TMCnet Feature
April 03, 2020

Tech-Savvy CFOs, Armed With New FinTech Solutions, Assume Greater Strategic Responsibilities

FinTech advancements create new opportunities, responsibilities, key performance indicators (KPIs) and a new specialist: the tech-savvy Chief Financial Officer.

Financial-technology advancements are being created in response to -- and, in some cases, the anticipation of – the disruptive technologies significantly changing how value gets created today. They also are driving the creation of new finance leadership opportunities, responsibilities, key performance indicators (KPIs) and a new specialist: the tech-savvy Chief Financial Officer.

“No executive should be more concerned about the opportunities and risks digital represents for their business than the CFO,” notes a report from Ernst & Young. “Traditional finance tools can't keep up, so it's never been more essential that finance functions begin their journey to digital transformation.”

Digital tools, however, aren’t just “updating core systems and existing capabilities,” Deloitte (News - Alert) notes. Other available solutions, the company says, are new and innovative capabilities.

  • Although CFO duties are changing in real-time, these developments actually have been taking place for some time. Consider: A 2015 survey on CFO needs by Gartner (News - Alert) found that more than 80% of finance-focused applications were being replaced by cloud-based applications and that – in more than half the cases – these apps became a key component of finance department KPIs.
  • Where finance departments have digitized, the McKinsey Global Survey finds that -- in more than 25% of their work -- respondents say they realized “notable gains” from the change. Moreover, 70 percent say their organizations realized “modest or substantial” returns on investment, compared with the 38 percent whose finance functions digitized less than one-quarter of the work.

An Array of New Capabilities

Armed with these digital tools, CFOs are able to:

  • run a more agile and productive department
  • expand beyond the numbers when they assess impacts on performance
  • depend upon data that is close to being perfect
  • better identify and monitor internal and external trends, opportunities and risks
  • better mitigate traditional risk and implement business controls
  • leverage big data to drive growth and innovation

“Tech-driven changes have freed CFOs from much of the day-to-day minutiae so they can take on more back-end and strategic projects,” writes cloud-accounting firm RinehimerBaker. “They can evaluate more data, report on it in new ways, and work with other company leaders to plan for the future.”

Planning, forecasting, monitoring and reporting are all areas where the tech-savvy CFO is experiencing change: Manual accounting is being phased out; accounts payable are being handled more efficiently; scenario planning is being accomplished in a fraction of the time it formerly required, and staff is spending less time on data gathering and instead is focusing on IT strategic risk and opportunity analysis.

Although these changes are being seen in companies of all sizes, KPMG says they are especially important for mid-market companies, where value creation now is teamed up with the historical job requirement of value preservation.

“The bottom line: mid-market companies need CFOs who are strong business partners,” says KPMG’s John Mulhall.

The New Generation of KPIs

Irrespective of company size, all of this requires a new generation of KPIs that link a large number of non-financial indicators from across the company to actual bottom-line performance. A study by Adaptive Insights notes that primary financial KPIs are reported at the end of the fiscal month and, in contrast, nonfinancial KPIs are reported during the month … providing time for management to react to them.

The connection between intangibles and economic performance can be found in many of the KPIs that are working their way into a CFO’s job description. These include:

  • educating the finance staff in how to better assess and report analytics to departments across the company
  • aligning with Human Resources to identify and successfully recruit tech-focused team members
  • teaming with the Marketing and Product departments to become more involved in customer-experience metrics and then, in turn, developing a means for linking CX metrics to financial performance KPIs
  • coordinating with Marketing to better link brand perceptions (key message resonance; customer reviews; customer churn, etc.) with financial performance

Going Forward

Finally, McKinsey & Company (News - Alert) points out that more than half of the CFO or finance functions are at the forefront of digitization, whether it is automation, analytics, robotic processes, or data visualization. “More than half have touched these technologies, which is remarkable,” says Ankur Agrawal, a McKinsey partner. “And then many more are considering the technological evolution of the function.”

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