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Senior management and directors expect CFOs to sharpen their focus on strategic issues rather than concentrate solely on monitoring and reporting financial information, a new survey finds.

True strategic partners 

Ernst & Young and CFO Research Services’ report The Finance Operating Model Matters reveals that in order to rise to the standard now expected of them, CFOs must first improve their financial operations, which have become disjointed and inefficient in the wake of rapid growth in the industry.

Only then can CFOs become true strategic partners, helping to evaluate new products, provide leading indicators on business performance and drive merger and acquisition opportunities.

Sam Knox, vice president and director of research at CFO Research Services, said that finance had always played a crucial role at the world’s leading banks, but that the job was evolving.

CFOs need to spend less time keeping score and more time leading.

Holistic perspective 

As the lingering credit crunch compels firms to boost their balance sheets and safeguard against future market shocks, the need to invest in finance has never been more urgent.

The survey, which involved executives at 14 of the world’s largest banks, found that CFOs who bring their business acumen to bear on strategy can have a lasting impact on their firm and the industry.

Banks are aiding this evolution of the CFO by centralising responsibility for a wide variety of finance roles to allow a CFO’s holistic perspective to flow to all parts of the organisation.

Other leading practices that CFOs and their firms could pursue, according to the survey, include using shared services to scale and improve the rigor of finance.

Shared services centres can yield highly reliable, timely, and cost-effective production of the daily transactions for large global banks.

Long-term plan for finance 

CFOs can start to get meaningful benchmarks and use them to drive improvements.

Finance could establish a firm-wide “golden” source of information and analysis to help ensure high performance in complex, multi-line businesses in order to repairing fragile information infrastructures.

Having common frameworks for measuring business unit performance provides the visibility needed to manage growth, cost and risk.

Just as other functions within a bank craft multi-year plans, CFOs should have a vision for how finance can contribute to growth by developing a long-term plan for finance.

These plans can also encourage innovation and seek to develop talent.

T.J. Letarte, head of Ernst & Young Americas’ finance and performance management practice for financial services, said that CFOs were elevating their game to meet the demands of today’s market conditions.

“In addition to the important work they’ve always done monitoring and reporting, they’re also helping to provide their firms with a comprehensive, actionable view of risk. By doing so, they’re creating more competitive institutions that can face future challenges more resiliently,” Letarte concluded.

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Related links

• Ernst & Young
• Banking and capital markets overview
• The Finance Operating Model Matters