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As artificial intelligence reshapes industries worldwide, its influence on public finance is becoming increasingly evident. AI offers a unique opportunity to enhance efficiency, improve decision-making, and foster accountability.
Yet, the road ahead is not without challenges. From job displacement to privacy concerns, AI weaves a tightrope between innovation and accountability. There lies a need to leverage such technological advancements to improve services while maintaining accountability.
This leaves us asking: what do public finance professionals need to know about AI today, and how can the public sector navigate technological turbulence to deliver better services for better lives?
The rise of AI in public finance
With the capacity to automate repetitive tasks, identify patterns in vast datasets, and simulate complex decision-making processes, AI has the potential to streamline operations in areas such as payroll processing, financial reporting, and fraud detection.
AI technologies, ranging from rule-based models to advanced deep learning algorithms, are transforming how governments manage finances. This shift promises not only increased productivity but also more efficient service delivery.
Real world application
AI in the public sector is already making a difference. The UK’s Department for Work and Pensions uses a ‘White Mail’ AI technology to process the 22,000 letters received daily, reducing the time it takes to identify vulnerable individuals from weeks to just one day.
Similarly, many aspects of public services are developing proof of concept to apply AI to healthcare, town planning and education.
In this way, AI allows the sector to prioritise prevention, easing demand for the long term. The result can be an expansion of capacity to tackle ever-increasing demand and the potential for quicker, more efficient service delivery to the public.
Finance gets smarter
As transaction volumes grow, AI and automation are being integrated into routine financial processes such as payables, receivables, and financial reporting. AI-driven Enterprise Resource Planning systems can automate invoice verification, process supplier invoices, and facilitate demand forecasting.
However, unlocking the full value of these technologies requires a certain level of preparedness. AI readiness frameworks, such as AI Singapore’s AI Readiness Index, help organisations assess their readiness across key pillars: organisational, ethical, business value, data and infrastructure. This holistic approach ensures that AI deployment is both effective and responsible.
Enhancing accountability
AI can play a significant role in improving accountability in public finance. However, this requires strong AI literacy among finance professionals. Understanding AI’s capabilities and limitations is crucial for ensuring that it is applied effectively and ethically.
Collaboration between finance professionals, data scientists, and AI specialists is essential. Finance teams will need to redesign processes to incorporate AI, provide feedback to improve AI models, and evaluate the cost and benefits of AI solutions.
Public finance professionals will also play a pivotal role in assessing AI systems post-implementation, measuring their performance and providing assurance that appropriate safeguards are in place.
Additionally, finance teams have a crucial role in providing assurance that AI systems are operating as intended. The government’s AI governance framework outlines the need for clear guidelines within each sector, and finance professionals will be instrumental in setting guidelines for AI governance.
The Strategic Role of Finance Professionals
At a strategic level, public finance professionals must support the evaluation of AI investments. This includes challenging assumptions about the benefits of AI and considering the social costs, such as job displacement. Finance professionals will also need to measure the economic value of AI pilots and assess the success of AI systems once implemented.
Embrace the future
As the public sector embraces AI to streamline operations and focus on more impactful work, public finance professionals must weigh both the risks and rewards of this evolving technology.
For the public sector to attract and retain top talent, adopting AI isn’t just an option – it’s essential. Reskilling will be key as AI reshapes finance roles, requiring professionals to adapt.
CIPFA plays a crucial role in guiding this transition, fostering collaboration between government, experts, and finance professionals. Establishing clear AI governance and assurance frameworks will be vital to earning public trust in AI-enabled services.
To learn more, stay tuned for CIPFA’s series of technology themed events in November. More details coming soon.
