4 Reasons Why CFOs Should Play Key Roles in Finance Modernization Efforts

Financial modernization, an important step in ensuring that a bank is able to carve a space for itself in the digital age, is an organizational endeavor. Indeed, it’s a huge and long-term undertaking for many financial institutions. Setting up the stage to digitalize a traditional bank that still relies on siloed data architecture, for example, can take several months to years. But time is running out, and banks that aim to serve a tech-savvy market can no longer delay this inevitable transformation within their respective establishments.

In many cases, the task of paving the way for modern finance within an organization falls on a dedicated working group. This team is often composed of a project manager, a product owner, and technical specialists from various departments within the bank.

However, it’s also important for the bank’s CFO to be closely involved in the digitalization process. This is because a CFO’s active participation in the financial transformation of their organization can lead to dynamic changes.

Here are four key reasons why the CFO should care about and take on an active role in their organization’s finance modernization efforts:

The CFO’s Involvement Will Make Modernization a Top Priority for the Bank

As one of the top officers in their respective organizations, CFOs are in a position to inspire their staff members. Thus, their involvement in the modernization process can have an impact on the priorities of the people they are leading.

Knowing that a top official prioritizes and is a major proponent of digitalization can prompt the working group to devote much of their time and effort to seeing the project to completion as soon as possible. Since the CFO has bought into their vision and sees the benefits that modernization will bring to the organization, the working group can be confident in implementing changes in the bank’s processes.

At the same time, the departments that the group is working with can exercise patience and cooperate more during the transition process, knowing that the group’s actions are backed by the CFO.

The CFO Keeps Track of the Resources Required by the Digitalization Process

Clearly, as the official responsible for forecasting the organization’s financial standing, the CFO should remain on top of a bank’s modernization efforts. That said, transforming a traditional banking institution into one that effectively utilizes modern systems and technologies is no easy feat. Despite intensive preparations, this process can still require years and countless man-hours to accomplish, and all these can cost the bank.

Given this, it’s important for the CFO to keep track of the developments that the working group is making as well as the resources that the process is taking up. Knowing the current progress of the bank’s modernization efforts will enable the CFO to factor the cost of this huge project into their projections and budget allocations for the next financial period.

Digitalization Will Impact the Bank’s Finances and the Processes Managed by the CFO

A bank that is capable of harnessing the full potential of automation and machine learning can efficiently and effectively handle more tasks and transactions. Through the use of digital tools and processes, a financial organization can implement more stringent KYC and CDD processes without compromising the quality of its searches or risking compliance, for example. Consequently, the bank can now afford to lessen compliance costs and instead redirect these funds to other endeavors that will directly aid the organization’s growth.

In short, digitalization has its costs, but these are heavily outweighed by its long-term benefits. As such, the CFO should be aware of the financial benefits and implications of each milestone that the organization reaches during the modernization process, as they can have a serious impact on the bank’s finances and resource allocation moving forward.

The CFO’s Lead Can Inspire Staff Members to Improve Their Technical Skills

Digitalization increases a bank’s capabilities through the use of automation, analytics, machine learning, and other cutting-edge technologies that rely on data. Naturally, the introduction of automation to an organization will reduce the amount of busy work that staff members have to carry out daily, and this can put the livelihoods of clerical staff in danger.

The CFO and the other top executives at the bank can take a proactive approach to this problem by encouraging employees to learn new skills and use new technologies in their daily work. The CFO may head this effort by allocating funds for classes and seminars that intend to help employees adapt to their digital working environment.

Such a move ensures that the staff members are ready to reap the benefits of the digitalization process and that they are prepared to keep up with the lightning speed at which digital technology changes. This concerted effort between the executives and regular employees will make the transition to digital systems much easier for the organization as a whole.

A Top-Down Approach to Digitalization

The working group, of course, will take care of the nitty-gritty details of the bank’s digitalization process. This dedicated team will be the one to establish and meet the project’s goals, timelines, and the scope and boundaries of the members’ responsibilities.

Still, knowing that the CFO is heavily invested in the current and continued efforts to modernize the system used by their financial institution will inspire the rest of the organization to follow suit. This, in turn, will make it much easier for the bank to anticipate and adapt to the changes that financial modernization is bound to bring about and maximize the opportunities that a digital banking system offers.

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