Ask anyone about the most notable recent tech innovations, and you’ll likely hear ‘ChatGPT’ mentioned. This OpenAI’s generative AI tool has been turning heads for its ability to swiftly generate real-time responses to user queries on the internet.
It comes as no surprise that the generative AI market could eventually boost annual global GDP by 7 per cent, resulting in an almost US$7 trillion increase over a decade. This increase can be achieved by improving businesses in three main areas:
- Labour cost savings: AI can decrease the number of employees by automating tasks and processes.
- New business opportunities: AI can help businesses identify new opportunities for growth and innovation.
- Improved decision-making: AI can help businesses make more informed and data-driven decisions.
More than improving business operations, ChatGPT’s advanced algorithms and machine learning capabilities have also enhanced the finance industry, further providing accurate financial analysis, forecasting, and risk assessment.
This raises a crucial question for many: Will the emergence of such advanced technology replace the need for human expertise, especially in finance management?
What can ChatGPT bring to finance management?
Before delving into ChatGPT’s potential impact on the finance industry, let’s understand the basics of financial management. Financial planning and Analysis (usually referred to in short as “FP&A”) involves planning, forecasting, and budgeting while aligning these aspects with investors, key management and operations.
A key element of this management is building a robust financial model, which is crucial for startups for two main reasons:
Firstly, startups often have limited financial resources and prioritise conservative spending for a longer runway.
Secondly, when seeking investment, investors typically expect a well-developed model to gauge the company’s growth trajectory.
One potential area where ChatGPT can disrupt this scene is by offering guidelines and templates for small startups. Given ChatGPT’s ability to gather web data, it can be seamlessly integrated into financial processes, simplifying data analysis, as well as enhancing accuracy in forecasting and trend spotting. All within minutes and at an affordable cost.
Under the freemium model, ChatGPT is largely free for the average user, with premium features available for a marginal fee of SGD$20. Compared to engaging a consultant, which could cost thousands, using the AI tool becomes a no-brainer.
Human touch: AI’s missing link
ChatGPT, however, faces limitations in handling financial complexities. While it can work with numbers and formulas, it lacks the nuanced contextual understanding, human judgment, intuition, and insights of experienced financial professionals.
Additionally, the firm’s priorities are influenced by its founders, who have their emotions, beliefs, and personalities. Hence, reaching financial decisions isn’t always straightforward and often requires negotiating among key stakeholders.
While AI can provide numerical data, aligning these numbers with management’s priorities and making sense of them is another challenge.
AI lacks an in-depth understanding of a business’ intricacies, offering only generic advice. It cannot replace the critical human insights that encompass market trends, industry knowledge, and nuanced decision-making.
Why trust and accountability defy AI replacement
It is also highly unlikely for AI to replace the crucial aspects of trust and accountability. Entrepreneurs often value the expertise and reputation of human professionals, who can be held accountable for their advice and decisions, establishing trustworthy relationships that go beyond automated systems. Unlike human experts, AI systems typically do not offer guarantees or accept liabilities.
From a security standpoint, cybersecurity stands out as the primary concern with AI use. It’s noteworthy that the second most common response among those experiencing reduced returns from AI implementation is their uncertainty about the extent of vulnerability to AI-related risks, such as data protection and privacy.
For example, the synthetic data created by generative AI can come across as real data, which may give away the data source or seemingly identify specific individuals or corporations (even without naming them directly.)
Another issue would be the management of the data collection; a study has shown that about 11 per cent of individuals share personal or confidential work information with AI-related applications – these data are not only stored in the servers of AI companies but are also used in the process of generating data for the public’s use.
Due to the hype and demand for such services, alongside a relatively new field of work, it is plausible that many providers (in a bid to collect data) skim through security policy enforcements, resulting in little or no oversight over such risks as user confidentiality.
Our ‘Skynet’ days have yet to come
In conclusion, while ChatGPT or AI are powerful tools, it’s crucial to avoid becoming overly dependent on them for business operations.
Rather than seeing AI as a complete replacement, businesses should acknowledge that human expertise can complement these tools.
By harnessing the strengths of AI-driven financial analysis alongside human judgment, startups can benefit from both worlds: efficient data processing through AI and strategic decision-making guided by human experts.
While ChatGPT and similar AI technologies promise valuable capabilities for startup financial management, they can’t replace the human element of relationships and emotions.
The human touch adds depth, adaptability, trust and nuanced decision-making, which complement the analytical power of AI. These intangible factors also play a role in team ownership and satisfaction, fostered through collaboration among stakeholders.
Instead, AI should primarily automate routine and repetitive tasks, freeing up workers to focus more on meaningful decisions and priorities. While this shift may lead to job displacement in certain industries, AI can also, on the flip side, create new opportunities, such as telemedicine, or expand existing areas, like agriculture tech.
Companies can therefore harness AI’s full potential to enhance their financial capabilities while involving human experts to ensure ethical and appropriate implementation.
Businesses may still find value in outsourcing their financial capabilities to agencies for cost savings and effective financial management, whether they choose to integrate AI or not.
(Note: ChatGPT did not write this article)
–
Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic
Join our e27 Telegram group, FB community, or like the e27 Facebook page
Image credit: charlesdeluvio on Unsplash
The post Is ChatGPT taking over financial management? appeared first on e27.