CFO

The Impact of Fintech on the role of CFOs

CFOs must explore and exploit the fintech to their advantage.

The digital revolution pushed the popularity of fintech to the next level like it has been doing in other domains too.

There is a constant effort to up the ante in business for the consistent progress of the company because attaining the desired profits and goals is not the end but a beginning of laying a solid foundation for better prospects in future, when it comes to streamlining and fine-tuning the existing process, adopting the right technology matters.

The fintech space is witnessing a vast transformation, hence disrupting the banking industry and utilising it makes sense. A key post in the company’s hierarchy is a Chief Financial Officer (CFO), on whose shoulder rests the revenue of the organisation. And that’s where fintech can be a game changer. It’s time CFOs pause for a moment and rework their strategy with fintech.

Well-defined roles

Compared to others, the role of the CFO is under great scrutiny, both internally and externally. CFOs face immense pressure to cut costs, grow revenue, and ensure control. Economic uncertainty coupled with increased regulatory requirements, financial restatements, and increased investor scrutiny add up to create greater responsibilities.

Every responsibility of a CFO is a priority – from optimising the financial performance of a company, including its reporting, liquidity to return on investment.

Treasury Management

Treasury Management involves ensuring cash and financial risks are properly managed and optimised in a business. The main priority is to provide some money and distributed for day-to-day business operations while having an outlook for long-term strategy.

Liquidity is a parameter that the CFO needs to ensure the company can achieve its financial commitments and manage cash flow most efficiently – mainly carried out by the treasury group, usually smaller than the reporting team.

This team is assigned for managing the company’s cash balance and working capital, like accounts payable, accounts receivable, and inventory. Simultaneously, they also carry out the issuing of any debt, managing investments, and tackling other liquidity-related decisions.

The Future advisors

With robo-advisors and automated investment platforms overtaking the role of an old-school financial advisor, it is safe to say that the world of fintech is creating some noise in the asset management space.

These automated platforms simplify and help people to manage their investment portfolios and make sound financial planning decisions – moving your money from one asset to another and avoiding the need of a financial advisor, even the commission.

The new host of financial planning tools are rewriting the asset management process.

Robo-Advisors and CFOs

CFOs who are experimental in choosing the right technology can opt for Robo advisors, a new breed of online software facilitating your investments and portfolio diversification. They automatically select investments, and once your funds are invested, on an ongoing basis, the software automatically makes necessary changes to the investments to align your portfolio back to a target allocation.

Robo advisors can work in tandem with the human asset management counterparts and help CFOs in unilateral decisions on surplus generation in the corporate treasury and also in cost-cutting, especially for those who are wary of spending huge on financial advisors.

Artificial Intelligence

AI has captured the imagination of the people simply because it apes the human mind.

AI can aid managers to connect with new clients by finding out where they are, alerting practitioners to liquidity events and who stands to benefit from them by highlighting Initial Public Offerings (IPO), trade sales, share options being exercised, significant bequests and even legally-mandated financial pay-outs.

How AI functions

AI can fetch leads about new clients, and managing the initial approach and the Onboarding Process.

Imagine a potential new client being discovered, the AI might prove handy to wealth managers like getting a piece of original and accurate information on the individual’s needs and position. This, in turn, would provide access to the full balance sheet of a client including the liabilities side as well as assets.

The high achievement will position AI to produce the right message and the appropriate language to reach out to a target. The minuscule details that AI can unearth about clients can empower advisors, giving them an edge in making pitches to new prospects.

As the information pool deepens, AI can massively boost client acquisition, client retention and sales.

Machine Learning

Joining the likes of innovative technologies is Machine Learning which can recommend which investments to opt and which ones to ignore.

With the assistance of third-party data and robust machine learning, they formulate intelligent automated answers to client queries.

Go with the Flow

The burden on CFOs includes the tasks and challenges while the latter is intrinsic of his role, the tasks shouldn’t be a constraint and that’s where the fintech can make things more defined and less time-consuming. By giving importance to technology, CFOs can focus more on decision making and ideation.

CFOs who run the whole show will need to consider factors like technology development, service positioning, and infrastructure to realise the potential of these platforms. The advent of alternate investment platforms is one of the most revolutionary trends in the wealth management industry. Players of the industry must now decide and determine how this will prove instrumental in capitalising for business prospects.

Fintech and financial planning can reach more people and allow experienced financial advisors to deal with more complex problems. In the days to come, automation will create opportunities to scale while meeting customer expectations for a better experience.

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