Traditional financial activities are making CFO’s lose the digital trend race
August 18, 2023

In the rapidly evolving business landscape, digital transformation is crucial for success. However, CFOs, though responsible for traditional financial roles, are grappling with this shift. While CEOs and boards seek real-time, data-driven insights, CFOs express a desire to engage more with digital initiatives, according to a recent McKinsey survey. Yet, the survey also reveals that CFOs currently allocate less time to digital trends compared to traditional financial duties. To begin, CFOs can collaborate with CEOs and senior leaders to identify finance tasks for digitization and invest in necessary technologies for improvement.

The Digital Transformation Landscape

In the fast-paced digital race, CFOs find themselves struggling to keep up with the rapid changes due to deeply entrenched traditional financial practices. As the wave of digital transformation sweeps through various sectors, the finance industry is faced with the challenge of adapting to this new landscape. Accenture's recent study highlights a significant shift in the role of CFOs, with a staggering 81% of them now considering innovation as a core responsibility. Furthermore, an impressive 77% are taking the lead in driving their organisation's journey through the realm of digital transition.

The role of CFOs has evolved beyond financial oversight. They now drive company growth and efficiency, leveraging technology for success. Modern CFOs utilise data, algorithms, and the cloud to guide accurate forecasts, strategic planning, and real-time decisions across sales, supply chains, and market trends. This shift positions them as pioneers reshaping the financial landscape in the digital era.

Automation and Efficiency

Research led by Gartner highlights that the most productive CFOs optimise their time by reducing their focus on repetitive finance tasks and reallocating it to analysis and value creation, guiding their teams accordingly. Automation emerges as a crucial driver of digital transformation, minimising errors in manual data entry and record-keeping.

Similarly, the McKinsey Global Institute champions this paradigm, revealing that 57% of finance tasks stand to gain from automation. Within this, a substantial 40% can be entirely automated, spanning cash disbursement, revenue management, accounting, and operational processes. An added 17% can be notably streamlined, promising efficiency through standardised reporting and transactions. CFOs who overlook automation tools may find themselves burdened with administrative tasks, leaving them with less time for strategic financial planning.

Impact on Decision-making

In today's business world, CFOs are embracing digital tools for real-time analytics and predictive insights, enhancing their agility amidst uncertainty and expanding their decision-making influence. However, the "paradox of choice" is a challenge. The multitude of interconnected options can hinder effective decision-making rather than aid it, with 67% of CFOs feeling overwhelmed by options, as per Accenture.

To overcome this, automated on-demand budgeting, planning, and predictive analytics tools are crucial. These tools enable teams to adjust using current data, boosting accuracy by 20% and cutting forecast volatility by nearly 50%. Neglecting these tools jeopardises decisions by relying on outdated data, putting potential opportunities at risk. Embracing these tools has become essential for CFOs to navigate a rapidly evolving business landscape effectively.

Customer-Centric Approach

The digital trend race is compelling the financial sector to adopt a more customer-centric model, as underscored by McKinsey's research demonstrating that brands prioritising customer experience achieve 1.7 times faster revenue growth and 2.3 times higher customer lifetime value. The shift is evident in the outperformance of customer-centric brands, which more than doubled revenue growth compared to their counterparts between 2016 and 2021. With online banking, mobile payments, and digital wallets altering consumer interactions, CFOs must integrate customer experience metrics into decisions, aligning financial strategies with evolving preferences, to stay competitive in this digital age.

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