AI Transformation in Finance: A Game-Changer for US Companies
US Companies Embrace AI for Financial Planning
In a groundbreaking report released by KPMG LLP, significant strides have been noted in the adoption of Artificial Intelligence (AI) within the finance sector. More than 78% of US companies are actively piloting or utilizing AI for financial planning, while 76% report similar progress in accounting. Despite these impressive figures, only 45% of organizations have ventured into the application of AI for tax and operations, indicating a landscape ripe for growth.
Cloud Technology Takes Center Stage
While AI adoption is surging, one thing remains clear: cloud technology continues to be the foremost priority for organizations aiming to enhance financial reporting. As companies strive for operational efficiency, the focus on cloud solutions has intensified. Simultaneously, non-generative AI appears to be catching up, now securing its position as the second most important technology amid fast adoption rates.
Rapid Progress in Financial Reporting
When it comes to financial reporting practices, advances are notably swift, particularly in cloud migration and cybersecurity. Approximately 75% of organizations report having achieved either mid or full implementation, and they are already reaping the benefits of these technologies. This progress translates to accelerated decision-making and fortified security, making companies more resilient in today’s fast-paced business environment.
AI’s Ubiquity in Financial Functions
As of December 3, 2024, the landscape of AI within the finance function has reached unprecedented levels, with 62% of US companies employing AI to a moderate or significant extent. Notably, 58% are either piloting or actively deploying Generative AI (GenAI). These stats underline a powerful shift toward technology-driven financial operations, echoing a broader trend in digital transformation across industries.
A Positive Outlook on ROI
Importantly, the report highlights that 92% of companies affirm that their finance function’s AI initiatives are not just performing well but are actually meeting or exceeding their return on investment (ROI) expectations. This serves as robust validation for companies considering further investment in AI technologies. Almost one-third of the surveyed organizations plan to ramp up their AI budgets, indicating a willingness to reallocate funds from other initiatives to fuel AI adoption.
A Shift in Organizational Mindset
Scott Flynn, KPMG US Vice Chair of Audit, states, “The use of AI and GenAI is becoming ubiquitous across accounting, financial planning, risk management, and much more.” He adds that many companies are beginning to witness substantial benefits from their digital transformation efforts, particularly as they integrate AI capabilities into their financial reporting processes. This signifies a pivotal shift in organizational thinking, where AI is no longer viewed as a supplemental tool but rather as an integral part of the financial ecosystem.
The Road Ahead: A Comprehensive Study
The report, titled "AI in Finance: Transforming into a New Era with the AI-Empowered Finance Function," is based on a global survey encompassing 2,900 companies across 23 countries, including 300 US finance leaders. This comprehensive study builds upon earlier research indicating that within the next three years, an astounding 100% of US finance leaders will either be piloting or using AI in their financial reporting.
Classifying AI Readiness
KPMG’s research employs a maturity framework designed to categorize companies based on their readiness and adoption of AI technologies. This has led to the identification of three primary groups: AI leaders, middle-ground implementers, and beginners. Among the firms surveyed, 41% were classified as AI leaders, 48% as middle-ground implementers, and only 11% as beginners. These classifications not only highlight the varied levels of AI adoption but also encourage organizations to escalate their efforts.
Benchmarking for Success
In concert with its research, KPMG has developed an AI maturity benchmarking tool aimed at assisting organizations in assessing their progress throughout the AI transformation journey. This tool is expected to serve as a guiding resource for companies to evaluate their current stance and devise strategies for growth as they navigate the complexities of an AI-driven financial landscape.
Early Adopters Leading the Charge
The survey reveals that early adopters of AI in finance are not just leading the way but are reaping consistent rewards. With more than three-quarters of these firms reporting tangible results from their AI initiatives, it’s clear that those who invest in cutting-edge technology stand to benefit not only in operational efficiency but also in competitive advantage.
The Role of Education in AI Adoption
As companies accelerate their journey toward AI integration, the importance of education and training emerges as a critical factor. For organizations to fully utilize AI capabilities, equipping finance teams with necessary skills will be paramount. KPMG emphasizes that ongoing training and development initiatives are essential to maintain a workforce proficient in navigating these new technologies.
Confronting Challenges Head-On
While the benefits of adopting AI are becoming increasingly evident, challenges remain. Companies must navigate regulatory environments, data privacy concerns, and workforce adaptations. Addressing these challenges is essential for accelerating AI adoption in financial reporting and other functions.
Future-Ready Finance Teams
As organizations move forward, a future-ready finance team will not only adapt to new technologies but actively embrace them as part of a broader strategic vision. This shift boosts operational effectiveness and redefines the skill sets required for success in finance, paving the way for a more agile and adaptive workforce.
Collaboration for Innovation
As companies leverage AI, collaboration will play a crucial role in fostering innovation. Building partnerships with technology providers and research institutions can yield new ideas and methodologies that enhance AI applications in finance. These collaborations are fundamental for pushing boundaries and exploring untapped potential within financial functions.
Embracing Change as a Culture
To optimize their AI investments, companies must cultivate a culture that embraces change and innovation. This involves leadership buy-in, employee engagement, and a clear roadmap for integrating AI into existing frameworks. Such an approach will not only facilitate smoother transitions but also empower teams to explore creative solutions.
Conclusion: A New Era for Finance
As AI continues to revolutionize the finance sector, businesses must seize the opportunity to enhance their operations and strategic capabilities. The KPMG report underscores a pivotal moment in the finance industry, where AI adoption is no longer a luxury but an essential component of competitive strategy. By investing in AI technologies and embracing innovative practices, companies can position themselves to thrive in this new era of financial management.
