Florence Bastos, CIPFA Public Finance Technical Advisor
Artificial intelligence (AI) is transforming industries, including public finance. While AI offers opportunities for greater efficiency, decision-making, and service delivery, it also presents challenges. From ethical concerns to potential job displacement, public finance professionals must carefully navigate this evolving landscape. What does AI mean for public finance, and how can professionals adapt?
AI impact on Public Finance
AI can automate routine tasks like payroll and financial reporting, while offering tools to detect trends and risks in large datasets. In public finance, AI promises faster, more accurate processes in fraud detection, budgeting, and forecasting. As AI enhances routine operations, finance professionals can focus on strategic tasks, but this requires careful planning and education.
AI’s potential is already visible in public finance. The UK's Department for Work and Pensions uses AI to assess patterns and identify potentially suspicious claims for Universal Credit which are then investigated by a human expert to reduce loss of public funds to fraud.
Globally, AI-driven solutions in healthcare, urban planning, and education are reducing long-term service demands by addressing issues before they escalate. Preventative use cases for AI such as these can improve financial sustainability whilst increasing quality of public services.
Smarter Financial Management
AI is increasingly used in financial operations, automating tasks like invoice processing and demand forecasting. As transaction volumes grow, AI helps improve accuracy and transparency.
To unlock AI’s potential, organisations must assess readiness. Frameworks like AI Singapore’s AI Readiness Index help evaluate preparedness across critical areas like data, infrastructure, and ethics, ensuring AI is implemented responsibly.
Accountability: A Key Concern
AI can enhance accountability in public finance, but it requires strong oversight. Finance professionals must understand AI’s capabilities and limitations to ensure ethical use. Collaboration between finance experts, data scientists, and AI specialists is essential for creating effective, trusted systems.
Finance teams are also crucial in adapting AI governance standards and ensuring systems meet ethical and regulatory requirements. This will be key to maintaining transparency and public confidence.
The Role of Finance Professionals
Public finance professionals are pivotal in evaluating AI investments. Beyond assessing financial benefits, they must consider social impacts, such as job displacement. Finance teams will evaluate AI pilot projects, measure economic value, and ensure AI aligns with public service goals.
Embracing Change
As AI reshapes public finance, professionals must adapt. AI is not just a tool to streamline processes; it’s a catalyst for broader change. Reskilling will be essential, as professionals take on more strategic roles.
Public finance bodies like CIPFA will guide this transition, fostering collaboration between experts, government, and finance teams. Clear governance and accountability will be key to earning public trust in AI-powered services.