Artificial Intelligence (AI) is rising to the top of the business agenda. Literally every day we see ever-more breath-taking announcements of its capabilities from technology vendors and increasingly stark warnings of its potential to automate knowledge, expertise and advice-based sectors such as accountancy and thus render millions of professionals unemployed in its wake.
Within the sector, many firms are already deep into their exploration of the potential uses of AI inside their firms and advising clients on potential AI opportunities and impacts. However, hesitancy still dominates management thinking, with innovation being held back by fears about the potential for AI to automate and eventually commoditize large parts of a US$450 Billion sector.
However, these concerns seem to miss the bigger picture opportunity – namely that every sector in the US$78 Trillion global economy will be transformed by the combined effects of AI and a range of other technologies. The speed, power, scope, and capability of these disruptive change agents is growing at an exponential rate or faster. Developments in fields such as quantum computing, blockchain, the internet of things (IoT), big data, cloud services, smart cities, human augmentation, 3D and 4D printing, smart nanomaterials, and synthetic biology could provide solutions that will be hundreds or thousands of times more powerful and impactful within a decade.
The resulting changes will literally bring about the total transformation of every business sector, the birth of new trillion-dollar industries and a complete rethinking of business models, accountancy standards, risk assessment approaches, financial reporting practices, legal and regulatory frameworks, and the supporting governance systems for literally every activity on the planet. By 2025, the global economy could reach US$120 Trillion with over fifty per cent coming from emerging sectors and those that don’t even exist today.
Servicing this new world offers the potential for exponential growth in accounting firms and could bring about the biggest transformation in the sector since its birth.
The scale of this opportunity is lost on or ignored by all but a few genuinely forward-thinking players in the sector. The majority are either unaware of AI’s potential impact or focused on relatively narrow internal applications of AI. Decision making is clouded by fears of commoditizing premium revenue streams, losing out to technology providers, depersonalization, and the loss of professional roles. These fears have in turn driven reluctance to understand and embrace the real opportunities that could emerge as AI and its disruptive relations facilitate the reinvention of our world.
There are clearly benefits to be gained from automating internal functions, building real-time accounting and audit analytics into clients’ transactional systems, providing rigorous and comprehensive decision support to professionals in key areas of legislative complexity, and automating the analysis of client financials. However, the potential gains are almost trivial compared to the opportunities that arise from supporting the emergence of the AI-enabled new economy.
Winning in the Next Economy
Whilst AI can clearly be disruptive within accounting firms, the core opportunity lies in the broader marketplace. AI and the technologies it enables such as robotics, blockchain, FinTech, InsureTech, and Medtech, will drive the reinvention of existing sectors from media, healthcare, education, and transport to retail, construction, and financial services. AI is already enabling the next wave of trillion-dollar sectors and developments such as autonomous vehicles, employee free distributed autonomous organisations, 3D printed buildings, superfast Hyperloop rail transit systems, synthetic fuels, self-repairing construction materials, intelligent cities, blockchain data networks, and smart contracts. AI is also driving interest in new economic paradigms, new notions of money, and digital currencies.
All these developments will require the interpretation, reframing and redrafting of accountancy standards and practices, audit procedures, risk management, valuation techniques, reporting frameworks and the creation of new accounting and legal concepts and financial dispute resolution mechanisms to encompass new political, economic, social, and business paradigms. So, while AI will have a big impact on the internal functioning of accounting firms, the true exponential growth opportunity lies in helping, governments, businesses and civil society to understand, account for, adjust to, and manage the risks of the coming waves of AI-enabled disruption.
Here are a few examples of these new accounting sector opportunities that are emerging:
• The emergence of autonomous self-driving vehicles opens up the potential for self-owning assets including buildings and public infrastructure – what new accounting practices would be required to govern, audit and assess the viability of this new asset class?
• New business models such as per second pricing for insurance will require new approaches to accounting, risk and viability assessment
• How will we account for transactions conducted in digital currencies and via blockchains where the source of the funds and information is not known and traditional money laundering rules may be impossible to administer?
• What are the procedures required for rollback, recovery, contract review, and dispute arbitration for fully automated, blockchain based financial transaction systems?
• How should we account for and address the taxation implications of firms that are using AI systems to move their financial assets around the world on a continuous basis in real time to attract the best second-by-second interest rates?
• How should we value goods and services and their relative profitability when delivery may be several decades into the future e.g. cryogenic freezing of humans for regeneration at some unknown point in the future?
The next three to five years will see these and many more opportunities emerge through as old sectors transform and new ones emerge. AI and the related technologies will enable the creation of new markets, commercial concepts, business models, and delivery mechanisms – ideas we couldn’t even begin to imagine or describe today. Future focused accounting firms have the opportunity to embrace this new world thinking and achieve exponential growth in revenues – but we must give ourselves permission to invest the time to really understand the new generation of technologies and what they can make possible.
There is no doubt these opportunities are already emerging, and many firms will be able to capitalize on them – the big question now is what will it take for our firm to be among the winners when we write the history of the next five years.