What does the survey of 2,900 organizations from 23 countries show?
The rapid pace of adoption of AI in the finance functions of organizations worldwide and a wide range of benefits is highlighted by the new KPMG global AI infinance report.
The survey, which involved 2,900 organizations from 23 countries, was based on a similar survey carried out last year with the participation of 1,800 organizations from 10 countries. As part of the survey, a maturity framework was developed to categorize respondents into three groups of AI readiness: KPMG identifies a group of leaders who are ahead and more mature in terms of implementing artificial intelligence. A quarter (24%) of organizations are classified as leaders, 58% in the middle stage of implementation and 18% in the early stage.
More specifically, more than seven in ten (71%) organizations use AI to some extent in their financial operations. Currently, 41% of them use AI to a moderate or high degree – and this is predicted to rise to 83% in the next three years.
Six months after the first phase of this research, the spread of AI is already evident. In April 2024, 40% of organizations in the top 10 countries were using traditional AI in their financial operations to a moderate or large extent, and this percentage has now increased to 45%.
At the same time, the use of GenAI also increased. The percentage of companies that do not intend to use GenAI has now dropped from 6% to just 1%. GenAI has been identified as a key goal and top priority for the future, with 95% of Leaders and 39% of Others predicting its selective or widespread adoption in financial reporting in the next three years.
The KPMG survey also highlights the extent to which AI is actively being used, or being explored, in a number of countries worldwide, albeit with some significant differences between them. While the companies in the US, Germany and Japan are far ahead in the use of AI, other major economies such as Italy and Spain have lagged behind. We see a similar difference in emerging markets, with China and India leading the way in the use of AI, while Saudi Arabia and African countries are behind.
At the industry/sector level, compared to the first phase of the survey, some leveling has been recorded as organizations have stepped up their efforts. Most industries have a similar percentage of leaders, although financial services is at the top (29%) while healthcare lags behind (16%). Companies with the largest revenues tend to be further ahead (41% of companies with revenues over US$10 billion are leaders).
At the same time, companies are turning to AI for all areas of corporate finance. The most prevalent area of use is financial reporting, with nearly two-thirds of companies piloting or already using AI for reporting, accounting and financial planning. Other sectors are following suit: almost half of companies are either piloting or already using AI for treasury and risk management. This can lead to better results in areas such as debt management, cash flow forecasting, fraud detection, credit risk assessment and scenario analysis in treasury and risk management functions, the EIA pointed out.
However, tax management has lagged behind. Less than a third of companies are piloting or using AI in this area, although about half are in the planning stages. The reduced use of AI here may be due to various reasons such as the complexity of tax regulations, lack of up-to-date data, outdated systems and reliance on human judgment for many tax-related decisions.
According to the same report, leaders are leading the way, with three times as many (87%) using AI in the finance function to a moderate or high degree as others (27%). Leaders act quickly and on average have developed six use cases for AI, almost twice as many as the rest. The top areas of use are research and data analysis (85%), fraud detection and prevention (81%), predictive analytics and planning (78%), and using GenAI to author documents and other content (75 %).
Leaders overcome barriers to AI adoption (which all organizations face) with greater success. Common barriers faced by all companies include data security vulnerability (57%), limited AI skills and knowledge (53%), consistent data collection (48%) and cost (45%) – but the leaders are in a better position to manage them through the measures they have taken. The key hurdles they face are more complex, such as integrating AI solutions into existing tools, and overcoming any resistance that their staff still exhibits.
As the use of AI in finance grows, the benefits multiply. When starting out, finance teams cite two to three benefits. When they become Leaders, these increase to seven.
Just as the benefits of AI can increase with its use, so can the potential return on investment. As a result, a remarkable 57% of leaders report that their ROI doesn’t just meet their expectations, but exceeds them. Even among the least pioneers, nearly a third (29%) report the same.
