AI, atomic weapon into Treasurer’s arms?

AI is a kind of atomic weapon as its power is phenomenal. However, it remains a little-known weapon and not yet used at full power. As we are developing solutions, the Treasurer must be proactive. Beyond a few easily identifiable uses, there is a sequel that will further change our profession for a truly “better” result.

Common sense, reasoning and planning ability

According to AI specialists, it is plateauing somewhat, and the “real revolution” will come when AI is equipped with reasoning and planning capacity (which should take another 5 years). The models remain imperfect, without question, but should not be dismissed for the cause. They simply require more attention. They are accused of a lack of common sense. Economists seem to downplay the impacts of AI in terms of productivity.? I think this is true, but the observation is always the same with new technologies which must “search” in order to mature. We are perhaps too impatient and certainly too critical of AI. In fact, we always see that costs will decrease while productivity will increase, thanks to greater reliability. A significant point in its development lies in the very high energy consumption required.

AI frauds

A particular point of attention concerns fraud. IT technology is always accompanied by fraud, because it allows you to work better, but also to be attacked better. Fraud attempts via fake video conferences, fake SMS, fake emails, etc. will become widespread. The paradox is therefore that the more AI (gen) develops, the more the technology will serve fraud. Caution is therefore required more than ever.

Payment Fraud Detection?

Applying AI to payments is another example of using machine learning to detect anomalies and prevent fraud, or abnormal behaviors. An increasing number of systems providers are also integrating these solutions into their treasury management solution (i.e. TMS). For instance, payment fraud detection software uses AI to check payments against historical payment data from a data source. An engine then analyzes those data, enabling it to identify anomalies in any future activity. In general, the solutions will provide treasury users with insight into computing variables and show how payment reconciliation is calculated. It allows users to set their own company tolerance levels to determine the sensitivity for fraud detection. It is essential as fraud becomes one of the biggest challenges for treasurers. It is key to avoid having the system return too many false positives, which disrupts the payment process. With an integrated workflow, fully secured and with many internal controls, in the treasury management system or around, any suspicious payments can first be reviewed and then either rejected or cleared for further approvals. The use of AI in payments provides several key benefits, then, particularly in terms of fraud detection and improving the efficiency of the payment process.

The ChatGPT like solutions may already simplify day-to-day life

Beside the pure treasury solutions, the chatbot development ChatGPT enables text-based exchange with users by means of AI. These "GPT" models (i.e. "Generative Pretrained Transformer") can generate text, answer questions, translate text, record sessions and transform recordings into minutes, and much more. Treasurers can easily think of several use cases for making their life easier: creating and commenting on financial reports, analyzing data, or editing, summarizing meetings and summarizing contracts. The application possibilities seem almost endless. Treasury must build a bridge between strict data protection and Treasury's need for information. Here, the idea is that its integration could help to process sensitive data without overstepping the bounds of internal security measures.

Opportunities and challenges

AI has already made inroads in Treasury and will transform and shape many aspects of the function. Today, progressing automation is making sure that repetitive tasks are carried out efficiently and quickly. AI will amplify this trend even further and set new standards in data processing and analysis. With big data being processed and in real time, predictive capabilities will be boosted on many levels. That will lead to better informed decisions across all elements of control, such as liquidity or risk. AI-based models hold the potential to play a growing role in forecasting market developments, interest rates and currency fluctuations, as well as in risk management. By leveraging machine learning algorithms, these models can analyze vast amounts of data and recognize patterns that are difficult for human experts to detect or to predict. As a result, they can help identify risks more effectively and make informed decisions. AI comes not only with opportunities, but also with risks and challenges that must be factored into any new deployment of functionalities. Treasury departments routinely collect and process highly sensitive data. A careful attention must be paid to keeping an eye on data protection requirements. Any use of cloud solutions, which are frequently used due to the large volumes of data involved in AI technologies, should therefore be treated with caution. An important question resides in ensuring data storage meets company-specific data protection requirements. With any data processing, the garbage-in/garbage-out principle comes into play. As AI systems too rely on valid or high-quality input data, or else they may produce erroneous analysis results. Any deployment should be reviewed to determine the extent to which unintended bias or discrimination could occur.

AI cannot be used without the human factor

Without a doubt, the increasing use of artificial intelligence will not only transform systems and processes, but also the treasurers. Among other things, the requirements profile for a modern treasury officer will involve greater technological sophistication. The new required IT skills are not clearly defined, although coding and capability in developing open-source solutions will be growing. The obvious benefits and impacts of AI on Treasury function will need to be gauged to ensure that technologies are used in a targeted and efficient manner to support business objectives in the optimum possible way. They will also need to make sure that data and executions generated are valid and reliable. AI helps but also open new doors to frauds. It requires to pay attention to the security and protection of AI systems from cyberattacks. Therefore, critically questioning the results of AI solutions will become an important role of treasurers. Training session will become necessary to prepare adequately teams. The aim is, thanks to the increasing degree of automation, to be able to spend more time on strategic considerations and decisions. Rather than preparing data, financial reports and calculating key figures, the focus will shift more to the needs of various stakeholders. The needs of customers, suppliers, banks, C-level and other business units must be recorded and considered with the ultimate objective of ensuring that the company's financial positioning is in line with its business objectives. However, it is essential to emphasize that despite the use of AI, data validation and verification by humans remain indispensable. Treasurers will want to be able to assess data accuracy and ensure that AI analyses are in line with business targets.

But AI is also a booster for (financial and treasury) reporting

There are solutions to enable advanced data reporting based on AI. Some solutions are specialized in data visualization tools, based on cloud-based and spatial computing technologies, these tools are multilingual and enable the extraction of information in real time from relational or documentary archives, immersive and interactive 3D visualization, dynamic exploration and querying of complex data. The future will be there for financial and treasury dynamic reporting. As the world keeps on changing faster and faster, artificial intelligence will surely be the next big revolution. It will be imperative to consistently exploit opportunities such as efficiency gains, flexibility, and improved decision-making, both in general and in the treasury area. And yet, AI also brings challenges and risks. It requires proper use and handling, especially when it comes to sensitive data, which, among other things, is largely located L-within Treasury.

AI, or the industrial revolution of this century, will be the star of treasuries in the years to come. Mastering technology and understanding what to use it for is essential. Such a weapon requires appropriate handling to give its full power. It is up to us treasurers to appropriate them properly to get the most out of them. The road is still very long. As W. Churchill said: "It is better to take change by the hand before it takes us by the throat."

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Fran?ois Masquelier, CEO of Simply Treasury – October 2024 - Luxembourg