Skip to main content
Industry

3 ways Microsoft AI capabilities are helping public finance agencies reignite economies

As the world becomes more complex and economically interconnected, governments are facing extraordinary pressures to ensure that their tax policies and collection services are fair, efficient, and accountable. This resonates with our work at Microsoft for Public Finance, where our focus is to help governments increase efficiency in public finance, combat tax fraud and abuse, and foster economic development. Today, government agencies are actively evaluating how to utilize AI, particularly generative AI, to spark transformation in ways that help improve accountability and reignite economic progress. 

Microsoft for Public Finance

Help reignite the economy and drive financial accountability

Two businesswomen are in the office using laptop, digital tablet and chart papers while working together.

The new AI opportunities for public finance  

Public finance organizations are generally well positioned to take advantage of AI’s ability to redefine their services, operations, and impacts on government. Those who have adopted the Microsoft Cloud and Microsoft productivity applications are benefiting from the fact that, over the past decade, and especially the last 18 months, Microsoft has been integrating AI capabilities throughout our offerings.  

Copilots—AI-driven software assistants—are delivering immediate opportunities for ingenuity among ground-level and operational employees, as seen in Microsoft Copilot for Microsoft 365, the new Microsoft Copilot for Finance, and Microsoft Bing. For business and IT leaders, copilots across Microsoft Power Platform, Dynamics 365, Security, and GitHub make it simple to unlock powerful new capabilities with embedded, low-code features. And in cases where advanced solutions are called for, Microsoft Azure OpenAI Service enables the development of customized solutions such as virtual assistants, chatbots, automated systems, and intelligent applications.  

Thanks to the broad range of these capabilities, public finance agencies can move quickly to redefine their role and leverage new opportunities. To make this vision a reality, we focus on AI innovation with three specific objectives in mind.  

1. Simplify taxpayer experience and revenue collection 

One great opportunity with AI is to make it easier for people and businesses to pay the right amounts of taxes and fees, in ways that are embedded into their lives. AI powered solutions for taxation, customs, and license and permit processes can be simple and sensible while providing the security and compliance benefits of the cloud. AI helps with managing data and fostering faster ways of information sharing across agencies—a challenge that by one estimate costs European Union governments more than 50 billion euros a year.1 

In this regard, AI can help in many ways, including: 

  • Modernizing taxpayer services—New engagement models can proactively build data intelligence to improve revenue collection, while reducing the cost of compliance, increasing agility, and improving productivity. Taxpayers can enjoy seamless experiences fostering a greater sense of trust in agencies. This proved to be the case with Estonia’s Information System Authority, which created an AI assistant that grants people with access to secure information about vital government services in a matter of seconds as opposed to days. 
  • Boosting employee productivity—Employees tend to be more effective with tools that minimize drudgery and help them focus on delivering results and finding solutions. User-friendly, interoperable, and automated processes foster better productivity, and AI enables new ways to help employees find the right information at the right time. A key factor in realizing this potential is upskilling the workforce, which is why the Bank of Canada implemented an ongoing training initiative based on Microsoft Learn that provides individualized learning pathways with online on-demand and instructor-led content.  

2. Drive informed budgeting for economic development 

Trillions of dollars are distributed by governments around the world to households, businesses, local authorities, and others for stimulus, recovery, and resilience plans.2 This puts an enormous responsibility on budget and treasury agencies, which have the complex task of allocating public resources in ways that measurably impact economic development. These agencies require innovative, secure tools that enable them to allocate the right support to the right beneficiary at the right time. Done well, these solutions also enhance collaboration between government and the private sector, which ultimately fosters financial inclusion. 

To meet these challenges, AI can help by: 

  • Modernizing budget planning and execution—Employees in budgeting agencies often deal with legacy systems that are insufficient for accurate forecasting and planning. AI can help with new tools that improve these processes, as well as automate budget distribution, deliver reports, and improve forecast precision. Low-code, AI-enhanced tools can accelerate the creation of powerful solutions. In Japan, for example, the Ministry of Economy, Trade and Industry slashed development timeframes from one year to as little as one month by adopting Microsoft Power Platform.  
  • Boosting employee productivity—Treasury agencies have significant management responsibilities, and high demands to operate with accountability and transparency. Cloud and AI can empower teams to better manage liquidity, optimize debt management, and manage reserves and investments, while also being efficient and secure. Productivity at the United Kingdom Department for Environment, Food, and Rural Affairs improved dramatically with a new cloud solution to provide a customer portal, streamline business processes, and add real-time reporting. By automating claim entry, they processed more than 40% of their annual 250,000 payments in the first three months.  

3. Mitigate fraud and corruption in public finance 

Fraud and corruption are major problems that incur trillions of dollars in losses worldwide every year.3 AI can help public finance agencies reverse the trend by helping to spot activities that may signal fraud, evasion, or abuse of public funds. To do this, agencies need solutions that give them fast, accurate, and comprehensive analytics, with a 360-degree view of taxpayer profiles to make informed decisions. 

Examples of how AI can help mitigate fraud and corruption include: 

  • Improving compliance and protecting against fraud and corruption—Public finance agencies need solutions to combat illegal activities while also safeguarding taxpayers, employees, and all their data. AI enables solutions that analyze data from traditionally siloed, disconnected sources to detect anomalies and derive insights in previously impossible ways, while inherently protecting to ensure security and regulatory compliance. SymphonyAI, an enterprise software company that employs AI to solve financial crime, recently launched a copilot for investigators that automatically collects, collates, and summarizes financial and third-party information. Early experience shows that it can improve investigator productivity by more than 60%.  
  • Enabling modern risk management—Risk is often inherent for public finance agencies, so teams need effective, modern approaches to risk management. These solutions should deliver monitoring and reporting across organizations and agencies, ensuring that everyone has complete, appropriate access to information. A good example is an Electronic Invoice Anomaly Detector built jointly by Microsoft and the Inter-American Center of Tax Administrations (CIAT), which strengthens electronic invoicing and reduces fraud and evasion for tax administrators in its member and associate member countries worldwide. 

The essential role of responsible AI 

The promise of AI would be impossible without trust. That is why Microsoft has long been a leader in ensuring the development of responsible AI, with principles designed to put people first. We believe AI exists to enhance human capabilities, not replace them, and we are committed to empowering responsible AI practices that benefit the world at large.  

The Microsoft Responsible AI Standard defines product development requirements for Microsoft technologies, guided by the principles of fairness, inclusivity, reliability and safety, transparency, privacy and security, and accountability. We believe this holistic approach can help public finance agencies deliver actionable results for their communities, with a minimum of risk and unintended consequences.  

Empowering public finance agencies with data and AI

It is an exciting time to be in public finance. Connected systems driven by data and AI set the stage for governments to unlock new possibilities such as tax compliance by design, intelligent connected trade windows, digital currency, outcomes-based budgeting, and cyber and financial crime detection and prevention convergence.

To learn more about how Microsoft is helping public finance agencies to reignite economies and improve accountability with AI, visit Microsoft for Public Finance.


1 Politico, “Billions of euros lost to poor tax data, EU watchdog says,” Bjarke Smith-Meyer, January 2021.

2 OECD, Global Outlook on Financing for Sustainable Development 2021, November 2020.

3 United Nations, “Global Cost of Corruption at Least 5 Per Cent of World Gross Domestic Product, Secretary-General Tells Security Council, Citing World Economic Forum Data,” September 2018.