Could Artificial Intelligence be the next game-changer in financial services?

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In an early glimpse at some of the proposed spending commitments in this week’s federal budget, there was mention of the government committing $124.1 million to help build Australia’s capability in Artificial Intelligence (AI). This will include a National Artificial Intelligence Centre and a network of AI and digital capability centres whose purpose will be to increase the adoption of AI technologies by businesses. At this stage the details on what all this means for businesses and the broader economy are sketchy and I look forward to seeing more analysis of this investment and expected output.

Along with a further $1.1B budgeted to boost Australia’s digital strategy, this growing focus on AI in Australia is a good sign that the government acknowledges the impact that this ever-evolving technology can have across many sectors of the economy. According to PwC’s 22nd Annual Global CEO Survey from 2019, AI will add US$15.7 trillion to global GDP by 2030, which is more than the current output of China and India combined.

So exactly what is AI and why does it matter to our industry? In a recent conversation with Chris Ridd, Director of myprosperity and former MD of Xero he recounted, “A number of years ago, Rod Drury of Xero, dedicated almost an entire keynote at the annual Xerocon event to the topic of artificial intelligence in the accounting software space.” He went on to say “In 2017, Drury declared that the amount of data that Xero was processing across millions of customers, was giving rise to opportunities to use Artificial Intelligence (AI) and Machine Learning (ML) to automate many tasks, starting with the coding of transactions.” Often the terms AI and ML are used interchangeably, but there is a distinction. Artificial intelligence is a technology that enables a machine to simulate human behaviour. Machine learning is a subset of AI which allows a machine to automatically learn from past data without programming explicitly. Machine learning generally requires large amounts of data for trends and relationships between data sets and outcomes to be accurately modelled and improved with repeated application. Ultimately, the goal of AI is to make a smart computer system behave like humans to solve complex problems. I like to refer to this as “getting the software to do the heavy lifting”, and thus replacing manual tasks to allow, in this case, the advisor to focus on developing deeper client relationships. Things that machines can’t do…yet.

In 2019, a study called “AI & its potential to revolutionise the accounting industry” was produced in conjunction with Singapore Management University School of Accountancy. Later published by CPA Australia, it revealed some good insights into the likely uptake of AI in the accounting industry. The report discussed how AI and ML can be implemented in accounting projects involving fraud detection, forecasting and prediction (of cash flows, inventory, revenue), rules identification to improve process automation, full-scale audits (without the need for sampling) and more. See the full report here and page 9 for the list of applications.

There have been several software providers in the accounting and advice space that have started to deliver some very practical applications of this technology. In the legal industry, Josef Legal built an advanced platform with AI capabilities to automate document drafting, configure bots for client engagement, and automate manual workflows in a practice. In the advice space, Nod has automated documents for advice planning to help streamline the preparation of an SOA. A close partner to myprosperity, BGL, announced SmartDocs last year, an AI-powered document reader that extracts data from images and PDFs (including scanned documents and photos) and converts the data into digital information. I particularly like how FYI Docs, amongst numerous process automation tools, has added a neat and really helpful feature known as “negative email alert”. A “sentiment detector” checks the text in all emails and creates an automatic alert for any inbound client email that is highly likely to have a negative sentiment. The process also creates a task that is assigned to the relevant client manager to review the email. That’s cool.

Further examples of AI in accounting include Xero’s acquisition of Hubdoc a few years ago, making it possible for the accounting software to automatically extract key information from receipts, invoices and bills, greatly reducing manual data entry. There is also a slew of chatbots available for advisers to use (e.g. FlowXO) that essentially allows someone with no coding skills to get set up and operate online quickly. At myprosperity, we’ve started to delve into the world of AI in our client portal technology in the use of digital forms. We are now starting to automate parts of the analysis/build of these forms to fast-track turnaround time for partners that want to take their customised paper-based form and turn it into a great digital experience for their clients.

So what does all this mean for you? If you had the chance to watch our recent WowCrowd interview with Damien Waller, i-Select founder and serial entrepreneur, he commented that “Virtually all my businesses have significant AI built into them. (If I was an adviser) I’d be looking at every AI-based product that I could plug into my practice because if I don’t do it my competitors will be doing it right now.” He makes a really good point. The accounting industry needs to recognise that AI technologies such as ML, are enabling tools rather than adversaries out to steal jobs. As the CPA AI report articulated only too well… “Rather than replace human accountants, AI and ML become colleagues to their human counterparts and help to get the job done in the most effective and best way possible.”

 

Stephen Jäckel

Chief Technical Officer at myprosperity

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Stephen is the technical leader behind the myprosperity platform. After graduating with a Bachelor of Software Engineering with Honours in Artificial Intelligence, Stephen was development manager at Carsales.com.au for nearly 5 years. With over 10 years of industry experience, Stephen hand-picked the team to build and grow the myprosperity platform.