10/23/2018

How the CFO Fits into Top Banking Priorities

Ann Jones October 23rd, 2018

The ABA Community Bankers Council recently asked the top officers of community banks nationwide about their top priorities for the year ahead. Will they be focusing on technology? Adding new products and locations? Transforming the customer experience? Recruiting and developing a stellar workforce? Creating new business partnerships?

Check all of the above, and then some. CEOs are striving to:

  • Expand into current and new markets
  • Implement new technologies
  • Reduce operating costs
  • Introduce new products and services

They also asked CEOs of community banks what keeps them up at night. Their answers will come as no surprise to anyone in the financial industry. They include:

  • Competition
  • Securing and implementing new technology to remain competitive
  • Recruiting talent
  • Acquiring new customers
  • Regulatory mandates

What do these priorities and pain points mean for a community bank’s CFO? It’s a question worth asking, because the role has been evolving in recent years. Traditionally, the CFO was the bank’s ultimate number cruncher and bottom-line arbiter. Today, technology, a new generation with different sensibilities, and the need for people in financial institutions (and every other industry, it seems) to wear many hats and do more with less has collided into the perfect stormĀ that has created a new breed. Far from being just the bank’s accountant, the role is evolving into value-adding financial leader and branching out beyond finance and accounting altogether.

According to McKinsey, today 41 percent of the CFO’s role is outside of finance and accounting. HR, IT, compliance: you name it, today’s CFO has a hand in it. That’s because when technology transformed the traditional number-crunching role, it freed up the CFO’s time. New technology, like Banker’s Dashboard, turned the process of running monthly, quarterly, and annual reports on the bank’s financials from a day-long or multi-day ordeal with complex spreadsheets, into something that can take a matter of hours. Suddenly, CFOs had the opportunity to start analyzing those numbers and put together data that could support a CEO’s initiatives. The new crop of people entering the CFO pipeline (namely Gens X and Y) are also more sociable, outgoing and willing to take risks on new projects than their accountant predecessors. They forged into new areas like HR and IT, and a new type of CFO was born.

The most important change in the role is in relation to the CEO. In years past, the CFO simply reported, quite literally running reports, to the CEO about the bank’s financials. Now, the CFO is the CEO’s wingman.

If the CEO in a bank is the idea person, the planner, the one who sees the big picture, the CFO is the one using the bank’s financial data to help develop strategies to make the CEO’s vision happen. Or, not happen. As the analyzer of the bank’s financial data, the CFO isn’t afraid to say no to new initiatives or projects if the numbers don’t line up just right.

So, all of those pain points that keep CEOs up at night can fall, in one way or another, to the CFO. Why? Because everything in a bank, whether it’s hiring new tellers, investing in technology to keep pace with fintech, or keeping up with the Wells Fargos of the world, is about the bottom-line numbers, and the numbers are the CFO’s wheelhouse.

Ways the CFO can help with the CEO’s top priorities

  • Recruiting and retaining talent. A bank may have an HR generalist, but he or she will now report to the CFO. That’s because HR knows everything dollars and cents about every employee, from salary to benefits to retirement plans. Suddenly acquiring and retaining top talent falls under the finance umbrella.
  • Streamlining operations. The CFO has access to the data via new technology and can spot inefficiencies and other places for improvement. It helps the bank to be lean and mean, reduce operating costs and be ready to competeĀ  not only with other banks but also with fintech.
  • Creating loyalty programs. It’s not something usually offered by banks, but a loyalty rewards program is one powerful way to attract new customers and incentivize the ones you already have that aren’t fully engaged. The CFO can run the numbers and determine what sorts of rewards make the most sense for the bank’s bottom line.
  • Assessing the risk of the CEO’s plans. Whether it’s buying new technology or totally transforming the branch experience, the CFO can be the voice of reason to rein in the CEO’s lofty ideas. Sometimes it doesn’t make financial sense to implement new initiatives and programs, and the CFO is the one who is going to have to say no.

The CFO’s role is evolving and their career paths are evolving along with it. More and more CFOs are finding their way into the CEO’s chair, and with the breadth of experience in all aspects of the bank’s operations, that trend should continue as well.

This content is accurate at the time of publication and may not be updated.