Why AI is a catalyst for the future of treasury and finance

The introduction of AI tools like machine learning and natural language processing has transformed the back office in recent years. Today, the rapid development of generative AI gives treasury and finance the scope to build on these advances, empowering executives to make smarter decisions and better navigate emerging risks. 

New research from DBS reveals an almost even split between the number of treasury and finance teams using and not using generative AI to enhance their back-office capabilities. More specifically, it finds that 49 per cent of the surveyed executives are using the technology to overcome previously insoluble talent shortages and related challenges. The other half are either experimenting without much success or have resisted the new technology altogether.  

The good news for the pioneers is that these powerful new tools are freeing treasury and finance leaders to lean into their growing strategic responsibilities.  

Productivity gains enable strategic output 

The generative AI pioneers in DBS’ research are more likely than the non-users to be dedicating resources to major strategic initiatives. To an extent, this is likely to be because the productivity gains afforded by the technology help free up their teams to work on a wider range of tasks.  

Instead of spending precious time and energy on transactional and process-intensive tasks, for example, treasury and finance teams can train generative AI to do the bulk of the labour, subject to human quality-control assessment.  

At insurer Manulife, Arthur Chan, AVP Asia Finance Transformation, explains that his finance function uses generative AI as part of wider efforts to transform back-office operations. “It’s been a great tool for productivity, especially when supporting non-native English speakers with business writing,” he says. “We’re also looking at incorporating our own data into the tool to support strategic business decisions.”   

Supporting on strategic sustainability and decarbonisation initiatives is a good illustration of the kind of additional work that treasury and finance can perform, given the bandwidth freed up by the technology. More than three-quarters of generative AI users (78 per cent) say their teams are directly involved in the execution of these initiatives, compared with 64 per cent of non-users.  

Diversify, innovate and enhance 

Large language models in generative AI can identify patterns, trends and anomalies in corporate sales and marketing data. They can analyse entire supply chains and production workflows to highlight bottlenecks and pain points. As such, the technology provides actionable insights that contribute to the development of new strategies, optimising supply chains and diversifying the business. 

The DBS research finds that generative AI pioneers have made a stronger day-to-day commitment to business diversification than have those lagging behind the technology curve.  

Nine in 10 pioneering users say treasury and finance are already playing an integral role in executing innovation and new product development, compared with 76 per cent of non-AI users. The findings also suggest that generative AI pioneers play a more active role in diversifying into new sales channels such as e-commerce (84 per cent versus 70 per cent of non-generative AI users), deepening penetration into new and existing markets. 

Building on groundwork 

Despite the understandable hype around generative AI, it is not the first AI tool to support the evolution of treasury and finance. The most successful teams will integrate a suite of different technologies, harnessing the relative strengths of each. 

Businesses have already adopted rule-based robotic process automation (RPA) and, in recent years, predictive AI has informed risk-management tools for companies facing multiple headwinds, such as geopolitical tensions, global inflation, and foreign-exchange volatility. Armed with real-time insights that AI has extracted from data, treasury and finance teams can update their business strategies swiftly, cutting exposure to hazards.  

In one example, Indian stainless steel maker Jindal Stainless uses multiple analytical tools to inform supply chain decisions in times of operational complexity. “Implementing SAP S/4HANA (an enterprise resource planning suite) has drastically reduced our report generation and analytics time,” explains Executive Director and Group CFO, Anurag Mantri. 

“We are also exploring AI for market intelligence and sourcing strategies, although predicting demand and tracking scrap generation in volatile regions remains challenging," he cautions. 

In China, home appliance and consumer electronics company Haier Group has built an end-to-end intelligent foreign-exchange risk-management module. “We have established an electronic trading platform with one-click triggering capabilities, achieving end-to-end closed-loop management, improving communication efficiency, reducing transaction costs, and effectively mitigating exchange-rate fluctuation risks,” explains CFO, Xinzhi Shao. 

Taking it forward 

The progress outlined in DBS’ research raises an inevitable question: does implementing AI make treasury and finance teams more strategic, or is it just that the most astute teams are more likely to have embraced the new technology?  

In many respects, the answer is less important than the simple lesson that AI technologies – whether existing tools or the newer generative AI platforms – offer enhanced reach and influence to treasury and finance teams.  

Encouragingly for those concerned about the negative implications of adoption, the research suggests that the added efficiencies of AI do not automatically translate into job losses. Among the pioneers of generative AI, more than eight in 10 (83 per cent) say they are actively building new skills and talent in the workforce, rather than simply replacing them with technology. 

Implementing game-changing technology is not straightforward and effective change management is critical to success. However, the rewards that embracing and evolving with the technology can bring outweigh the risks. AI-minded executives can look forward to a more efficient, productive and liberated future. 

Read the DBS Pivotal report to find out more about evolution within the treasury and finance function