Bajpai explains how the future of the CFO role will evolve with technologies like AI and RPA and financial information will become more visually intuitive for all stakeholders to act upon
The article has been written by Alok Bajpai, Head, Finance, NTT Ltd. In India
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Traditionally, the role of a CFO was focused on maintaining the financial records, managing budgets, tracking revenue and profits, managing risk and on focusing on investments that ensure growth. However, CFO’s role and criticality in any organization have evolved and grown exponentially with time. This change is primarily due to the changing industry trends and challenges and more so from the rapid and pervasive digitization of every aspect of business and our economies. Hence, the finance function and of course the CFOs needs to not only align but also exploit, the technological transformation to themselves and their businesses’ advantage.
With the huge availability of data, and now the technological ability to process them efficiently and with speed, the CFOs are best placed to lead this digital transformation within their organizations and process data more intelligently, helping them and other leaders to strategize better while improving performance.
The forecasting prowess of AI
The COVID-19 pandemic’s impact on the future is still not fully clear. But one thing is clear – no organization can afford to just wait and watch. To stay ahead of the curve, CFOs will need forecasting and scenario modelling tools to base their strategies and financial decisions – more so now when the future may not be so easily predictable through the conventional models.
With the help of data analytics, CFOs have been better managing scenarios like raw material shortage or supply chain shocks or just in time inventory. Rather than only looking at static or historical data, most CFOs are leveraging the power of predictive analytics to better predict outcomes, understand hidden risks and explore untapped opportunities.
Artificial Intelligence is another transformational technology that can help CFOs visualize multiple alternative scenarios by aggregating and analyzing huge amounts of data. As AI algorithms keep on learning and unlearning, it can help CFOs improve the speed and accuracy of forecasting. AI can also be used effectively for quick and accurate financial reporting – which is not only a statutory requirement but is also vital for taking decisions for running the business. Most importantly, AI can be used to cut down risk, and identify fraud quickly. Using natural language processing, AI can sift through large volumes of unstructured data and provide the real-time status of financial transactions.
RPA is another promising technology that is increasingly being used by CFOs to automate a host of finance-related processes and tasks. One important task is the automation of P&L reporting, which is particularly useful in providing periodic business-critical reports to the management. RPA can also play a big role in ensuring compliance through the ability to scan through multiple contracts and documents and comparing it with the required regulatory norms.
A More Cognitive Role
This evolution in the way finance technologies will continue and grow and the CFO’s function will become more cognitive, led by automation, and this may mean that routine tasks will be done by bots leaving only more complex tasks to human beings. Finance functions will create financial reports on demand, based on real-time data, thereby making traditional cycles and time periods, increasingly less relevant. Self-service will become the norm, rather than an exception. This will encourage every business stakeholder, beyond the finance function, to have the ability to create relevant reports for themselves, again in real-time.
Financial information – hitherto considered esoteric by few – will be more visually intuitive and easy for stakeholders to understand and act upon. CFOs will continue to use technology to provide just that – more efficiently and more smartly.
Disclaimer: The views expressed in the article above are those of the authors’ and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.