Artificial Intelligence (AI) is rapidly making big changes to the small business landscape, enabling businesses to work smarter, faster, and more efficiently. With spending on AI in the US predicted to reach $120 billion by 2025, many firms now use AI to automate routine tasks and help them make more informed, data-driven decisions. Its impact on small business finance is becoming increasingly clear.
With its ability to analyze huge amounts of data, identify trends and automate processes, AI has the potential to transform the way small businesses manage their finances, become more efficient and increase profitability. Small businesses will also be able to minimize financial losses thanks to AI-powered fraud detection tools, reduce risks with predictive analytics and optimize resources. But despite the enormous advantages of AI, it also poses potential challenges that small business owners need to be aware of to enable them to make informed decisions about implementing AI in their financial operations.
We recently sat down with Damian Brychcy, Chief Product Officer and US Managing Director for Capital on Tap, to talk about the impact of AI on small business finance. Here, he shares his advice for small business owners on maximizing AI’s potential and how Capital on Tap is leveraging AI for its own decision-making.
1. There has been a lot of media coverage about the impact of AI, some good and some bad. Starting with the positives, how do you think small businesses can leverage AI to their advantage?
Small businesses can leverage AI in two primary use cases, either as a way to automate and simplify work streams or as a way to generate more sales (with some overlap between the two).
In the first bucket, I would tell small business owners to automate as much as possible. Use it for the first draft of a cold email to a prospective customer, the reply email to a customer concern, or even the ability to summarize a recorded phone call transcript. These are tasks that AI can produce very quickly and can streamline a lot of work for a business owner.
In the second bucket, AI has the ability to unlock significant revenue growth for small business owners. If you run a florist business and you have your sales data for the past three years, you could have AI help ensure you have the right stock of flowers and set the right pricing so you maximize revenue. AI can spot patterns in what day of the week, hour of the day, or time of year when people buy flowers that are way more accurate than trying to do it yourself.
2. On the flip side, what risks are there with AI, and what advice would you give to small businesses?
I think the biggest risk of AI is the over-automation of specific tasks and the potential advantage of large incumbents to use AI faster than any small business owner.
The over-automation point concerns relying on AI too much and taking out any “personality” in your business. To fight this, I’d make sure anything customer-facing is still reviewed by an owner or their team rather than outsourcing the critical customer touchpoints.
The other risk is that a lot of AI tools today are pretty technical and require you to use APIs and your own data to really get the most out of them. This technical and data advantage majorly favors incumbents as they have tremendous amounts of data and teams of engineers ready to build new applications with AI.
3. “Small businesses must take a proactive approach to AI implementation and recognize that it should not replace human involvement.” How do you think AI can improve customer experience?
AI can supercharge the customer experience in two ways. First, it has the capacity to increase the speed at which a customer interacts with Capital on Tap by up to 10 times. Using AI, we can provide a five-bullet point summary to our agents of every action that a customer has taken with our company over the past decade. This means they know precisely what is happening with a customer within seconds and not minutes. We can also draft potential e-mail and chat responses to any customer queries and then our agents can review the responses, again saving tons of time for our customers and our company.
Second, it gives us the power to highlight the right features or product functions to our customers at the right time. We can train an AI engine that will help say: “This customer is in this state at this time. I’m going to highlight this feature of our product to make their life better.”
4. “Chatbots can be used as the first line of defense (in customer service)…answering most customer queries before they need to speak to a human.” How is Capital on Tap leveraging AI to make more informed decisions?
We’ve had millions of customer “interactions” – calls, chats, and e-mails over the past decade of running Capital on Tap. We can use all these interactions to help us learn what is the best possible customer experience and how to best serve the customer.
More importantly, we can use these millions of interactions to help us refine how we can improve our product so customers never have issues and never have to speak to us – unless they want to! We look at every interaction as a product defect that can be rectified.
5. “We are exploring how we can implement deeper AI to improve our credit underwriting.” Do you see a time when AI enables virtual financial directors to support small businesses on a daily basis?
I don’t think most small businesses want a finance director to help them on a daily basis. They want to make sure their cash is earning interest, paying down any unneeded debt, and making sure they get the best price on everything they buy for their business. But you don’t want advice on how to do that, you just want that done in the background so you don’t have to think about it. I think AI will give us the tools to help small business owners automate their financial decisions to create the best possible experience for them and make their lives easier.
AI is transforming how small businesses operate and compete in the marketplace, providing greater opportunities for improving efficiency, decision-making, and customer service. As AI continues to evolve, we can expect to see more small businesses leverage it to their advantage. Small businesses will experience benefits such as gaining valuable insights from data, automating routine tasks, and improving the customer experience to enable them to succeed in an increasingly data-driven and digitized landscape.
Founder Dinis Guarda
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