8December 2022OPINIONIN MYFew trends have received more attention among business leaders in the past decade than innovation. With buzz words like AI and machine learning so often thrown around, it can be hard to tell where advances in new technology and data meet realistic use cases and the resultant impact. Although the promise of a tech-induced business revolution can seem unrealistic, we are beginning to see real progress in the application of technology and the ability to harness new data sets. Increasingly finance and accounting functions will be able to take advantage of new, data-driven opportunities to get an edge. To do this, CFOs will need strategies for data, cloud computing and talent. AI is the broader encompassing category of using computer science to receive inputs and make decisions. Machine Learning is a sub-set of AI that allows the computer to learn from a distinct set of data inputs without explicit programming. Both are being used to develop more sophisticated financial models, including predictive models that enable businesses to better understand market and company signals and even probabilities of potential outcomes. As a result, "data is the new oil;" businesses not leveraging vast amounts of structured, semi-structured and unstructured content will find themselves running out of fuel to make critical business decisions or advise clients around potential scenarios. With vendors now offering a wide range of datasets that were unavailable several years ago, and alternative data like geo-spatial and satellite imagery reemerging as viable resources to drive differentiable outcomes, executives have never had more information at their disposal. But the question remains: are companies using it effectively? For this reason, executives need to consider a data strategy as critical to the success of their business. For businesses in highly-cyclical industries, particularly those impacted by fluctuating commodity prices, accurate forecasting of macroeconomic indicators like GDP, consumer price index or housing starts is critical. Given these leading indicators are published with a monthly or quarterly cadence, firms have limited reaction time to adjust strategic direction. As such, CFOs may seek analytical methodologies to get early warnings in anticipation of macroeconomic environmental changes. This enables proactive decision making around risk exposure, asset sales, capital investments, and activity forecasts. By combining internal, proprietary company data with IMPACT OF EMERGING TECHNOLOGIES IN FINANCIAL SERVICESBy Lena Mass-Cresnik, Chief Data Officer, Moelis & Company
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