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How the deep data revolution is transforming the CFO role

Nov 20, 2019 / Consumer Banking

CFOs at today’s financial institutions face urgent new demands. With a role once considered numbers only, CFOs are increasingly expected to help set overall strategy and develop new sources of value for their financial institutions. Because of heightened competition, new technologies and increased regulation, CFOs now balance their traditional responsibilities with a growing need for analysis and insights that support growth and strategy.

Much of this demand for an expanded, more-strategic role comes from CEOs, who turn to the CFO as a trusted advisor—not just for finance-related issues, but in all areas of business. A recent study from KPMG showed that 63 percent of CEOs believe the CFO role will grow in significance compared to other C-suite roles.

The ramifications of an expanded CFO role don’t stop at the C-suite. The finance teams they lead are transitioning from solely reporting financial results and performance to generating critical analysis and insight. Rather than looking at the past, these teams now need to set the stage for their institutions to make strategic decisions about the future and quickly adapt to the market.

Until now, finance leaders have focused on improving their firms’ financial processes and tools to take advantage of the resulting efficiencies, cost-savings and risk-reduction. Now, these executives need to demonstrate the real value of all that effort: gaining insights from the treasure trove of accurate data that’s already at their fingertips.

But how do finance teams make this transition? 

Stuck in silos 

Fortunately, financial institutions already possess a wealth of information they can transform into actionable insights. Unfortunately, the collected data that’s available to financial institutions often proves difficult to access; it lives in disparate systems, offline spreadsheets and departmental silos.

According to a recent survey by CFO Research, there exists a significant need to improve the current state of finance technology. The majority of CFOs who responded to the survey — a combined 63 percent — described their finance function’s technology as “inefficient,” “silo-constrained” or “not linked to decision-making.”

Insights in sight, improved profitability 

It doesn’t have to remain that way. Imagine data from these key functional areas—financial accounting, budgeting, strategic planning, profitability and risk management—in one platform.

Here’s what would happen:

» New insights that emerge from predictive or prescriptive analytics would move your organization from a reactive state and toward a proactive, data-driven culture.

» With those analyses in mind, financial institutions would build a strategy to become more competitive and profitable.

» Using data to drive strategic decisions would lower overall risk and better manage return for every stakeholder.

Financial institutions already leverage advanced analytics to improve their ability to manage risks and better plan for the future. According to a 2018 Hackett Group survey, CFO Agenda: Finance’s Four Imperatives to Accelerate Business Value, 82 percent of financial executives have already begun to adopt advanced analytics or plan to within the next two to three years. Those organizations will wield a strategic advantage over organizations that blindly plan their future.

Seeing is believing 

So what does a best practice analytics platform for finance look like? It does the following:

» pulls together data from finance and across the enterprise

» allows users to view data in a variety of ways, including summary and detail levels, through time periods (such as current versus prior month/quarter/year, or percentage change over time periods) and across multiple dimensions (such as customer/household/relationship, product, organization or channel)

» provides a forward-looking view by offering forecast data

» enables all enterprise business users to understand the data and collaborate to drive decisions, particularly around profitability, risk and pricing.

Even the most advanced, flexible and versatile analytic tools will fail to deliver maximum value to financial institutions if the results do not guide decision-making. To translate these results into actionable insights, CFOs must have visualization and reporting capabilities, as well as finance teams and other stakeholders who need to digest and dissect the information.

Business users become data literate when they’re able to understand the story behind the numbers. They can better collaborate and innovate when they possess readily accessible, easy-to-grasp analytics. Clear, detailed data models and dashboards, along with powerful, flexible visual analytics, allow them to do just that. Such data discovery tools support better performance monitoring because they enable decision makers to identify trends, compare and modify their assumptions, and create new scenarios with real-world performance data. This equips them to act and adjust quickly when needed.

Data visualization supports conversation and interorganizational engagement. It empowers finance teams to understand and share insights, and it fosters a culture of data-driven decision making.

Meeting today’s challenges for tomorrow’s success

For CFOs to achieve success in an expanding role, they must prepare today to seize the opportunities and challenges ahead. By transitioning from the status quo to innovative practices that provide a more streamlined and accurate view of the future, they can provide insights with more efficiency and accuracy. Since the financial institution looks to the CFO for facts as well as trends, they must have visibility into data across the enterprise by using analytics that allow them to understand and improve profitability and growth.

Ultimately, these kinds of strategic insights will empower and transform the traditional role of the CFO into an integral asset driving the current and future success of the entire enterprise. Put another way: The insight and spark to leverage data for ultimate success will be reflected in data of another kind, residing at the bottom line.

Danny Baker is vice president of market strategy, Fiserv.

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