Don't panic! Why automation is good news for accountants.
The very mention of that word should have us shaking in our boots. At least, according to the media, who seem convinced that artificial intelligence and machine learning will render human labour redundant in the coming years. According to McKinsey, half of work activities in the global economy (worth $16 trillion in wages) have the potential to be automated by 2055.
Automation is set to transform industries across the global economy by optimising long-established work processes, reducing labour costs and improving the customer experience.
This is nothing new. The automation of tasks done by humans has been going on for centuries. To date, professional services have been insulated because they are complex, necessitating the collection and refinement of unstructured real-world data. Human judgement and relationship skills are hard to automate.
But the next generation of automation will be different, thanks to AI and machine learning. The pace of change has accelerated, and the scope of what can be automated has expanded, bringing professional services within range.
Machines are getting better at perception and analysis, both in terms of the quality and speed of outputs. Human genetics contain thousands of years of programmed knowledge, but technology is catching up because it has vastly bigger datasets to learn from.
Clearly automation is an important development, one that we should be mindful of when running our businesses and planning for the future. But has the impact of automation on the accountancy profession been overhyped? Should the UK’s 335,000 registered accountants – not to mention 166,000 accounting students – be worried?
The rise of accounting software like QuickBooks and Xero has changed the industry and made it easier for accountants to manage client work. Some speculate that the next wave of technological innovation has the potential to remove accountants from the equation altogether. And yet, serious questions remain concerning the ability of machines to manage the end-to-end accounting process, on-boarding clients, executing their wishes and filing tax returns with HMRC. These processes demand more than AI, technical expertise and raw computing power – they demand people skills. Discretion, empathy, intuition, creativity and experience are hard to programme with lines of code. And yet, accountants need these skills in abundance in order to manage the complex needs of a diverse client portfolio.
High profile commentators and publications disagree. Harvard Business Review predicts: “within decades the traditional professions will be dismantled, leaving most, but not all, professionals to be replaced by […] high-performing systems.” Others say that accountancy is particularly vulnerable to automation, since robots are best suited to predictable tasks when the cost per error is low and that most tax return decisions “aren’t that risky” because they're based on historical data that can be used by machines to anchor their decisions. Try telling that to a client!
The truth is, every client believes their tax return is the most important work on your desk. They demand accuracy and entrust their business to accountants who get things right first time. It will take years for technology to render human accountancy obsolete and disrupt small and mid-market accountancy firms. But in the meantime, it makes sense for accountants to consider a future where machines perform core accountancy functions, and position their businesses accordingly. This means a greater focus on advisory services and other offerings that are hard to automate.
Advice on business funding should be a key pillar of these services. By helping clients to obtain financing, small and mid-cap accountants in particular can remain relevant in the era of automation.
Capitalise.com enables businesses and their advisers to find, compare and select lenders for loans between £25k and £2m. We help accountancy firms to diversify their offerings and stay competitive by helping clients obtain business funding.
To find out more, visit our website.