In today’s fast-paced financial landscape, where innovation is vital to survival, the role of finance professionals has evolved significantly.
No longer solely focused on balancing the books, modern financial experts are increasingly turning their attention towards the total cost of ownership (TCO) and the expected payback period of technology investments. This shift signifies a broader acknowledgement within the industry that efficient allocation of resources and adoption of strategic technology are paramount for sustainable growth and competitive advantage.
In a scenario where a fintech company invests heavily in the latest technological solutions without fully considering the long-term costs and benefits, despite initial excitement and anticipation, the reality will eventually set in when the financial team grapples with unforeseen expenses and struggles to justify the investment’s impact on the company’s bottom line. This narrative underscores financial experts’ importance in guiding technology investments to ensure optimal financial efficiency and return on investment (ROI).
According to a recent study by McKinsey & Company in March 2020, finance experts overwhelmingly cited increased participation in business decision-making as their most impactful strategy for managing economic volatility. This underscores the pivotal role of finance professionals in shaping strategic investments, particularly in technology, to navigate uncertain economic landscapes effectively.
Finance Professional Focus on the Operating Stack
As finance professionals embrace their expanded role in driving financial efficiency, they recognise the need to reevaluate traditional metrics and adopt a more holistic approach to decision-making. Central to this paradigm shift is the concept of the operating stack, which encompasses the interconnected systems and processes that underpin financial operations. Transformation lies in rethinking these metrics and utilising them to gauge success accurately. In this context, technology emerges as a catalyst for streamlining operations, enhancing decision-making capabilities, and ultimately driving financial performance.
Areas for Tech Investment
- Improving Customer Experience: By leveraging technology to personalise interactions and streamline processes, finance professionals can enhance customer satisfaction and retention. A study by Forbes reveals that when companies focus on customer experiences, there is usually a big payoff— 84% of companies that invest in customer experience recorded an increase in revenue, to be exact.
- Data-Driven Decision Making: Investing in advanced analytics and business intelligence tools enables finance teams to derive actionable insights from vast datasets, empowering them to make informed strategic decisions.
- Automation of Routine Tasks: By automating repetitive and time-consuming tasks such as data entry and reconciliation, finance professionals can focus on value-added activities that drive business growth.
- Enhancing Regulatory Compliance: Given the complex regulatory landscape in the fintech industry, technology solutions that facilitate compliance monitoring and reporting are essential for mitigating risk and ensuring adherence to regulatory requirements.
- Optimising Financial Reporting: Implementing robust financial reporting systems improves accuracy and transparency and enables real-time monitoring of key performance indicators (KPIs) to inform strategic decision-making.
- Streamlining Payment Processing: Efficient payment processing solutions reduce transaction costs and accelerate cash flow, enhancing liquidity and working capital management.
- Cybersecurity Infrastructure: With the growing threat of cyber attacks, investing in robust cybersecurity measures is imperative to safeguard sensitive financial data and preserve customer trust.
- By strategically allocating resources towards these key areas, finance professionals can drive tangible improvements in operational efficiency, risk management, and overall financial performance.
Unlocking an Agile Execution Path by aligning with the right KPIs
Within a volatile economic landscape characterised by rapid technological advancements and unpredictable market shifts, the ability to adapt and respond swiftly to change has become imperative for financial success. While meticulous planning undoubtedly lays the groundwork for success, businesses must also be able to pivot quickly in response to emerging challenges and opportunities. This agility is a desirable trait and a strategic imperative for survival and growth. The Business Agility Institute’s 2019 Report underscored the correlation between business agility maturity and organisational success, particularly during economic uncertainty. Organisations with high business agility maturity tend to excel in three key areas:
- Cultivating a culture of relentless improvement.
- Structuring operations aligned with value streams.
- Adopting an adaptive funding model.
These attributes empower businesses to navigate turbulent waters with confidence and resilience.
Now, let’s explore four (4) practical ways in which finance professionals can outline agile execution paths to drive financial efficiency and resilience:
- Operational Resilience Enhancement: Recognising the importance of operational resilience in mitigating business disruptions, finance professionals can lead initiatives to fortify operational processes, implement robust contingency plans, and leverage technology solutions such as cloud computing and disaster recovery systems to ensure business continuity and mitigate operational risks.
- Customer-Centric Innovation: Embracing a customer-centric approach to innovation, finance professionals can champion initiatives to co-create value with customers, solicit feedback, and iterate rapidly on product and service offerings to address evolving customer needs and preferences, fostering customer loyalty and driving sustainable growth.
- Regulatory Compliance Optimisation: Given the evolving regulatory landscape in the fintech industry, finance professionals can drive initiatives to streamline regulatory compliance processes, leverage regulatory technology (RegTech) solutions, and embed compliance-by-design principles into business operations to ensure adherence to regulatory requirements while minimising compliance-related costs and risks.
- Ecosystem Integration: Finance professionals can drive efforts to integrate seamlessly within broader business ecosystems, forging strategic partnerships and leveraging open banking platforms to enhance value proposition, expand market reach, and unlock new revenue streams through collaboration and co-innovation.
Finance Experts: Sustaining Their Role as Strategic Partners Amid Uncertain Futures
Finance professionals stand as indispensable strategic partners, equipped not only with their traditional financial stewardship but also with a broader, holistic perspective on business operations. In a study by KPMG, this shift has been underway for years, evidenced by the significant increase in CFOs’ responsibilities over their companies’ digital activities from 2014 to 2019. As economic uncertainties persist, the role of finance professionals is poised to expand further. Their unique vantage point allows them to navigate through turbulent times with resilience and foresight. By leveraging their financial expertise and strategic acumen, finance experts forge collaborative relationships with other C-suite leaders to craft resilient financial strategies. Integrating new technological investments into financial strategy is the cornerstone for businesses to weather economic storms effectively. These investments enhance operational efficiency and foster agility and adaptability, enabling companies to thrive in dynamic environments.
In essence, finance professionals’ evolution from financial stewards to strategic partners positions them at the forefront of organisational decision-making. As they continue to embrace this expanded role, they play a pivotal role in shaping the future trajectory of their organisations, ensuring sustained growth and resilience in the face of uncertainty.
Adetolani Balogun
Director of Finance and Business, Kudi
Adetolani Balogun is social; connect with him on LinkedIn. He is the Director of Business and Finance, Kudi.
