Why AI, Blockchain, and Hyper Automation are the Future of Finance

Gartner
16 Sept 202204:44

TLDRThe future of finance is autonomous, driven by AI, blockchain, and hyperautomation. This shift will revolutionize corporate finance by making decision-making predictive and prescriptive, based on real-time data. Companies will need to adapt, with CFOs reorganizing financial functions to embrace this efficiency. The challenge lies in overcoming our mindset and embracing technology, as broad experimentation is key to unlocking the full potential of autonomous finance, leading to significant cost reductions and a more strategic role for finance in the enterprise.

Takeaways

  • 🚗 Future road trips will be fully autonomous, with no need to touch the steering wheel.
  • 🤖 Autonomous finance will be driven by AI, blockchain, and hyperautomation, changing the way finance operates.
  • 📉 The cost of finance is expected to decrease by nearly 40% due to these technological advancements.
  • 🔮 Finance departments will need to become more predictive and prescriptive, relying on real-time data streams for decision-making.
  • 🔄 Companies must adapt to these changes, or risk falling behind, as seen with the example of the retailer missing earnings due to slow book closing.
  • 🤔 There is a trust gap between human-based forecasts and AI-based forecasts, with finance organizations demanding less variance from AI.
  • 💡 To fully embrace autonomous finance, a shift in mindset is required, including a willingness to experiment with new technologies.
  • 📈 Broad experimentation, rather than incremental changes, will lead to compounding effects and faster adoption of autonomous finance practices.
  • 📊 CFOs who are actively learning and experimenting are the ones achieving the most in the transition to autonomous finance.
  • 🚀 The goal is to free CFOs from routine data collection and analysis, allowing them to focus on strategic initiatives and growth opportunities.

Q & A

  • What is the future scenario described in the script involving a road trip in California?

    -The future scenario involves a time when autonomous driving technology has advanced to the point where passengers are surprised that people once had to touch the steering wheel to drive.

  • How will the finance function change in the future according to the script?

    -The finance function will become autonomous, with staff in the future questioning the need for manual processes like touching the steering wheel, running models, and dealing with variances in the past.

  • What are the three major technologies revolutionizing corporate finance?

    -The three major technologies are artificial intelligence, blockchain, and hyperautomation.

  • Why is the finance function particularly suitable for autonomy?

    -Finance is suitable for autonomy because it involves numbers, code, and rules that can be automated and managed through technology.

  • How will companies benefit from autonomous finance in terms of predictive capabilities?

    -Companies will be more predictive in managing inventory, staffing, pricing, and global supply chains, making decisions based on a constant stream of data rather than just efficiency.

  • What is the predicted cost reduction for finance in the coming years?

    -The predicted cost reduction for finance is nearly 40% in the coming years.

  • What was the issue faced by the large retailer mentioned in the script?

    -The large retailer missed their earnings because they couldn't close their books quickly enough to adapt to changes mid-quarter, leading to incorrect ordering of goods and services.

  • What is the variance acceptance for human-produced forecasts in finance organizations?

    -Finance organizations accept a 10% variance in forecasts produced by humans.

  • How does the variance acceptance differ for AI-algorithm-based forecasts?

    -For AI-algorithm-based forecasts, the variance acceptance is only 5%.

  • What is the biggest barrier to adopting autonomous finance technologies?

    -The biggest barrier is the mindset, which needs to be open to trusting and experimenting with new technologies.

  • What is the importance of broad experimentation in the finance function?

    -Broad experimentation allows CFOs and leadership teams to quickly learn where artificial intelligence is effective and scale those learnings across the finance function, leading to compounding effects and growth.

  • How does the script differentiate between automation and autonomy?

    -Automation is a simple task like checking a heart rate on a smartwatch, while autonomy is a more advanced intervention, like an ambulance pulling up to prevent a heart attack.

Outlines

00:00

🚗 The Future of Autonomous Finance

This paragraph envisions a future where autonomous technology revolutionizes the finance function, making tasks like steering a car or closing financial books seem archaic. It highlights the transformative impact of artificial intelligence, blockchain, and hyperautomation on corporate finance. The narrative emphasizes the need for companies to adapt to predictive and prescriptive decision-making based on continuous data streams, predicting a significant reduction in finance costs. It also discusses the challenges of adopting new technologies and the importance of a mindset shift towards broader experimentation and trust in technology to achieve autonomous finance.

Mindmap

Keywords

💡Autonomous Finance

Autonomous finance refers to the use of advanced technologies to automate and optimize financial processes within an organization. It aims to reduce human intervention, increase efficiency, and enable real-time decision-making based on data. In the video, autonomous finance is presented as the future of finance, where tasks like bookkeeping and forecasting are handled by AI and other technologies, allowing finance staff to focus on strategic tasks and integration with the rest of the organization.

💡Artificial Intelligence (AI)

Artificial Intelligence is the simulation of human intelligence in machines that are programmed to think and learn. In the context of the video, AI is a key component of autonomous finance, used to analyze data, make predictions, and generate forecasts with a higher degree of accuracy than human analysts. The video suggests that AI can significantly reduce the variance in financial forecasts, leading to more reliable decision-making.

💡Blockchain

Blockchain is a decentralized, digital ledger that records transactions across a network of computers in a secure and transparent manner. In the video, blockchain is mentioned as one of the three major technologies revolutionizing corporate finance, although its specific application within autonomous finance is not detailed. However, it implies that blockchain could play a role in ensuring the integrity and security of financial transactions and data.

💡Hyperautomation

Hyperautomation is the use of advanced technologies, including AI, machine learning, and robotics, to automate complex business processes at scale. The video positions hyperautomation as a driving force behind autonomous finance, suggesting that it will enable finance functions to operate more efficiently and with less human intervention, leading to cost savings and improved decision-making.

💡Predictive and Prescriptive Analytics

Predictive analytics uses historical data to forecast future outcomes, while prescriptive analytics goes a step further by suggesting actions based on those predictions. In the video, these analytics are crucial for autonomous finance, allowing companies to make informed decisions about inventory, staffing, pricing, and supply chains based on a continuous stream of data.

💡Cost Reduction

The video predicts that the cost of finance will significantly decrease due to autonomous finance, with a nearly 40% reduction in the coming years. This cost reduction is expected to result from the increased efficiency and automation of financial processes, leading to a reorganization of finance functions and a shift in how work is done within organizations.

💡Mindset Shift

A mindset shift refers to a change in the way people think or perceive things. In the video, it is emphasized that finance professionals need to adopt a new mindset that embraces technology and experimentation. This shift is necessary for organizations to fully realize the benefits of autonomous finance and to keep up with the rapid pace of technological change.

💡Variance

Variance in finance refers to the difference between actual results and expected outcomes. The video highlights that finance organizations traditionally accept a 10% variance in human-generated forecasts, but this is reduced to 5% when using AI-based forecasts. This indicates a higher level of accuracy and trust in AI technology for financial forecasting.

💡Broad Experimentation

Broad experimentation involves trying out new technologies and processes across various aspects of a function to understand their effectiveness and potential impact. The video encourages CFOs and their teams to engage in broad experimentation with AI and other technologies to quickly learn and scale successful initiatives throughout the finance function.

💡CFO (Chief Financial Officer)

A Chief Financial Officer is the executive responsible for managing the financial operations of an organization. In the video, CFOs are portrayed as key figures in the transition to autonomous finance, needing to lead the reorganization of finance functions and integrate with the rest of the C-suite to drive the enterprise forward.

💡ESG (Environmental, Social, and Governance)

ESG refers to a set of standards for a company's commitment to environmental concerns, social well-being, and ethical governance. The video suggests that autonomous finance can help organizations establish and improve their ESG outcomes by enabling them to make more informed and strategic decisions that align with these values.

Highlights

The future envisions a time when autonomous driving will be so advanced that passengers will be surprised by the past need to touch the steering wheel.

The finance function will undergo a similar transformation, with staff in the future questioning the need for manual processes that are currently standard.

Autonomous finance is driven by three major technologies: artificial intelligence, blockchain, and hyperautomation.

Finance is particularly suited for automation due to its nature of numbers, code, and rules.

Companies need to be predictive in their inventory, staffing, pricing, and global supply chains due to economic challenges.

Autonomous finance is about making decisions based on a constant stream of data, not just efficiency.

The cost of finance is predicted to decrease significantly, nearly 40%, in the coming years.

CFOs and leadership teams will need to reorganize core finance functions to adapt to these changes.

A large retailer missed earnings due to slow book closing, which affected their ability to respond to market changes.

Finance organizations traditionally accept a 10% variance in human-made forecasts but only 5% in AI-based forecasts.

The biggest barrier to adopting autonomous finance is our mindset and willingness to trust technology.

Broad experimentation with technologies like AI is necessary for compounding effects and learning.

CFOs who learn and experiment widely are achieving more in the transition to autonomous finance.

Starting incremental changes can lead to falling back into old ways, so broad adoption is crucial.

The technology for autonomous finance is mature, and the focus should be on learning and experimenting.

Autonomous finance will free CFOs from the daily tasks of data collection and analysis, allowing them to focus on strategic initiatives.

Autonomous finance will enable integration with the rest of the C-suite, driving the enterprise and finding new opportunities.

When decisions are automatically made and presented, the role of finance becomes much more interesting and impactful.

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