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If your finance team isn't already using predictive analytics, chances are high they will be soon. In fact, the predictive analytics market is expected to reach $3.6 billion by 2020, with financial and risk management accounting for one of top areas of application, according to Global Industry Analysts, Inc.
"Within a few years, every finance team will be using some form of predictive analytics because it will be embedded in their software applications," says Rich Clayton, vice president of Oracle's Business Analytics Product Group. Read: You don't need to be a programmer to make use of it.
A little foresight goes a long way
Predictive analytics can enhance a variety of finance processes, as well as offer insights into business problems and areas of potential. Here are several ways finance leaders are putting predictive analytics to use:
Proceed with caution
The potential for predictive analytics is only growing—and while the possibilities are exciting, there can also be serious pitfalls. This targeted use of data can lead to privacy missteps, faulty use of data and even discrimination. For example, companies can end up losing customers if they overstep perceived personal privacy boundaries; in some cases, they can even break privacy laws, depending on the country.
Clayton says such possible pitfalls are why finance teams need to establish some ethical oversight as they ramp up their analytics capabilities, ensuring that the standards and values of the company are being adhered to. The key: Applying critical thinking to the technological process. "It's an opportunity to combine human judgment with analytics and automation," he says. "The union of those things is the future of finance."
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