The pace of innovation has accelerated significantly in the past two decades. In 2003, the internet was still in its fledging stages, and both smartphones and social media were in their infancy. Today, all these technologies have become ubiquitous, and new innovations are swiftly evolving. Most recently, the uptake of AI, witnessed around 6000 new AI startups founded in 2023, and 15 AI Unicorns in Q3 alone.

This innovation spree has had a profound impact on society, with new products and services making our lives easier, more convenient, and more enjoyable. It has also created new jobs and opportunities. However, with any innovation comes new challenges, such as a growing skills gaps, and an increase in the pace of change, which can be difficult for people to adjust to. Overall, the acceleration of innovation is a positive trend. And while these changes are grounded in technology, and typically seen as the purview of the CIO, this innovation rocket ship is also impacting CFOs.

Re-designing the CFO

In the past, CFOs were primarily responsible for financial reporting and risk management. However, as businesses become more complex and technology-driven, CFOs are now being tasked with a wider range of responsibilities, including strategic planning, data analytics, digital transformation and sustainability. In turn, they must also be able to think strategically and communicate effectively with other members of the C-suite.

The changing role of the CFO mirrors the shift in the business landscape. Now, artificial intelligence (AI) and automation are two tailwinds that are rapidly changing the finance function. The global robotic process automation (RPA) software market soared by 32.4% between 2017 and 2022, hitting nearly $2 billion. It's likely that by the close of 2024, over 50% of businesses will have adopted AI to boost efficiency in the digital era. IDC anticipates global AI spending to reach $554.3 billion by 2025. If not embraced, businesses are at serious risk of falling behind.

Embracing change

CFOs who adopt AI and automation technologies can gain significant advantages, including:

• Improved efficiency and productivity: AI and automation can alleviate time-consuming and repetitive tasks, freeing up finance professionals to focus on more strategic work. For example, AI can be used to automate data entry, reconciliation, and financial reporting.
• Reduced costs: via the elimination of manual tasks. For example, an RPA tool can be used to automate tasks such as invoice processing and payment approvals.
• Enhanced accuracy and compliance: AI and automation can help CFOs improve the accuracy and compliance of their financial processes. For example, AI can be used to identify and correct errors in financial data, and RPA can be used to ensure that transactions are processed in accordance with company policies and procedures and reducing the risk of non-compliance.
• Reduced human error: automating error-prone tasks minimises human error and ensures data integrity.
• Improved decision-making: AI and automation can provide CFOs with timely and accurate insights for more informed decision making. For example, AI can be used to analyse financial data to identify trends and patterns, and RPA can be used to create reports that provide CFOs with a snapshot of the company's financial health and aid financial forecasting.

Harnessing the power of AI

To unlock the full potential of AI and automation, CFOs must take a strategic approach. This involves crafting a vision for how AI and automation can be used to improve the finance function, such as pinpointing the automatable tasks that alleviate admin heavy-lifting, and free up valuable time. For the integration of digital tools, businesses must also evaluate and select the right AI and automation tools suitable for enhancing business processes to minimise disruption to the finance function.

Beyond financial responsibilities, CFOs are responsible for ensuring security due to the increasing sophistication of cyber-attacks and the need to protect sensitive financial data. Security breaches have a significant financial impact on businesses. According to a recent study, the global average cost of a data breach in 2023 was $4.45 million, a 15% increase over the past 3 years. This figure includes the costs of lost productivity, customer churn, legal fees, and remediation costs.

The financial impact of a breach hinges factors such as business size, the type of data that was compromised, and breach severity. A breach exposing customer credit card data can prove more financially detrimental than one affecting only employee data. Beyond direct costs, breaches tarnish a business's reputation, eroding customer trust and potentially decrease sales and revenue.

In turn, CFOs must closely collaborate with IT teams to establish robust security policies and procedures. Proactive measures safeguarding data and systems not only mitigates breach risks but also firmly places security within the CFO's domain.

The future of financial excellence

Ultimately, the CFOs who demonstrate innovation excellence will be the most successful in enhancing financial efficiency and improving risk management. And it's not a solo effort. Armed with a comprehensive understanding of the technologies that stand to accelerate business growth, coupled with collaboration between senior CxO counterparts, is crucial for accelerating business growth. The perpetual focus on maximising ROI remains at the forefront of the CFO's wheelhouse, ensuring a sustainable future for financial excellence in a fiercely competitive business environment.