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Why CFOs are giving AI a second look

In 1997, when IBM’s Deep Blue defeated world chess champion Garry Kasparov, it marked a pivotal moment in the public perception of artificial intelligence. Nearly three decades later, AI has evolved from a novelty into a valuable tool for businesses across many sectors. Now, it’s knocking on the doors of finance departments worldwide, where chief financial officers (CFOs) are considering how to balance traditional approaches with new technological opportunities.

The latest American Express CFO Survey* unveils a telling statistic: 34% of finance leaders report being under pressure to adopt AI technologies. This pressure isn’t emerging in a vacuum. It’s driven by a perfect storm of factors: the need for faster, more accurate financial forecasting; the demand for real-time data analysis; and the ever-present spectre of competition in an increasingly digital marketplace.

But the push for AI adoption is just the tip of the iceberg. A significant 75% of CFOs surveyed acknowledge the growing strategic importance of digital transformation writ large. This shift signals a growing emphasis on leveraging data for proactive decision-making and strategic growth.

The drivers behind this digital urgency are multifaceted. Many CFOs are grappling with an explosion of financial data, necessitating more sophisticated tools for analysis. They’re facing pressure to provide more accurate forecasts. And they’re being called upon to drive efficiency and cost savings across their organisations, a task that increasingly requires leveraging advanced technologies.

Moreover, the rise of fintech startups and digital-native competitors is forcing traditional companies to innovate. In this context, AI isn’t just a nice-to-have anymore.

Financial leadership is shifting

This marks a notable change from 2023, when 89% of CFOs indicated a need to improve cost-cutting efforts, and 70% considered job cuts a real possibility, according to last year’s American Express CFO Survey. Now, finance leaders are focused on growth and resilience, with technology squarely at the centre of most strategies.

The American Express survey reveals a clear pivot in priorities. In 2024, improving cash flow (81%) and digital transformation (75%) have emerged as the top strategic priorities for finance leaders, surpassing traditional focuses such as revenue growth (68%) and risk management (67%).

Unpacking the digital imperative

The drive towards digitisation is also multifaceted. CFOs are not merely responding to board-level pressures; they’re recognising the potential of technology to address persistent challenges. Automation, efficiency gains, and improved cash flow management are key motivators behind this digital push.

Indeed, 36% of surveyed CFOs plan to increase automation in their organisations. This move towards automation is closely tied to cash flow optimisation, with 29% of finance leaders planning to enhance their payment systems to improve liquidity.

Virtual payments are  also gaining particular traction, with 59% of finance leaders deeming them important for their business in the coming year. This trend reflects a broader shift towards digital financial solutions that offer increased transparency, real-time insights, and enhanced security.

Jumping the hurdles to transformation

However, the path to digital transformation is not without obstacles. The survey reveals that 27% of CFOs face internal resistance to change, while 29% grapple with skill shortages within their teams.

Perhaps most tellingly, 39% of finance leaders express the least confidence in adapting to greater digital transformation, particularly in areas such as workflow automation.

To navigate this new landscape, CFOs are adopting various strategies. Nearly half (47%) of organisations plan to increase technology spending in the coming year, making it a top investment priority second only to new product development.

Yet, throwing money at the problem is not enough.

Successful digital transformation requires a holistic approach. CFOs must address skill gaps within their teams, potentially through upskilling programmes or strategic hiring. They must also work to overcome internal resistance, which may involve closer collaboration with other departments, particularly IT.

Redefining success metrics

The pressure to innovate is further intensified by changing performance metrics. The survey indicates that CFO performance is likely to be measured by key performance indicators (KPIs) around cash flow (37%) and growth (45%) this year.

Access to high-quality data insights around payments and revenue is thus becoming essential, further driving the need for advanced digital solutions.

AI, in particular, presents both opportunities and challenges. While it offers the potential for more sophisticated financial modelling and decision-making, it also requires significant investment and expertise to implement effectively. CFOs must carefully weigh the benefits against the costs and risks.

Despite these challenges, the overall sentiment among finance leaders remains optimistic. The survey reports that 80% of CFOs feel very or extremely confident that their organisation will meet its cash flow goals.

This confidence, however, varies by region, with US finance leaders expressing the highest levels of optimism.

 

* Data based on a survey of 513 senior financial decision-makers from 11 countries. 60% were in C-suite roles, and industries represented included finance, construction, retail, manufacturing, and more.

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