The Growing Influence of AI in Finance

AI's presence in finance has expanded dramatically in recent years, with applications ranging from fraud detection to robo-advisory services. According to Citi's 2024 report, AI is increasingly seen as a General-Purpose Technology (GPT), one with the potential to reshape entire industries, including finance. AI in finance has primarily focused on increasing operational efficiency, reducing costs, and enabling data-driven decision-making. In FP&A, AI's role is evolving from simple automation to becoming an indispensable part of strategic planning.

Generative AI, in particular, has captured the imagination of financial professionals. With its ability to analyze unstructured data such as emails, transcripts, and reports, generative AI is poised to enhance the decision-making process. What once required teams of analysts and several days of work can now be done in minutes using AI. This rapid progress raises questions about the future role of human analysts in FP&A.

‍

‍

Automation of Routine Tasks: AI's Impact on Day-to-Day FP&A Work

One of the most transformative aspects of AI in FP&A is the automation of routine tasks. Historically, FP&A teams spent a significant amount of time collecting data, preparing reports, and conducting variance analysis—tasks that are essential but repetitive and time-consuming. AI can now automate these tasks, saving time and reducing the risk of human error.

For example, AI-powered tools can generate financial reports, reconcile discrepancies, and even prepare real-time dashboards for executives, all within seconds. In some organizations, AI has already taken over tasks such as expense management, monthly forecasting, and even the preparation of quarterly financial statements. AI's ability to process vast datasets more accurately than humans not only streamlines operations but also increases the precision of financial forecasts.

However, this automation does not necessarily mean the elimination of FP&A jobs. Instead, AI frees up professionals from mundane tasks, allowing them to focus on higher-value activities. Tasks that once required weeks of work can now be done in hours, giving FP&A teams more time to engage in strategic initiatives that directly impact business outcomes. By automating repetitive tasks, AI enables FP&A professionals to become more strategic in their roles, adding greater value to their organizations.

Strategic Decision-Making: The Human-AI Partnership

While AI excels at data processing and pattern recognition, it lacks the human ability to interpret context and apply strategic thinking. FP&A professionals play a crucial role in interpreting the insights generated by AI and translating them into actionable strategies. AI can assist in predictive analytics and scenario planning, but it is human expertise that drives strategic decisions.

For instance, AI can generate a range of potential outcomes for a company's financial performance under different market conditions. While AI might identify potential risks or opportunities based on historical data, it is up to human analysts to apply context and judgment to these insights. Factors like competitive positioning, market trends, and regulatory changes are difficult for AI to fully grasp without human input.

This partnership between AI and human analysts is where the future of FP&A lies. AI will increasingly become a tool that augments the decision-making process, but it is unlikely to replace the need for human judgment in high-level strategy development. By allowing AI to handle the "heavy lifting" of data analysis, FP&A professionals can focus on advising leadership on critical business decisions.

‍

The Role of AI in Forecasting and Scenario Planning

One of the most valuable contributions of AI to FP&A is its ability to enhance forecasting accuracy and perform complex scenario planning. AI systems can analyze massive amounts of historical data and generate highly accurate forecasts in real time. Machine learning algorithms can identify trends that are invisible to the human eye, providing more reliable predictions about future financial performance.

In FP&A, this capability is particularly valuable for companies operating in volatile markets. AI-driven forecasting models can simulate how different external factors—such as economic shifts, regulatory changes, or supply chain disruptions—might affect a company's financial performance. These models allow businesses to prepare for multiple outcomes, making them more resilient to market shocks.

Moreover, AI can continuously update forecasts as new data becomes available, making it easier for companies to adapt to changing conditions. Instead of relying on static financial models that are updated quarterly, AI allows for dynamic, real-time forecasting, giving FP&A teams the agility they need to respond quickly to changes in the business environment.

The Human Element: Critical Thinking and Contextual Understanding

While AI can handle the data, it cannot replicate human intuition, creativity, or ethical considerations. These aspects are critical for FP&A professionals, especially when dealing with complex, high-stakes financial decisions. For example, AI can flag potential financial risks based on data patterns, but it cannot determine the underlying causes of those risks or provide solutions tailored to the unique needs of a business.

FP&A professionals must still interpret AI-generated insights, applying their knowledge of the business and industry to recommend actionable strategies. Moreover, FP&A roles require building relationships with other departments and communicating complex financial data to non-financial stakeholders. These skills—understanding context, explaining insights, and building trust—are areas where human expertise remains indispensable.

In many ways, AI is expected to elevate the role of FP&A professionals rather than replace them. As AI takes on the data-heavy tasks, professionals will be required to focus more on strategic planning, leadership, and innovation—skills that are deeply human and cannot be easily replicated by AI.

Future Skills: Preparing FP&A Professionals for an AI-Driven Future

As AI reshapes the FP&A landscape, the skills required to succeed in this field are changing. Technical proficiency in AI tools, data analytics, and financial modeling is becoming increasingly important. FP&A professionals will need to learn how to work alongside AI systems, interpreting their outputs and using them to guide strategic decisions.

In addition to technical skills, communication and leadership will become even more crucial. FP&A professionals must be able to translate complex, AI-generated insights into actionable business strategies and communicate these insights to senior leadership. Moreover, as FP&A roles become more strategic, professionals will need to demonstrate strong leadership capabilities, driving the conversation around business strategy and long-term planning.

Finally, critical thinking and creativity will remain essential. While AI can handle data analysis, it cannot replicate human ingenuity. FP&A professionals who can think critically about AI-generated insights and develop innovative solutions to business challenges will continue to be highly valued.