By Mark Bodger, Director at ICit Business Intelligence
AI is not just a tool; it’s a transformative force that empowers finance professionals to be more strategic, efficient, and impactful.
Financial planning and analysis (FP&A) professionals are the backbone of financial decision-making in businesses today, transforming complex financial data into actionable insights. However, recent advancements in artificial intelligence (AI) and machine learning (ML) are set to evolve the FP&A function, promising new efficiencies and transforming how finance teams operate.
With 71% of CFOs planning to increase spending on AI year-over-year according to Gartner, the case for AI in finance is undeniable. Businesses that adopt AI-driven FP&A tools are well- positioned to gain a competitive edge by automating time-consuming processes, reducing errors, and unlocking faster, more strategic insights to help guide them to growth. We recently conducted a survey into AI’s impact on FP&A, taking a look under the hood of how finance professionals can benefit from this technology, as well as the potential challenges and considerations potentially on the horizon.
The Rise of AI in FP&A
The recent study, which questioned over 300 UK FP&A professionals, highlighted the fast-growing adoption of AI and ML in the finance sector, with more than 85% of respondents already using FP&A software with AI or ML capabilities. These tools are already proving invaluable in areas such as financial forecasting, anomaly detection, and data analysis. AI’s ability to sift through vast amounts of data in real time helps finance teams quickly identify trends, understand variances, and make informed decisions—tasks that previously required hours of manual effort. However, despite widespread use, many organisations are still navigating the steep learning curve associated with these technologies. Some 22% of respondents admitted they were unsure of the AI capabilities embedded in their FP&A software, suggesting that greater awareness and training are needed to maximise the technology’s potential.
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AI’s Business Benefits in FP&A
The benefits of AI in FP&A are multifaceted, impacting not only efficiency but also strategic foresight. AI’s ability to automate routine tasks has been transformative, with 66% of respondents indicating that these tools save between 50 and 200 hours of work annually. This newfound efficiency enables finance teams to shift their focus from repetitive tasks to high-impact strategic activities such as budgeting, forecasting, and scenario planning.
Moreover, the impact of AI on forecasting accuracy is particularly significant. A 2022 McKinsey study found that advanced analytics can improve forecasting accuracy by up to 50%, a figure that has direct implications for strategic decision-making and could lead to cost reductions of 10 to 15 percent. By offering real-time insights and reducing the margin for human error, AI-driven FP&A systems strengthen stakeholder trust, with our study highlighting that 67% of finance professionals affirming that AI is essential for building confidence with senior leaders. Larger enterprises, which often have more complex financial requirements, are experiencing especially significant returns on AI investments. Half of the large companies reported annual savings of £50,000 to £100,000, a testament to AI’s scalability in finance.
The Challenges of AI Adoption in FP&A
Despite AI’s promise, several challenges remain. Data privacy is a top concern for 67% of finance professionals we surveyed, particularly given the sensitive nature of financial information. Organisations must prioritise data governance and regulatory compliance to ensure that AI systems handle data securely. This is crucial not only for protecting sensitive information but also for maintaining stakeholder trust.
There are also concerns about human oversight. While AI can deliver highly accurate insights, it often lacks the contextual awareness that comes naturally to human analysts. This limitation emphasises the need for a collaborative approach, where human judgement complements AI-driven analysis. Relying solely on AI-generated insights without considering broader business strategies or external factors can lead to misguided decisions.
Moreover, AI adoption presents practical hurdles. Many finance professionals are still building confidence in the reliability of AI technologies. This underscores a gap that finance leaders must address by investing in training, fostering a culture of continuous learning, and demonstrating the tangible benefits of AI tools.
A Strategic Differentiator
As companies across the world adopt AI, the competitive advantages become clear. AI-driven FP&A teams are better equipped to respond to market changes and make quick, data-driven decisions. The World Economic Forum suggests that companies integrating AI into their operations will outperform their peers in decision-making speed and accuracy, which is essential in today’s fast-paced business environment.
AI also plays a key role in attracting and retaining talent. Finance professionals are increasingly drawn to roles that leverage cutting-edge technologies, and our study shows that 65% of respondents believe companies with AI-powered FP&A functions are more likely to retain top talent. In a competitive job market, this is a strategic advantage, positioning these businesses as leaders in innovation and technology-driven decision-making.
Practical Advice for AI Adoption in FP&A
Finance leaders must adopt a balanced strategy as they integrate AI in and across their daily work. Some advice that could make this transition smooth includes:
- Investing in Training and Doing it Fast: AI tools are only as effective as the people who use them. To harness the full potential of these technologies, finance teams need comprehensive training and ongoing support to build confidence and competence with AI tools.
- Enhancing Data Governance: Effective AI relies on high-quality, unbiased data. Establishing rigorous data governance practices will ensure that AI systems produce accurate and actionable insights.
- Strengthening Human-AI Collaboration: While AI excels at data processing and pattern
recognition, human oversight remains essential. Finance teams should use AI as a complement to, not a replacement for, human judgement, particularly when it comes to nuanced decision-making.
Shaping the Future of FP&A
As we look ahead, AI will continue to redefine the FP&A function, especially as real-time forecasting and anomaly detection become the norm. AI is not just a tool; it’s a transformative force that empowers finance professionals to be more strategic, efficient, and impactful. However, successful AI adoption depends on a balanced approach that considers not only the technical aspects but also human factors like trust, transparency, and adaptability. For organisations ready to embrace AI, the potential rewards are significant: reduced costs, increased efficiency, and a stronger position in the market. By adopting AI with a strategic, collaborative approach, finance leaders can unlock new value and prepare their teams for the future of work. The journey toward AI-enhanced FP&A is just beginning, and those who lead the way stand to reap the most substantial benefits.
About ICit Business Intelligence:
ICit is a leading provider of managed services and FP&A software solutions, specialising in Workday Adaptive Planning. Helping finance teams leverage advanced technologies like AI and ML to drive performance, improve decision-making, and enhance strategic leadership.
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