The number of areas a CFO's responsibilities spans have significantly changed in the past years. From an average of four in 2016, up to six at the time of the survey. Most notable is the increasing importance of board engagement and digitization (all things automation, cloud computing, data visualization, etc.).
Indeed, the share reporting digitization responsibilities has doubled to around a third, despite also showing an under-digitization in the financial industry. Most strikingly, two out of every three respondents report that less than a quarter of their responsibilities have been automated or digitized in the past years, despite a third reporting major organizational changes pertaining to these categories.
“Amid a raft of new duties for CFOs, our survey suggests that finance leaders are well positioned to lead the C-suite agenda by championing transformations, digitization, and capability building.” -McKinsey, 2018
So, what’s the deal? Why and how CFOs are leading this change within financial organizations?
CFOs shepherd this change because of the founding principle of any financial firm: it's responsibility to its shareholders. As such, any company aiming to undertake massive capital investments that will substantially change the infrastructure of the company, needs to focus on the performance of these investments. As we can see from the above chart, to really see dividends from digitization, firms cannot just go halfway. So how does it work for the top of the class?
“Make a fundamental shift in how to spend time.”
With increased responsibilities and opportunities, time management is going to be critical. They should be looking for new technologies, methodologies, and management approaches to help them determine where to make the necessary trade-offs.
“Embrace digital technologies.”
Finance companies are increasingly responsible for larger amounts of critical company data, which is an important enabler of organizational transformation. As such, finance leaders, CFOs, need to better exploit these opportunities in the digital space. This should not be done in a vacuum, nor should it be disruptive to operations. To start, CFOs should begin by prioritizing quick wins while developing the long-term strategy. Focusing on value-added activities explicitly and delegating or automating other tasks.
“Put talent front and center.”
One of the key ways CFOs have been dealing with increased responsibilities is through capability building and talent development. Despite remaining a small portion of their responsibilities, they are nonetheless areas that have room to grow.
So what does this mean for the typical financial services firm?
Considering that many firms have undergone strategic reshaping at various levels (branding, product offering, services), I see the next steps to developing the business in the digitization of operations.
Without disrupting operations, opening a support position under the CFO to explore the benefits and use cases of digital technology could be highly beneficial to these firms, without implying significant upfront costs. I believe there would be value in having a ‘shadow’ under the CFO to help with traditional responsibilities where needed to liberate the schedule and support the exploration of these digitization opportunities. This would show an eager yet careful approach of digital technologies, which could positively reflect on investor sentiment.
Concretely, this position would provide ad hoc support to traditional operations and, as the individual familiarizes themselves with the firm's structure, operations, and style, identify critical areas of improvement.
In short, just as the shepherd had his dog to round the sheep while he led them, the CFO needs a helper to round up the digitization opportunities to let them focus on maximizing a positive economic impact on the company.
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