One area where AI / bots are well established (relatively speaking) is financial management. Traders and fund managers have been using algorithms for what, decades? We now see automated wealth management filtering down to personal banking, Wealthify, Nutmeg, and so on.
But where’s the SME equivalent? An automated financial assistant for businesses?
Here’s some data from Government and Industry research, coupled with Fractal Labs own customer interviews.
72% of UK SMEs don’t have a financially qualified person on the team. 50% consider analysis financial data a major pain point.
42% consider aggregating and visualising data difficult.
40% of SMEs only apply for financing a week after it is needed.
According to Fractal Labs, there’s a financial cost of around £3B per year due to this. There’s also a human cost of unnecessarily lost businesses, lost jobs, and subsequent debt and distress.
If a business were ‘conscious’ it could fully explain to the owner / managers exactly what its position was at any given time, and based on that, what it’s position will be in the near and medium future. A conscious accounting platform would know what was going to happen with itself, it has all the data, it knows what it has in the bank, what it owes, what it’s owed, when it’s likely to receive payments, all the information is already there. The problem the business has is communicating the information to the human making the decisions.
If a business knows it’s going to temporarily run out of cash in 39 days, going into a negative cash situation for 19 days before coming back into a positive situation after that time, it would very much like to be able to tell the MD. Even better, to have already have arranged an overdraft to cover the payroll happening in 44 days. The information is always there. The solutions to the problems are always there. The problem is the disconnect between the information, the human decision makers, and the solutions. Join these together and the failure rate of SME’s would tumble.
What would it take to deliver this?
- Stage 1. To begin with a platform that you can actually ask what’s going on, in natural language, and that responds in an immediate and direct way, giving options for further questioning. That’s a very good start.
- Stage 2. The next stage of the platform is for it to flag up imminent buy viagra levitra and cialis danger before it becomes a serious problem.
- Stage 3. The next stage is to flag up problems, and offer a series of pre approved solutions. “Good morning MD. We will run out of cash in 56 days, for a period of 39 days, due to the invoice default of client XYZ. A lending facility with ABC has been approved to cover this shortfall period. Shall we proceed? Yes? / No? / More information?
- Stage 4. Flags up potential opportunities as well.
“Hi there MD, we have £98,076 in the bank for 24 days before payroll, we could invest it with zero risk at 0.88% additional interest. Yes? No? More information?”
And there we enter the realm of robo financial director. As 72% of UK SME’s don’t have a financially qualified person on board that would be a very valuable addition to lot of companies.
Fractal as an app and web based financial assistant is, from the demo I saw, somewhere between stages 3 and 4. Their intention is to make fractal available not just to SMEs but also the account manager at their banks and also their accountants, giving everyone a full picture of financial performance coupled with the commercial connections to improve it.
Some background info…
Name: Nicholas Heller
Born: Toronto, Canada, 1975
Roles: Fractal Labs, CEO & Co-Founder SVC2UK, Board of Trustee
Biography: Co-founder and CEO of Fractal Labs, an automated Financial Assistant for SMEs. For the past 19+ years, Nick has focused his passion on projects of positive consequence. He previously held several leadership roles at Google, across Business Development and Partnerships. Prior to that, Nick worked in media at Viacom, built an early eCommerce platform as Founder of Degrees of Separation, and as a trader at RBC Capital Markets. Nicholas pursues a portfolio of interests that include serving on boards of companies, advising and investing. He is a trustee at SVC2UK, and a mentor at early stage incubator Seedcamp, Level39 and Founders4Schools. He holds a BA from the Western University of Ontario, Canada, and an MBA from the University of Cambridge.
Favourite Books: What I Talk About When I Talk About Running, Haruki Murakami
Favourite Films: Ferris Bueller’s Day O , John Hughes
Hobbies: Coureur de bois
Business Ethos: Relaxed intensity
Favourite CEO: Reid Hoffman, LinkedIn
Quote: “Colorless green ideas sleep furiously.” Noam Chomsky