RESEARCH ON AI APPLICATION TO COST ACCOUNTING: THE POSSIBILITY OF SOLVING CHALLENGES IN BANKING ACTIVITY-BASED COSTING

Abstract

ABSTRACT Activity-Based Costing(ABC) was successively introduced to the Japanese banking industry mainly in the 2000s. However, from the 2010s onward, banks that had applied ABC fell into a situation where cost accounting staff became fixed, delayed delivery of cost data for use in management, and ABC was difficult to respond to changes in strategy and organization. One of the issues that cause these problems is the excessive burden of operation and maintenance of ABC. Therefore, we will examine the possibility of solving the problem of excessive burden of operation and maintenance by applying AI. The research method was action-research in which staff members of the bank actually applied AI to one of the Japanese banks currently applying ABC and evaluated whether or not it would lead to a reduction in the operation and maintenance burden. The results showed that the current ABC and the ABC with AI were able to calculate the same quality of results much faster than the current ABC. This allowed us to make decisions faster than anywhere else, and had a higher impact on management. In other words, it became clear that one of the ABC issues that had been thought to be difficult to solve in the Japanese banking industry could be solved by using AI, which has been in full swing since the latter half of the 2010s. This study is limited to the study of the effect of AI improvements to ABC as applied to service industries such as banking. However, the results of this study have significant implications for the effective and efficient operation of management accounting in all industries. Keywords Activity-Based Costing; Bank; management accounting; Artificial Intelligence; machine learning; digital transformation