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Strategy and innovation
The Super CFO: the 5 traits that define the CFO of the future.
Like a Swiss army knife, because of the multiplicity of functions, or like a Swiss watchmaker, because of their ability to understand the complex mechanism of the company and to make all the gears work in perfect unison.
The future CFO is moving towards a more strategic and analytical role, according to the CFO Frontline Report 2022. That's how we imagine it to be in 10 years' time, based on the responses to Bankinter's first annual survey of Spanish CFOs.
How do you see the profession in the future? This was one of the key questions asked of 115 CFOs across Spain in the CFO Frontline Report. 51.38% of them expect major changes, while 48.62% believe it will be business as usual. It is no longer the same now as it was before the pandemic. Covid-19 and digitalisation, according to respondents, are the main drivers of change for the CFO.
Download the full CFO Front Line Report now.
The Bankinter report finds that at least one in four CFOs already possesses the qualities that could be identified as those of the CFO of tomorrow. This is the profile that defines this new CFO:
- A strategic financial function carrying weight in decisions on new businesses, business models, internationalisation and new marketing channels.
- Career progression is on the rise and there will be big changes in the medium term.
- The role relies on analytics and data processes which are the bedrock for strategic decisions. Processes that were previously outsourced can now be handled in-house.
- The new CFO is a facilitator who actively and dynamically collaborates with other areas of the company.
- Their role also pivots around one of leadership in the digital transformation of the organisation.
These are the 5 major trends that define the new role of the CFO.
1. Work flexibility and remote management
The CFOs of the future, before the pandemic, were already working on improving flexibility in the company and in their department. The lockdown served to test new work formats and now teleworking has become normalised and culturally accepted. In a survey conducted by Deloitte in 2021, 76% of CFOs believed that most work will still be done remotely when the pandemic comes to an end.
According to the CFO Frontline Report, teleworking does not seem to have changed the way finance departments and the CFO work. It was the best prepared function for this situation. This was helped by the fact that electronic banking and administration had already been integrated into the department more than five years earlier.
CFOs describe this integration as one of the digitalisation processes that has most simplified and facilitated the work of finance departments. They also recognise the great effort in digital transformation that the banking sector has been making in recent years, which has allowed operations to remain unaffected at a time of integration and mergers.
2. Strategic nature
The strategic profile of the CFO is now well beyond doubt. It involves having a 360 degree view and the need to collaborate with departments they did not work with before, according to the CFO Frontline Report 2022. The CFO steps out of their department and joins the CEO in a more fluid and cross-cutting communication process with all areas. Their leadership is particularly relevant today in:
- The digital transformation of the company.
- Planning the organisation's expansion and internationalisation.
- The search for new forms of financing and mergers and acquisitions.
According to the Frontline Report, the areas work alongside the CFO and not in front of the CFO, placing this function at the centre of the organisation: this is called CFO Centricity. It used to be seen as "a necessary evil in businesses". It is now "a collaborator, an ally of strategy" and the head of a department that provides truthfulness.
A strategic function in which the CFO is surrounded by the best teams, which are also more cross-functional than those that traditionally served the financial area. Ryan Charlier, CFO of McCormick & Company, argues that the effective management of diverse teams will drive innovation and creativity.
"The CFO should be agile in learning and open to new opinions. Broadening horizons is not possible without a variety of viewpoints," he says in a report by the consultancy Spencer Stuart on the CFO of the future.
3. New skills and ways of working
The exploitation of data and reporting is the most important competency of the CFO of the future right now and, at the same time, their main motivation, according to the CFO Frontline Report. This has radically changed how the finance department works.
The CFO is first and foremost a numbers person, as Stephen Ma, CFO of Nissan Motor, argues in Spencer Stuart's report. Together with their teams, they are the people with the strongest analytical capabilities in the companies and the quickest at obtaining business-relevant information. According to Ma, "whoever is able to make use of data to be the first to identify opportunities will have the competitive advantage".
The CFO Frontline Report focuses on how the CFO has moved forward in the way they work, automating and improving processes. Finance departments today are much more efficient and more digital. Their information to the Board is more accurate and faster, allowing them to make more confident decisions.
The room for improvement lies in greater collaboration with other areas in extending this culture of data and automation. As a recent Gartner survey points out, only 30% of CFOs and CIOs work together to drive digital investment forward by sharing their vision for the business. According to the study, when they work together and share vision and goals, they are 51% more likely to optimally fund the organisation's digital transformation.
4. Being a CFO is now much more difficult than before
The CFOs consulted for the CFO Frontline Report agree that the speed at which decisions are made today is very high and the impact of those decisions is also more relevant. The pandemic has changed the dimension of what is short and what is long term. Previously, a CFO knew the roadmap of their role and set a series of annual, quarterly and monthly milestones. That has been blown out of the water.
The work is more complex, closer to business development and has a high international component, as we have seen in other sections of the report. This requires that CFOs take a holistic view of the business and be more aware than ever of the international situation, supply issues as well as global and geopolitical crises.
Furthermore, the current liquidity in the Spanish market, with special emphasis on private equity, is accelerating merger and acquisition transactions, where the CFO has a crucial role in ensuring an optimal capital structure.
5. They have to get to grips with new skills.
All studies, including the CFO Frontline Report, emphasise technology upgrading as the major challenge that financial professionals have already overcome, in some cases, or have yet to face. Bankinter's report also cites other challenges, such as mastering international taxation, international and foreign exchange markets and alternative financing methods.
According to Gartner, 80% of CFOs believe that finance still needs to significantly accelerate the deployment of digital technology and specifically cite Robotic Process Automation (RPA) and Artificial Intelligence as the main levers to effectively support the business between now and 2025.
"Despite continued investment in RPA, CFOs are realising that they need a broader set of tools to achieve their full automation goals," according to Nisha Bhandare, Vice President Analyst at Gartner. "To get more value from their RPA investments, CFOs are turning to a set of complementary efficiency technologies, such as process mining, which will continue to be a future growth driver for RPA in the coming years," warns the Gartner expert.
Strategy and leadership: what they teach the CFO youth academies
In the prestigious Emerging CFO programme: Strategic Financial Leadership at Stanford University (USA) advocates 8 competencies that need to be worked on in order to build the new role of the CFO. The word strategy appears in four of them:
- Develop strategic skills within the context of financial leadership.
- Transition from the role of information provider to that of strategic partner.
- Learn new techniques and methodologies associated with finance, strategy and leadership..
- Gain a better understanding of current trends in finance.
- Improve negotiation, conflict management and communication skills.
- Develop a long-term strategic vision.
- Evaluate and improve a personal leadership style.
- Foster innovation and lead cultural change.
Ultimately, it is about making better financial decisions, building strategic partnerships with stakeholders and developing a more effective leadership style within a context of globalisation and expansion.
