Wednesday, April 08, 2015

Getting Finance Right By Automating Lying Humans Out

Financial people do many things wrong.  Sales people are generally the worst and their managers are right behind them.  Saying anything to close a deal is a typical bad habit.  Lying is hard to stop once it's financially rewarded.  The best way to stop it is to never start in the first place.  The next best way to stop it is by automating the functions that lying humans used to perform.

Brokers who lie to clients cause more than missed performance expectations when clients get wise.  They cause legal liabilities that bring lawsuits for misrepresentation.  Compensation on Wall Street has long been a colossal expense for firm that feel driven to pay top dollar for "talent."  The talented liars running brokerages and investment banks are about to meet the new digital world.  Automated sales processes will reduce Wall Street's highly paid sales forces to a handful of domain experts and their DevOps partners.  Everyone else will be obsolete.  The liars' legal problems will be gone when they are gone.

Public companies that send financial statements to the SEC are supposed to make them truthful.  It's hard to discover financial fraud but dedicated forensics examinations can uncover egregious frauds.  Most auditors aren't so dedicated because they just want to make it through the day.  Catching the more commonplace fudging is quite difficult.  Modern accounting rules give CFOs plenty of leeway to report odd things.  Outside auditors that keep teams embedded with large clients are prone to capture.  Enron got away with fraud thanks to its cozy relationship with Arthur Andersen.  Both companies no longer exist except as legal fictions needed to unwind assets on behalf of angry creditors.  Automated auditing is coming next after automated relationship management.  The botnets will share no sentiments for human buddies across the aisle.

Doing the right thing in finance always means reporting results honestly.  Many humans are not up to this task but somehow mask their deficiencies.  Very talented liars can fool a lot of dimwits for a long time.  Hardly anyone can be fooled forever.  Getting finance right will be much easier when automation drives lying humans out of the corner offices.