A new research shows a growing confidence among business leaders that robots can handle finance tasks better than the finance team.
The research, done jointly by Oracle and personal finance expert Farnoosh Torabi, also reveals that the financial uncertainty created by COVID-19 pandemic changed who and what we trust to manage our finances, and is reshaping the role and focus areas of corporate finance teams and personal financial advisors.
“The year 2020 has changed people’s relationship with money, and people now trust robots more than themselves to manage their finances,” Torabi said.
Business leaders trust robots more than humans for finance
The study conducted across 14 countries including India found that the COVID-19 pandemic has increased financial anxiety, sadness, and fear among people around the world. Among business leaders, financial anxiety and stress increased by 186% and sadness grew by 116%; consumer financial anxiety and stress doubled and sadness increased by 70%, according to the study.
It showed that 90% of business leaders are worried about the impact of COVID-19 on their organization, with the most common concerns being a slow economic recovery or recession (51%), budget cuts (38%), and bankruptcy (27%). And these concerns are keeping people up at night.
In the top three areas where business leaders are trusting robots over their own finance teams, most believe that robots can improve their work by detecting fraud, creating invoices and conducting cost/benefit analysis.
“Robots are well-positioned to assist – they are great with numbers and don’t have the same emotional connection with money. This doesn’t mean finance professionals are going away or being replaced entirely, but the research suggests they should focus on developing additional soft skills as their role evolves,” said Torabi, who’s also the host of the So Money podcast.
“Digital is the new normal and technologies such as AI and chatbots play a vital role in managing finance. Various other studies have shown that the transition from human to robots was already happening in finance. A research by Ernst & Young shows that over half the CFOs polled in a survey believe that their current finance function is not equipped to meet the demands the future will place on it.
Is the finance team worried?
For some companies however, embracing automation is easier said than done. According to a survey, 95% of CFOs revealed that their finance teams feel anxious about the automation of processes. Also, 57% indicated that their team members were worried that automated solutions could replace their jobs. And that is a concern of many in the business world, not just those in finance.
However, despite this concern, 70% of CFOs realize that there are inherent risks with failing to modernize their finance function—citing the increasing challenge of meeting executive demands without automation.
Hesitation to adapt to this new way of working can severely hinder financial operations. According to the AI: Built to Scale study by Accenture, failure to scale AI and other allied technologies could put as many as 75% of organizations out of business.
But automation cannot be treated like an enemy in the digital world, including the finance functions. In ZipRecruiter’s Future of Work report, it was revealed that it has created three times as many jobs as it has destroyed. Plus, the World Economic Forum estimated that AI and automation would create 58 million new jobs between 2018 and 2022.
What should the CFO do?
Robots and automation already reshaping the future of work in the finance function, and the opportunity to boost performance will fuel the trend.
The main challenge lies with the CFO and adapting the finance team to a more strategic role within the organization. Perhaps, that’s what the Oracle study also tries to reflect. As Juergen Lindner, senior vice president, global marketing, Oracle, said, “Organizations that don’t embrace these changes risk falling behind their peers and competitors; hurting employee productivity, morale and well-being; and struggling to attract the next generation of AI-empowered finance talent.”
In this regard a PwC report also recommends how CFOs can lead this change:
- Set targets for outcomes and benefit. For example, what’s most important to your organisation? Efficiency, effectiveness, expansion or disruption?
- Directly involve frontline employees. Look for ways to bring finance experts together with data scientists to marry specialized expertise with technical ability.
- Define your areas of focus across people, processes and performance – How you integrate automation and AI should fit into a broader finance transformation strategy
- Put a governance structure in place, both for data and AI overall
- Prepare the workforce by reskilling and upskilling programs
We’ve already seen the rise of Collaborative Robots, or Cobots engineered to work alongside humans in manufacturing, aeronautics, food & beverages, pharmaceuticals and healthcare, and many more. In finance too, we may see a similar trait in the post-Covid era. Adapting to disruption is challenging, but CFOs who build a clear early perspective on the nuances of the automation journey will be well positioned to thrive.