Strategy and vision

As highlighted in my previous blog, the Financial Services industry is experiencing uncharted change. The impact of digital disruption, Fintech innovation, robotics, big data, predictive analytics and artificial intelligence (AI) processing are driving a fundamental need to rethink the way an organisation’s back office functions are designed, and how they can sustainably operate in the future, ideally using a Target Operating Model (TOM) approach.

To fully embrace this change, and to remain relevant, a seismic shift in the strategy of the finance and risk function and leadership is needed. Such is the degree of change that hovers around the edges, with short-term objectives in place of a long-term vision no longer a viable option. Failure to address the digital environment’s realities are expected to lead to long term decline in performance, a failure to satisfy customer and regulatory expectations, and eventual side-lining, from a leadership perspective. With the digitally enabled generation ready to bank with a technology, telecom or retail company, the risk to being passive is significant.   Finance and risk professionals need to leverage new technologies, seize initiatives, aid the business in establishing trust, embed risk strategies across the enterprise, recruit digital talent and improve IT architectures. The job should be owned by the Chief Financial Officer (CFO)/Chief Risk Officer (CRO) and delivered through an executable TOM vision and strategy.

In this post we’ll look at the CFO’s role in driving a TOM strategy. My next post will consider the CRO’s role, and take a look at what Chief Data Officers (CDOs) can do.

CFO’s impetus for change

Most of today’s CFOs are vastly experienced in change, having navigated a decade of regulatory transformation whilst driving down costs and steadily moving up the value chain. However, a fundamental rethink of the finance strategy is needed across all aspects of the TOM if finance is to stop accounting for the past and start architecting for the future.

An agile, analytics-driven finance function can:

  • Provide real-time insight into the key business drivers and support the business strategy
  • Make strategic C-Suite decisions based on accurate and trusted data
  • Support insight and analytics across the business, driving value enhancing decisions
  • Leverage alternative and specialist skill sets to drive real value from organisational data
  • Support regulatory and statutory demands in an increasing effective and low cost way

It’s up to the CFO to move the organisation toward this new functionality. But how can they drive things forward? For starters, CFOs should establish themselves as leaders, and not just technical specialists. The “leader” role can both enhance CFOs’ credibility and widen their sphere of influence beyond just finance or IT.

Next, CFOs should invest in the right financial technology, and make informed choices on organisational structure and where to focus talent to drive the best results for the organisation.

The CFO plays a crucial role, but a CFO alone may not be sufficient to drive a financial firm toward a TOM. Other players, such as risk and data leaders, have a role to play as well.

See my next post for a discussion around what CROs and CDOs can do to support the TOM.