Artificial Intelligence or AI is defined as the capacity of machines and software to exhibit or imitate a sense of cognitive intelligence. The idea behind AI holds great potential and yet also raises many concerns. In fictions, scientific and otherwise, developing AI tools and applications, capable of thinking, learning and, reacting like living beings doesnt end very well. But in the real world, the concerns it generates are not that grave but does, however, pose the threat of a revolutionary disruption trend similar to that of cloud accounting.
There is no need to deny the fact that AI can become an invaluable business enhancement tool in professions where significant training is a necessary prerequisite. Professions where technical precision and right-minded judgments are necessary such as accounting also has great scope for AI applications. In fact, a report from Deloitte states that in the very near future, AI could help develop a whole new paradigm of services, and product, creating a whole new market with huge investor profits.
Niche business areas like customer service, research and development, logistics, sales, and marketing also have great potential for AI applications. Although AI as a technology is still in its infancy, a report from the European Commission states that the global market for AI and AI applications grew from 700 million in 2013 to 27 billion by the end of 2015.
Similar to the cloud accounting disruption in the industry a few years earlier, accountants and the accounting industry in general, will again have to rethink their profiles and services as stated by Dr. James Canton. That being said, does AI pose a threat to accountants who can’t keep up with time and technology or doesnt it? Read on to find out more.
A Learning & Evolving Machine
An accountant’s daily obligations usually include obeying archaic data analysis and report generation methodologies. Although there are many specialized software tools to help automate such data-centric tasks for accounting, tax, and auditing, human accountants are still needed to verify and review such data according to the aforementioned traditional methods.
AI, on the other hand, can potentially change this entire aspect of the accounting profession. The Association of Chartered Certified Accountants claims in one of their reports that AI-powered automation will soon eliminate almost all tedious and cumbersome data related tasks like bookkeeping and transaction coding. This will further help accountants to focus on more advisory services and other high-value tasks. Logically this should create a situation where the business value of accountants and their advisory services increases many times over.
However, according to The Economist, AI and its integration within the accounting profession has a 94% chance to cause job losses, in the nest couple of decades.
Artificial Governance
Intelligent machines with AI will be able to ensure compliance with the numerous rules, regulations, and organizational policies. It can also evaluate employee performance and influence HR decisions. Some might even think that AI may invade human privacy by analyzing human behavior and lifestyle patterns through its ‘machine learning’ prospect.
The Economist defines ‘machine learning’ as sentient programming which allows computers or machines in general, to understand things by rewriting rules and codes which the human programmers cannot. This raises the question of how AI creates the balance of black and white data and human-like empathy while making its decisions.
Machines as Financial Guardians?
All industries require professionals who act in both financial and legal aspects and shoulder significant financial onus. They are usually very skilled and experienced employees, but being human, they are therefore prone to misconceptions, biases and other human errors. Machines and computers with sophisticated AI capabilities can someday take over such financial roles as they are not prone to such human errors and become more effective fiduciaries than their human counterparts. This aspect of AI implementation is highly attractive for public trust funds like medical research, parks, educational institutes, etc., by ensuring long-term continuity and adherence to the original mandates.
Automated Management
It is no mystery that proper implementation of AI would result in improved productivity and excellent resource management. Accountants all over the world are already using multiple software tools from CRM systems to business process management tools, to make better-informed decisions. As the technology of AI keeps on advancing each day, more accounting automation avenues also keep popping up. Deloitte recently shared a paper discussing “What artificial intelligence can do for your business“, and how the cognitive abilities of AI can help businesses generate more business insight and reduce expenditures.
Intelligent Investments
AI backed investment management or “automated wealth managers” according to The Economist, are more likely to offer sound financial advice without having to bring aboard a full-time advisor. The reactive cognition based benefits of AI has piqued the interest of the global investment community as well. Bridgewater Associates, one of the biggest hedge fund managers in the world, have already developed AI backed trading algorithms, which are capable of predicting market trends based on historical and statistical data.
While such AI systems will allow for greater competitive advantages for individual investors, it still however also poses a great threat to the market. If every investor out there is armed with such AI systems, it might have significant detrimental effects on the entire market as it will greatly influence capital flows and macroeconomic policies. Quicker AI backed trading decisions can ultimately offset entire industries and markets.
Consider the Runaway Effect
It is highly logical given the cognitive abilities of AI systems, that they might, at some time in the future, generate autonomous knowledge/data. Programming codes and algorithms, originally designed to ensure optimal system efficiency, could give rise to negative situations.
This effect, known as the ‘Runaway effect’ which causes the very things we sought to fix or solve to go south on us and do even greater harm. With AI, the runaway effect, if ever present will create more problems than it solves and judging by the current level of AI sophistication, the day where AI can be relied upon to mitigate all negative outcomes is still quite far away.
Threat or Opportunity
As Alan Turing, one of the forefathers of modern computing, once stated in his paper Computing Machinery and Intelligence, that we may hope that machines will eventually compete with men in all purely intellectual fields. AI with all of its recent developments and advancements has somewhat come of age and is already automating/eliminating jobs in banking, law, and many more industries. But accounting has always welcomed technology and has already found ways to make AI beneficial for the profession.
With that being said, the accounting industry is sure to be next on the AI hit list. But with the cloud accounting disruption trend as an example, we can surely say that AI will bring about another revolution in the industry, which doesnt put accountants out of work, but actually helps them and their services gain more business value and efficiency.
