Assessing Bank CFO Value: Are You Paying Brand-name Prices for Knockoff Work?

Amiee Ball June 22nd, 2016

That old saw “you get what you pay for” may well be true when you buy a knockoff handbag from a guy selling them out of the back of a truck near Times Square. That bag may look a lot like a famous designer’s latest and priciest creation, but chances are good the strap will break before you get it home.

What about when you’re hiring a bank CFO? Are you getting what you’re paying for, or are you getting a knockoff that can’t live up to the title of CFO?

Too many banks are paying top dollar for CFOs but not getting what they think they’re paying for. However, the problem likely isn’t the CFO — or at least not just the CFO. Banks are bilking themselves out of their CFOs’ true value if they’re still only viewing them as number crunchers.

CFO salaries

CFOs across every industry tend to make tidy salaries; Glassdoor says the national average is more than $158,000. For bank CFOs, the average is around $82,000 Simply Hired says, based on job descriptions with the words “bank CFO” anywhere in the listing. Of course, CFO compensation depends on a number of factors, including the size and location of the bank doing the hiring. The actual average bank CFO salary is probably somewhere close to the middle of those numbers, and is almost certainly in the six-figure realm.

All CFOs share basic roles like overseeing the departments that manage purchasing, debt, and other financial functions of the organization. They’re responsible for providing the C-suite and board with reports that give a clear picture of the organization’s current and projected financial situation. The bank CFO’s role, however, has evolved far beyond those basic number-crunching tasks, yet not all banks are keeping pace.

Whether a relatively paltry $82,000 or a lofty $200,000-plus, whatever a bank pays its CFO is too much if it’s not optimizing the CFO’s role. Instead of incorporating organizational leadership tasks into the CFO’s role, far too many banks are still only using their CFOs to crunch numbers and do order-taker tasks. That’s like paying top-dollar for the best-looking, most durable designer handbag ever made and then using it as a diaper bag. They’re paying designer prices for knockoff tasks — jobs that they could easily hire a whiz kid fresh out of college, one who’s good with Excel, to do for a third the salary!

If you want to learn more about how the role of the CFO is evolving, download our report called “The Evolution of the CFO: Six Habits Helping Today’s CFO and Shaping Future Finance Leaders

We also have an on demand webinar by the same name that features insights from Joel Sweren, Chief Financial Officer, Freedom Bank, Maywood, NJ and Guy Becker, VP Finance & Operations, Deluxe Financial Services. Listen to it anytime to gain unique insights from people who have transformed their role at their company.

Changing roles to optimize value

American Banker has reported extensively on the changing role of bank CFOs, and Deluxe has researched just how CFO functions continue to evolve. There’s no escaping the reality that in order to maximize their value to the financial institution, modern bank CFOs should do far more than count their beans, wrangle regulators and generate reports — all activities that remain important to a bank’s well-being. CFOs must also create value, strategically drive growth, help shape the bank’s culture, be a standard-bearer for new technologies and innovative processes, and build the bank’s bench strength by identifying, hiring, training and managing top performers.

Helping build a culture of transparency

Today’s bank CFO needs to be a master communicator, adept at expressing financial information through multiple channels outside the reports shared with the CEO and board. He or she must facilitate the flow of information and foster collaboration among departments, across business lines, with other C-suite members and the board as well. Such open communication and collaboration enhances both accountability and performance.

Embracing technology and innovation

Banks face competition from more disruptors outside the industry than at any other time in the history of banking. Only innovation will keep financial institutions viable in the face of ever-emerging threats. CFOs should play an integral role in identifying, funding and implementing innovative ways to differentiate their financial institution in the marketplace. They also need to be the evangelists who lead the call for better use of technology tools across all aspects of the bank’s operation, including internal functions and the customer/FI interface.

Building bench strength

While the CFO of yesteryear might have sat by himself in a lonely office crunching numbers and generating reports, modern bank CFOs need to be team captains. They need to be able to choose talented players who can fulfill a variety of finance-related functions, and who are good fits for the bank’s culture. Nurturing the professional development of each team member should also be among the bank CFO’s most important roles. Finally, the CFOs should be involved in succession planning, and ensuring the CFO’s department maintains equilibrium even after he or she is left should be a top priority for all financial institutions.

By redefining the role they expect their CFOs to play, banks can ensure they’re really getting what they pay for — designer quality instead of knockoff regrets.

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