How AI is Revolutionizing Finance Operations: Insights from KPMG

How AI is Revolutionizing Finance Operations: Insights from KPMG

Artificial Intelligence (AI) is reshaping finance operations, delivering unprecedented efficiency and ROI, according to a recent KPMG study.

The global research, which surveyed 2,900 organizations across 23 countries, revealed that 71% of finance teams are already leveraging AI in their operations. Of these, 41% have adopted AI to a moderate or significant extent, marking a 5% increase from earlier research conducted in April. This figure is expected to rise to 83% in the next three years, underscoring the rapid adoption of AI-driven technologies.

AI Adoption Levels: Leaders, Implementers, and Beginners

KPMG’s study categorized organizations into three AI-readiness groups:

  • Leaders: The most advanced group, comprising 24% of respondents.
  • Implementers: The middle ground, representing 58% of participants.
  • Beginners: Those just starting out, making up 18% of the total.

Among the Leaders, an overwhelming 95% plan to incorporate AI extensively in financial reporting within the next three years. In comparison, only 39% of beginners and implementers anticipate such widespread adoption.

Expanding Use Cases in Finance

While financial reporting remains the most common application of AI, its use cases are rapidly expanding to include:

  • Treasury management
  • Risk management
  • Tax operations

Interestingly, companies piloting AI in treasury and risk management are progressing faster than those in tax-related applications, where fewer than one-third are actively experimenting with AI.

Benefits Multiply with Maturity

According to the report, the benefits of AI adoption grow as organizations advance in their maturity:

  • Early-stage adopters reported two to three benefits, such as improved efficiency and cost savings.
  • Leaders, on the other hand, experienced up to seven benefits, including enhanced decision-making and predictive analytics capabilities.

Notably, 57% of Leaders reported that their AI investments are exceeding ROI expectations, compared to nearly one-third of less mature adopters achieving similar results.

Overcoming Adoption Barriers

Despite its advantages, AI adoption is not without challenges. Companies cited the following barriers:

  • Data security vulnerabilities (57%)
  • Limited AI skills and knowledge (53%)
  • Inconsistent data collection (48%)
  • High implementation costs (45%)

KPMG’s Global Head of AI, David Rowlands, emphasized the importance of acting now: “Businesses need to proceed with robust governance in place and a clear focus on outcomes. The benefits of AI are multiplying as we enter a new era powered by AI.”

The Future of AI in Finance

The report also highlighted the growing adoption of generative AI, with the percentage of companies having no plans to use it dropping from 6% to just 1%. This marks a shift towards more innovative AI applications, setting the stage for transformative changes in the finance sector.

For example, finance teams are increasingly exploring AI to enhance lifecycle management and efficiency. A related initiative, SmarTrak.Ai’s advancements in lifecycle management, demonstrates how AI is driving innovation across various industries.

As organizations continue to navigate challenges and invest in AI, the potential for transformative outcomes in finance operations has never been greater.

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