The Risks and Rewards of AI in Finance: An Interview with Jack McCullough

Prophix ImageProphix Aug 14, 2018, 2:22:00 AM
Chief Financial Officers and finance leaders: Artificial Intelligence is not coming for your job. It’s coming for the parts of your job that are least worthy of your time and attention. Any task that a machine can do, it likely should do. Save your time for the strategic parts of the job, the tasks that need your experience, intellect, and insight. AI is not coming for your job, but it is coming to the office of finance — in many ways, it’s already here. To help CFOs prepare for an intelligent transformation, we are asking experts in AI and finance for their guidance. In this Q&A, we talk to Jack McCullough, President of the CFO Leadership Council, and Founder & Chair of the MIT Sloan CFO Summit. Jack has been listening to — and advising — CFOs across the country for over a decade. Read on to learn about the potential risks, challenges, and rewards of AI adoption, and how to maximize the benefits. Prophix: We know there are substantial benefits to adopting AI and machine learning in finance. But there’s no denying there are challenges as well. What risks should CFOs keep in mind? Jack: The big one is the cybersecurity risk. If your company is being run largely through artificial intelligence, there are highly competent and highly unethical hackers who right now are studying AI, staying up to and even ahead of the learning curve on artificial intelligence, and they are just scheming for ways to take over companies through AI. You know, it's great that we can turn things over to machines, but what happens when we lose control of the machines? There could be people, organized criminals, agents of foreign governments, whatever it might be, who are smart and ruthless and motivated and going to take over some of these companies through AI. Then there are the cultural risks. AI is going to replace some jobs; it's inevitable. So there is that cultural risk that you are going to lose employees to it. But the real risk with artificial intelligence is not embracing the change. The cyber risk is a legitimate fear, the cultural element cannot be and should not be ignored, of course. But the reality is: AI is here. It's going to make organizations far more productive, far more efficient, and you are going to have to embrace it. And if you're in a marketplace that's competitive, you'd be well served to be amongst the first to embrace it and really enjoy the benefits of the advantages that AI bring. Prophix: So you feel it’s important to be aware of these risks, but they shouldn't stop you from moving forward? Jack: Yes. You must move forward. I'm a little young to remember it, but I'm sure when PCs were coming of age in the 1970s, I'm sure there were people arguing against their adoption on a mass level. But, everybody eventually adopted them. I suppose if you go back far enough, you can find people that would have argued against the wheel or fire, right? We all know people like that. There are people that would have debated the wheel: "I don't think we should do it. Too much risk." So, you know, you don't adopt it and your competitors blow right by you. Prophix:  What specific types of work do you think CFOs should be turning over to AI? Jack: This is going on now to a certain extent. Things that are kind of routine and process/transactional oriented. Accounts payable is a good one. There are companies with those technologies out there now. Accounts receivable — maybe not the collection process right now, I think you want human beings to collect your bills — but definitely tasks like payroll. I think you start with things that are repetitive, simple. They're relatively easy for a CFO and his or her team to review to make sure they're done right. And as AI becomes better at these sort of things then you throw in more complex things, like the monthly closing process. But right now, I'd focus on transactional repetitive stuff. Prophix: So, assuming you have technology taking care of all of your boring repetitive stuff, what should the CFO be doing with that free time? What are the priorities they should be focusing on? Jack: With AI, you are taking a lot of...I hate to call it this, but, bluntly, the boring aspects of the accounting job away from people. So it’s time to empower them, get them on the cutting edge, into the decision-making process; you know, the sexier, more exciting type of work. The other thing is, a large focus of the modern CFO job is on growth of the company. They are involved in growth on multiple levels. More and more of them are actually involved in the customer acquisition process. They have more of a corporate development and a business development role than they've ever had in the past. So by taking away some of this stuff, they can focus more on that, and then on operational and organizational efficiencies as well. Prophix: So getting into more of the work you do: You spend a lot of time talking to CFOs. How do they feel about AI? What’s the prevailing sentiment? Jack: Most of them haven't done any active planning for it, at least not on a conscious level. They’re buying products that have an element of AI in them, but they're not saying, “I've got to embrace AI strategy.” They do know that it's out there and it's inevitable. But the ones that I've spoken to, for the most part, are focused on other things. So I'd say they're aware of it, they're intrigued by it and threatened at the same time. It's nothing that they're talking about or thinking about on a day to day basis. And that will change soon, but it hasn't changed just yet. Prophix: What’s holding up the process, do you think? What are the fears that cause hesitation? Jack: A couple of things. One is the cyber threat I mentioned earlier. It's real; CFOs are responsible for it; and it's not typically within the CFO's skill set to prevent that sort of thing. So they really want to understand what the risks are from cyber threats before they move on. There's also the cost. Not only the outlay for the technologies, but the internal cost of embracing them. And changing your focus from going from a traditional environment to one that's run through artificial intelligence. So they would like to have a better understanding of that. And then there's the general fear that all people have of the unknown. People had a different mindset with automation when robots were simply doing physical tasks. Building things in the factory, that wasn't going to threaten the CFOs job at all, right? But now that that AI and robotics are finding their place within the white collar world, all of a sudden it affects them. They have to think about it on a personal level more than they've ever had to in the past. Because it is going to radically change their job. Prophix: How can CFOs help smooth the transition within their teams? Advice from @cfoleader on AI in #finance: "Embrace it! It's going to improve your company. It's going to improve the quality of life. Why not be a positive part of that revolution?" Jack: Embrace it as a positive! It's going to improve your company. It's going to fundamentally improve the very quality of life for people all over the world. And that's a fact. Why not be a positive part of that revolution? First of all, you have to understand it yourself, because you're going to be the communicator here. Second, as it always is with CFOs, is open, honest, forthright communication. CFOs are expected to be the most ethical and the most trustworthy people within their company. You need to be forthright with the team. Tell them, “this is why we're making the changes, this is why it's a positive thing,” and acknowledge some of the fears. I mean, we're all using AI technology without realizing it. If you ask Siri for help, Siri is a form of artificial intelligence. Embrace it as a positive, understand the reality that there are going to be risks and challenges. But all in all, it's going to be much more positive for your career, your organization, and your life in general. Jack McCullough is the Founder and President of the CFO Leadership Council and the MIT Sloan CFO Summit. Follow him on LinkedIn and Twitter. For more insights from AI and finance leaders, check out our AI resource center. [bctt tweet="Advice from @cfoleader on AI in #finance: "Embrace it! It's going to improve your company. It's going to improve the quality of life. Why not be a positive part of that revolution?"" username="prophix"] CTT: "With AI, you're taking a lot of the boring aspects of the accounting job away from people. It's time to empower them, get them on the cutting edge, into the decision-making process." @cfoleader CTT: Advice from @cfoleader on AI in #finance: "Embrace it! It's going to improve your company. It's going to improve the quality of life. Why not be a positive part of that revolution?"
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