How private company finance functions are trailblazing GenAI
Find out why finance is the ideal candidate to lead the private company adoption of GenAI.
Finance functions are rapidly adopting generative artificial intelligence (GenAI) to enhance productivity, improve operations, and create value.
In this edition of Privately Speaking, we explain why finance is the ideal candidate to lead the private company adoption of GenAI. We share some opportunities and risks, and we offer some tips to help private company CFO and finance leaders move their companies ahead.
Finance as the crucible for GenAI
GenAI has been on the scene less than 16 months, but it has already proven itself to be a valuable business tool and catalyst for reimagining how to improve operations. And the finance function is proving to be a trailblazer in its adoption.
According to a recent survey by KPMG, 1 65 percent of finance leaders say they already use traditional AI in their financial reporting. Perhaps more importantly, around half say they have already deployed or are piloting GenAI; another third say they are currently looking into it.
Today's finance leaders are likely the ones who can blaze the trail for GenAI transformation. By establishing a robust governance framework, finance leaders are harnessing the transformative potential of GenAI while minimizing pitfalls and enhancing overall trust in the technology.
Conor Moore
Partner, Global Head of KPMG Private Enterprise
Where are finance leaders adopting AI and GenAI?
- Fraud detection : AI algorithms can analyze patterns in transaction data to detect fraudulent activity, helping businesses prevent financial losses and maintain the trust of their customers.
- Financial analysis : Using AI, analysts can sift through financial data faster to identify trends, predict future performance, and make investment recommendations.
- Compliance assistance : GenAI can help automate the process of identifying and flagging potential compliance issues, create audit trails, and maintain records for internal controls.
- Scenario risk management : GenAI could be used to summarize risk factors, dependencies, and potential impacts, thereby equipping financial officers to make better and faster decisions.
- Internal audit support : AI can automate repetitive tasks such as data entry and reconciliation. It can also learn from previous years’ audit engagements to identify areas for improvement.
- Financial reporting : With the right corporate governance, internal controls, and auditing, GenAI could provide amazing improvements in financial reporting speed, quality, and insights.
What are some of the risks?
AI, especially GenAI, comes with both promise and risks. Organizations should treat AI risk like other risk areas that can be managed responsibly. Here are five risks to consider as you think about responsible AI:
- Transparency and explainability: Particularly with GenAI, it can sometimes be difficult to understand how the models arrived at their conclusions.
- Data leaks: Employees who use publicly available AI tools like ChatGPT may inadvertently leak confidential information.
- Data privacy: Data used in GenAI can contain personal identifiable information (PII) including names, addresses, and phone numbers.
- Intellectual property: Large language models use information that has been posted online, and it can be difficult to determine the provenance of GenAI results.
- Ethics and bias: Biases inherent in the data used to train large language models could lead to discrimination or the amplification of existing biases.
People and AI together
While AI can improve efficiency, consistency, and accuracy, it cannot replace the finance staff. However, while finance professionals bring a wealth of knowledge and experience to the table, finance functions will need to broaden their capabilities to encourage strategic thinking, adaptability, and intellectual curiosity. The focus should be on using AI and automation to enable finance professionals to focus more on synthesis and anomalies with less time spent on routine tasks.
Find out how to embed GenAI into the workforce in this recent edition of Privately Speaking.
Adapting the risk framework
When adopting AI and GenAI, existing risk frameworks should be adapted to govern their use and account for any probabilistic outcomes. Your framework should include the following:
- Recognize the direct and indirect effects of GenAI and determine how their use by finance impacts the risk assessment.
- Assess the completeness of the in-scope internal controls over systems, and design a sufficient and appropriate internal control response.
- Incorporate a robust process to select, develop, operate, and maintain controls related to the organization’s use of GenAI.
Want to learn more?
Check out our recent paper, Today’s finance leaders: blazing the trail for GenAI transformation to find out more. Download PDF.
What you can do now
Private market finance leaders should be considering how they can build an institutional framework for AI and GenAI that is true to their organization’s risk tolerance, cultural complexity, and investment appetite for technology-led transformation. Here is how to get started:
- Appoint leaders: High-level, empowered leaders will need to be involved and visibly engaged.
- Define risk appetite and AI ethics standards: Secure your AI journey with robust governance and risk mitigation.
- Build a cross-functional team: Work with risk and IT to co-shape the AI strategy and transformation.
- Choose your partners and vendors: Figure out where to invest, what you can build, and what you need to obtain through partners.
- Identify initial use cases: Pilot the transformation approach in key areas of the business.
- Define success and measure progress: Prepare to measure progress across all dimensions of your program.
- Build a sandbox: Sponsor and support enthusiastic adopters to score quick wins and learn.
- Get started: Build momentum that can be shared and promoted across the enterprise.
AI in corporate finance makes business sense. The finance function is a good starting point for implementing generative AI. The pioneering approach optimizes intricate financial strategies and decision-making processes, enhancing efficiency, accuracy, and adaptability in the dynamic world of finance. As the “tip of the spear” in generative AI, finance can build the strategy that fully considers all the opportunities, risks, and trade-offs from adopting generative AI for finance.
Francois Chadwick
Partner, Tax, KPMG Private Enterprise, KPMG LLP (US)
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Today's finance leaders : blazing the trail for GenAI transformation
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