorithmic trading, enabling data-driven decisions at high speed with improved accuracy.
Embracing AI in Finance Right Now
AI is no longer just a buzzword. It's a powerful tool that, when used in the right way, can transform the way FP&A teams operate on a day-to-day basis. Unlock the power of AI software to automate routine tasks, enhance forecast accuracy, provide real-time analytics, and deliver strategic insights.
There’s no denying a popular narrative of “will AI take my job?” But AI isn’t your competition. In reality, knowing how to leverage AI to be more productive and effective in your role will become your competitive advantage.
Whether you’re a seasoned finance pro or an FP&A newcomer, AI is set to be your secret weapon. It’s time to stop wondering about the future of AI and to start leveraging the tangible, practical uses of AI right now in FP&A. Find out how Abacum Intelligence takes your FP&A team to the next level, with the 4th generation of FP&A. Request a demo
