CFOs raced to understand generative AI’s potential use cases following the introduction of ChatGPT in late 2022, but as the year ends, business and financial leaders are looking to narrow their AI strategies from the general to the specific.
The next step for businesses — and for CFOs, who need to play a critical role in their companies’ AI initiatives — is “really starting to prioritize and focus on those use cases,” said Paul Goodhew, global assurance innovation leader at big four accounting firm Ernst & Young.
“Which ones are going to really be central and fundamental to their finance transformation, and to enabling their finance function going into next year?” Goodhew said of how finance chiefs must approach AI strategies in an interview together with Myles Corson, EY’s global and Americas strategy and markets leader, financial accounting advisory services
Getting the right AI ‘fuel’
As CFOs and executive leaders look to zero in on the most efficient use cases for AI, many businesses have been inspired to shine a brighter light on data, realizing “that now is really the time to be revisiting that data strategy, making sure that that data, is the data that they will need to fuel artificial intelligence,” Goodhew said.
Data strategy — and more importantly, data governance — is going to be foundational to really unlocking the opportunities offered by GenAI, Corson agreed. CFOs need work in tandem with other key executives such as the chief information and chief technology officer to establish who owns and is responsible for the data being aggregated — the position finance chiefs hold as the nexus of information in a company means that “clearly CFOs have a great perspective on what those data requirements are, how that data is being used,” Corson said.
This goes beyond table stakes financial metrics, with CFOs and the finance function increasingly expected to take responsibility for non-financial reporting areas such as ESG, for example, he said. As they look to take a more tailored approach to AI strategy, considering the kind of governance tools and processes they need in terms of risk management is top of mind for finance chiefs — something that comes in the face of “a huge amount of stakeholder discourse around the topic,” Goodhew said.
New regulations surrounding GenAI, data privacy and cybersecurity are cropping up worldwide as companies and individuals begin to engage with the technology more broadly. In October, President Joseph Biden signed an executive order surrounding the safe and secure development of AI, citing the technology’s “potential for both promise and peril.”
Earlier this month, the European Union announced a similar provisional agreement on the AI Act, aiming to “ensure that fundamental rights, democracy, the rule of law and environmental sustainability are protected from high risk AI,” while also ensuring Europe as an AI leader.
CFOs therefore need to balance their companies’ AI and data strategy with how they might need to report under these new and emerging regulations, Goodhew said.
Balancing risk, efficiency and innovation
Changing regulations also make it crucial for finance chiefs to take a leading role when it comes to driving that strategy; looking into the far future, GenAI itself could represent an existential threat to the finance function as it exists today, Corson said.
“Is there a future for finance, in a world where regulators are plugging directly into companies’ systems and taking the data out, where natural language allows anyone in the business to really achieve the goals of democratizing data and access?” Corson asked. In that vein, “this is where I think CFOs really need to be directing the narrative, they need to be determining what is the future value for finance, and I absolutely believe there is a positive narrative,” he said.
However, it’s also important to keep in mind that AI is at the very beginning of its maturity curve. Utilizing the technology in an effective way that creates that positive narrative for finance will likely require a shift in thinking: there’s always this risk that “you apply new technologies to old ways of thinking, and take your new hammer and try find lots of nails,” Corson said.
At the same time, true disruption or innovation doesn’t come out of smaller pilots or experiments, Corson acknowledged, leaving CFOs stuck in a place where they need to balance risk against innovation. Keeping the focus on value creation can help finance chiefs navigate that challenge, he said.
“It's really understanding, ‘Well look, as a finance organization, what are we trying to become?” he said. “What is our vision for five years? And how do we use AI as a tool in that journey?”
