AI and accounting: 30+ facts and figures
Is the corporate finance function ready for artificial intelligence? It’s already changing how we work, how we communicate, and how we live, and soon it could automate tasks and simplify finance team members’ lives for good.
And contrary to popular belief, AI likely won’t replace accountants and other finance professionals. The World Economic Forum predicts that finance teams will use AI to enhance their accuracy and efficiency, and that AI will create even more demand for high-skilled workers. So the faster teams adapt to AI tools and programs, the more resilient and hirable they’ll be.
What is artificial intelligence?
But let’s start with a definition. What exactly is artificial intelligence? Basically, it’s computer technology that mimics human thought processes or behavior, and shows that they’re capable of learning. Artificial intelligence is both a field of computer science and a tool.
AI can review, process, and extract much more data than a human can. These tools can also analyze this data and then make accurate predictions about future behavior.
With global spending on AI to exceed $301 billion by 2026, it’s clearly big business. Finance teams need to decide whether to embrace artificial intelligence, and how much to depend on it for both big and small projects.
We’ve rounded up over 30 facts and figures about artificial intelligence in finance, and specifically how it’s a game changer for accounting and finance teams.
The history of AI
While artificial intelligence may seem like a new concept, it’s actually been around for over half a century.
Alan Turing is considered the father of computer science. In the 1930’s, he conceived the idea of a machine that could learn from models and consequently modify its behavior. He was describing what we now think of as artificial intelligence.
Of course, Turing couldn’t put his theories into practice because computers themselves weren’t yet advanced enough. Humanity had to wait until the 1980s for computers to catch up to artificial intelligence concepts, where they could finally be put to the test.
Here are some more fun historical AI facts:
The term ‘artificial intelligence’ was first used in 1955. (Forbes)
MIT professor Joseph Weizenbaum invented the first chatbot, ELIZA, in 1966. But the term ‘chatterbot’ or ‘chatbot’ wouldn’t be coined until the 1990s. (Analytics India Mag)
The Japanese government was an early investor in AI technology, spending over $400 million throughout the 1980s on their Fifth Generation Computer Project. (Harvard)
In 1997, for the first time ever, a computer beat the reigning world chess champion, Gary Kasparov. It marked the beginning of a new era for AI capabilities. (AI Business)
Between 2015 and 2019, the number of companies using AI increased by 270%. (BusinessDIT)
It’s estimated that 35% of businesses use AI as of 2023. (BusinessDIT)
AI startup funding worldwide in Q1 2022 was 18 billion USD
AI and accounting
It’s no secret that artificial intelligence helps save finance teams hours’ worth of time on accounting tasks each month. From budgeting to forecasting to invoices, AI technology for finance professionals is developing at breakneck speed. In fact, 22% of accounting firms confirmed that AI helped automate tasks and improve business operations.
Budgeting and forecasting
The biggest potential use for AI in the finance function at the moment is for budgeting and forecasting tasks, because they require so much data.
Using AI forecasting models could result in reducing errors to less than 5%. (Paro)
AI forecasting can automate up to 50% of workforce-management tasks for companies in telecommunications, electric, and healthcare industries. (McKinsey)
Only about half of organizations have implemented AI in their FP&A processes. (IBM)
Invoices and AP
Invoicing and accounts payable tasks can also be automated and aided by artificial intelligence, especially for data extraction.
Manual data entry costs about $2-$4 per invoice on average, but using an AI tool for invoices can reduce this cost to about $.045. (Docsumo)
OCR, or Optical Character Recognition technology, automatically extracts important data from invoices and saves finance teams hours’ worth of manual work every month. (Spendesk)
Up to $28 billion can be saved within the next ten years by using AI to complete e-invoicing systems. (Global Banking and Finance)
AI and corporate finance
33% of fintech companies develop their own in-house AI technologies. (Analyzing Alpha)
AI could reduce the need for lower-skilled jobs by over 50%. (Gitnux)
The Covid-19 pandemic increased the use of artificial intelligence in the finance sector. (OECD)
AI and banking
Perhaps surprisingly, banks were early adopters of artificial intelligence tools. In fact, it was way back in the 1980s when banks first started using AI.
Banks are on track to save $447 billion thanks to AI applications by 2023. (Insider Intelligence)
77% of financial institutions have implemented or plan to implement AI to improve client communication. (Gitnux)
The financial services industry will spend over $10 billion on AI in 2023. (Dataiku)
Banks and financial institutions have started to implement artificial intelligence in their fraud detection processes.
Banks are increasingly using AI to track and catch financial crime and fraud cases: 56% of financial services companies use artificial intelligence for risk management. (Business Insider)
Machine learning algorithms achieved up to 96% accuracy in reducing fraud for ecommerce businesses. (Seon)
AI is great for predicting patterns and detecting irregularities, reducing the risk of fraud. (Business.com)
AI and personal finance
Think that artificial intelligence only affects people working in finance? Think again! Everyday people encounter AI on a daily basis, especially when they interact with their bank.
Most personal banking clients already interact with AI without knowing it; most banks use AI and natural language programs to power their client-facing chatbots, such as Capital One’s Eno. (Insider Intelligence)
Younger banking clients try to avoid going into physical banks. 78% of millennials don’t go into banks if they can help it. (Insider Intelligence)
Emerging AI technology for personal finance can help individuals make better spending decisions. (Wired)
Use AI to your advantage
AI hasn’t completely taken over the finance department…yet. While artificial intelligence has made amazing strides in accounting and finance tasks, there’s still a need for human decision-making, teamwork, strategy, reflection, and critical thinking skills in the finance function.
Actually, banking clients prefer a hybrid model: 68% of wealthy clients like to have access to both a human advisor and a robo-advisor instead of just one or the other for investment advice, according to Accenture.
But there’s always room for improvement. Learn to work in harmony with automated solutions to increase your finance team’s efficiency. We have a free guide on how to make your accounting processes more efficient in just six steps. Download it here: