MARKET INSIGHT: THE EVER-GROWING INFLUENCE OF AI

On a cold Wednesday, November 30 2022, Open AI’s ‘ChatGPT’ was launched, a generative artificial intelligence chatbot. It was concertedly viewed as nothing short of revolutionary, and the use of it quickly made its way into the business world.

The impact of AI is unprecedented. As of January 2025, ChatGPT has over 200 million weekly active users – proving to be a key step on the journey of AI which has no end in sight.

Gone are the days of speculating about the abilities of AI and what it will look like. There was a time when one might visualise future AI as Sonny from ‘I, Robot’. Now, AI is in your pocket, or in the air we breathe by voice command. It is omnipresent, almost god-like.

AI is more sophisticated than we once imagined, and we must keep that in mind when speculating about its role in the future. Innovations and smart technology beyond our grasp are yet to be imagined. AI is here and is the topic of more conversations than ever.

So, where does AI fit into corporate finance – or better yet, where does corporate finance fit into AI?…

Corporate finance leaders already lean on predictive analytics to collect data patterns insights. The result often allows teams to capitalise, quite literally, on opportunities, as well as more efficient risk management, which helps with critical (human) decision-making.

The uses and benefits of AI in corporate finance can already be seen through financial statement analysis, and in liquidity and working capital management. In the M&A market, AI can greatly enhance the due diligence and contract processes. AI is also used to achieve more realistic forecasts.

The impact of AI on corporate finance was among the key topics discussed by the speakers at the Corporate Finance Mid-Year Review, hosted by the Pro-Manchester Business Community, which was attended by KBS Corporate.

Subrah Krishnan-Harihara, Deputy Director at the Greater Manchester Chamber of Commerce, told the audience: “We talk a lot about AI primarily because of generative AI, which entered the market two years ago, but AI has been around for a long time.

“I think the really interesting use for AI in professional services will be primarily around data. But there was a case in the US where a lawyer prepared case notes using generative AI for someone who was suing an airline. In terms of all the case references, AI had made them up – so it was hallucinating.”

Referring back to the context of corporate finance, Subrah concluded: “We will use generative AI as a complementary technique, but the real advantage will be how good we can become with data forecasting.”

Can AI take the place of people?

AI is unarguably amazing. In corporate finance, automated transactions and processes free up humans to focus on strategic and compliance roles.

For leaders in corporate finance, the implementation of AI creates opportunities to increase efficiency, reduce costs and create new services – otherwise out of reach, and consistently achieved without the need for people management.

The use of AI in corporate finance seems inevitable, practical and a natural part of business evolution. But not everyone agrees…

A corporate finance specialist at the event, Sam Davies, told the audience: “I just don’t believe you can sell something without people – the experience between buying something online and buying something in person, especially if it’s something you care about.

“I think at some point in the future, some of the laborious typing we do probably won’t happen. You’ll have more automation around financial modelling and aspects of design. I think there will be a slickening of the system.

“What nobody talks about and is actually far more interesting than AI is Web 3 and blockchain and how that can impact the deals market in terms of building SPAs.

“I think businesses with fewer than 250 employees and a turnover of under ￡20million need to find a way to protect against the oncoming technology risk or they won’t be able to compete with those who invest in that technology.

“But at the core of it, people still buy from people. For example, if I had an employment issue I’d always still go and talk to someone because I wouldn’t trust a computer knew the right answer. I think that will always exist, and that we all still have jobs for the next 10 years.”

The earliest fear of AI was predicted decades ago, and the concern remains provident today: will AI replace humans in the workplace, and what are the consequences of this? After all, AI is seen as more efficient and can perform daily tasks better and faster than humans, such as those found in accountancy.

Fortunately, in corporate finance, the use of AI is likely to complement manual work, and serve humans in this respect rather than replace roles. It is, however, through this comforting realisation that we see the limitations of AI and can perhaps discredit some of its impact on corporate finance:

AI can process data much faster and more accurately. This is simply fact, and the result is that humans are removed from the input. However, the output is that humans are still essential in strategic decision-making and scenarios. This can also be said for forecasting and risk management.

In monitoring real-time performance, AI detects discrepancies in data, but it is humans who strategise and action changes, performing advanced analytics.

So where do we stand with AI now?

Ben Wildsmith, another corporate finance specialist at the event, shared his thoughts on the matter: “AI can do lots of things and has been around for many years. I think it’s just taking on more prominent roles within businesses.

“In terms of its life cycle, it’s gone from being like a small child with limited use in terms of the business world and is now in its adolescent years. I don’t know how long it will take to reach its grey-haired years, but I think it’s complementary and supports us in the day job because it gives advice faster and better when you prepare for meetings. It hasn’t created a massive void of redundancies.”

Sam Davies agreed with the sentiment: “A technology expert has compared AI currently to being like one of the brick-sized mobile phones in the 1980s (to highlight the scope for development).”

Ultimately, humans can use AI input as recommendation and as a rapid data source, whilst thinking critically which is unique to humans – and its use in corporate finance could be seen as being beneficial rather than as something to fear.

In business sales, AI’s automation of essential but repetitive and laborious manual tasks can free up a transaction adviser’s time for more customer-focused attention. AI can assist sales teams in understanding client needs and preferences, and predict closing likelihood.

With AI-driven sales forecasting, sales teams can make more data-driven decisions by analysing past outcomes and activities. Overall sales performance and efficiency can also be enhanced, as AI can help streamline processes and boost conversions.

And what do KBS Corporate experts think of AI’s impact on all things corporate finance?

David Gardner, Corporate Finance Managing Director, commented: “There’s a long way to go before there is the level of trust and confidence with AI that is currently present in what is a highly personally and professionally managed service.

“Currently, AI is useful to pull information together in a meaningful way on a timely basis. However, it still needs verifying and checking to ensure the completeness and accuracy of the information contained.

“AI concentrates on information that is publicly available or published online, whereas our niche client base can be highly confidential in nature and each have bespoke requirements and nuances that can only be determined through personal relationships and the dedication of time and resources to those clients.

“However, as AI develops and the sources of information become more varied, the potential for AI will no doubt grow and become a more viable option for everyday use, although never replacing the highly relationship-based approach that drives success within the corporate finance sector.

Mughees Saleem, Corporate Finance Director, added to this: “As with any new technology, there will be benefits and drawbacks from the application of AI within the Corporate Finance deal-making process.

“On one hand, AI can be leveraged from a market research/data collation perspective, as AI chatbots can be much more efficient at collating useful information and presenting it in an easy-to-digest format.

“On the other hand, the essence of dealmaking still requires the building of personal relationships with clients and buyers, and the human aspect of leveraging these relationships to get deals across the finishing line cannot be discounted in the age of AI.”

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