#CFOReimagined

See how the new CFO is adapting to a changing financial landscape, utilizing transformative new technology to disrupt, innovate and generate value for the banking industry.

THE CFO IN BANKING

“Many CFOs face significant challenges as they take on a broader role. Our research reveals how they can leverage technologies, skills and relationships to transform their companies and prosper.”

Global message 3

The CFO in a changing 4 banking sector: volatility, value, and vision

Leaders of value-discovery 9

Mapping a complex future 6

Getting up to speed with cloud 11

Pivot the workforce 13

Conclusion: time for action 16 in banking

Contents

The CFO Reimagined: Banking2

#CFOReimagined

CFOs have long been responsible for producing the numbers and managing technology costs. Today, they are continuing to push the boundaries of automation and are increasingly harnessing data to enhance analysis and generate insights. They are also looking beyond the borders of the finance function, proposing and shaping business models throughout the enterprise. Ideally, they are leading the charge in deciding how to invest in digital, guiding their organization into the next evolution.

Based on a large survey of CFOs and up-and-coming finance professionals, as well as interviews with leaders from top global companies across multiple industries, the findings uncover the CFOs’ ambitions, priorities and obstacles.1

The CFO has an expanded remit to:

• Create more revenue streams.

• Manage down total costs.

• Share insights across business functions.

• Advise the CEO.

• Improve risk and compliance.

• Increase enterprise value.

• Steward the digitalization of the entire enterprise.

But CFOs (and the entire C-suite) should seize this moment.

Many CFOs face significant challenges as they take on a broader role. Our research reveals how they can leverage technologies, skills and relationships to transform their companies and prosper.

Now is a pivotal moment for CFOs. Our new research on the dynamic role of the finance function reveals how the CFO is positioned at the center of the organization, side-by-side with the CEO, turning finance into an engine that can power the entire enterprise.

1. Accenture carried out a quantitative survey of more than 700 CFOs and senior finance executives, including 97 from the insurance sector, as well as a separate survey of 200 up-and-coming finance professionals. We also conducted almost 50 qualitative interviews with CFOs, CEOs and CDOs. The survey is titled “The CFO Reimagined: from driving value to building the digital enterprise.”

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Worldwide, banks have invested billions and have struggled to balance changing compliance requirements with some level of earnings stability.

Today, there are new threats. Fintechs, for example, are exploiting emerging technology and new open banking regulations to reshape the traditional business model and lure customers from traditional banks.

To defend themselves, global banks are investing in improved customer-facing technologies like artificial intelligence (AI) and opening themselves up to more collaboration with third-party service providers.

The CFO in a changing banking sector: volatility, value, and visionIn the wake of the financial crisis, the banking sector has gone through a decade of unprecedented scrutiny and regulatory demands.

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Banks also see fintechs as opportunities and are themselves acquiring, partnering, and adapting to the emerging technologies.

But this alone is not enough. There are other threats to counter at the same time: the industry should prepare for complex and volatile conditions in the form of macroeconomic and geopolitical uncertainty, increased global credit risk, and renewed interest in subprime.

In this environment, respondents to Accenture’s “The CFO Reimagined: from driving value to building the digital enterprise”2 survey find the Bank CFO exerting greater influence than ever before. As we explore in this report, banking CFOs have bold ambitions to help their organizations respond to change and deliver earnings growth in a difficult market. They are predicting the future rather than reporting the past, creating new value from data, enabling digital transformation across the enterprise, and pivoting their workforce to align with tomorrow’s business.

“Our research reveals that the CFO, alongside the CEO, is at the center of the organization—they’re turning finance into an engine that is powering the entire enterprise. As well as producing the numbers and managing costs, they are leading enterprise-wide digitalization and harnessing data to drive analysis and unlock market-leading insight,” explains Alan McIntyre, Senior Managing Director for Global Banking at Accenture.

2. The CFO Reimagined: from driving value to building the digital enterprise, Accenture 2018

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Mapping a complex futureAs guardians of financial data and senior executives with a clear overview of the organization and its commitments, CFOs have always had the responsibility to understand economic and operational risk.

In light of today’s industry challenges, however, CFOs in banking, working hand in hand with the risk function, are now striving to become more predictive in their outlook. Finance once focused on reporting the past; today, it aims to anticipate the future. And banking CFOs are using new technologies along with data from inside and outside their organization, to better prepare the enterprise for future changes more easily, more rapidly and more accurately.

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Metals and mining

Insurance

Banking

High-tech

Consumer goods

Oil and gas

Utilities

Comms and media

Retail

40%

39%

38%

37%

36%

35%

32%

30%

29%

FIGURE 1Extent to which finance teams are providing proactive

analysis of future business scenarios, by industry.

The challenge remains, however, for CFOs to help their organizations become ‘data-centric.’ In many cases, they need to work around a legacy architecture that hampers access to big data and makes it more difficult to plug in analytics, perform stress-testing and satisfy regulatory demands for quality and completeness in their data repository.

According to our research, three in four banking CFOs (73 percent) are highly confident about their team’s efforts to embrace this more predictive, data-centric mindset. Their teams are also the most likely, across all the sectors in our survey, to be providing proactive analysis of future business scenarios to their peers across the enterprise (see Figure 1). For the banking industry this is the upside of regulatory demands over the last decade to model future earnings scenarios under stress and create accurate economic simulation models of the business.

Source: The CFO Reimagined: from driving value to building the digital enterprise, Accenture 2018.

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FIGURE 2Respondents who have achieved positive outcomes from their efforts to identify and prepare the business for increasingly volatile future scenarios, by industry.

78%

76%

75%

75%

71%

71%

69%

64%

61%

Oil and gas

Retail

High-tech

Metals and mining

Insurance

Comms and media

Utilities

Banking

Consumer goods

Banking CFOs are also most likely to be satisfied with the results of their efforts to prepare the business for increasingly volatile future scenarios: 78 percent say they have achieved positive outcomes from this (see Figure 2).

Steve Culp, Accenture’s Senior Managing Director, Accenture CFO & Enterprise Value, and Finance & Risk, believes that it is finance’s experience in analyzing and stress-testing data that is helping it to become more future-focused. “To comply with regulations, finance has had to become highly skilled with data and understand what it can tell us about trading conditions and the business’s readiness to adapt,” he says. “Today, the function is using those skills to prepare for an increasingly more complex future.”

Source: The CFO Reimagined: from driving value to building the digital enterprise, Accenture 2018.

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Increasingly, the way financial services companies interact with their customers is being transformed. Digital platforms allow previously unimaginable business models that give customers greater control over their money—and that is what customers now demand.

Leaders of value-discovery

These new business models depend on data, and as seen in Figure 3, finance has a growing influence and responsibility over the focus and completeness of the company’s approach to data. And using data effectively to identify revenue creation opportunities is an increasingly important activity for CFOs in the sector. Indeed, three-quarters of respondents to the CFO Reimagined survey say they personally are best placed to pivot the organization to a new era of digitally-enabled growth.

A similar proportion say they have achieved clear success in their ambitions to drive new value across the enterprise, such as in data that could be used for a new business model.

With that in mind, four in ten (39 percent) believe finance should be playing a leading role in enterprise-wide value-discovery initiatives relating to company data.

39%believe finance should be playing a leading role in enterprise-wide value-discovery initiatives relating to company data.

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9%

9%

10%

82% 9%

78%

77%

75%

74% 10%

74% 12%

57% 17%

16% 34% 32% 8% 5%

26% 32% 21% 13% 5% 3%

18% 31% 26% 15% 3%4%

24% 26% 24% 12% 8%

20% 17% 20% 26% 16%

23% 32% 23% 12% 6% 4%

32% 23% 18% 15% 3% 3% 4%

Identifying and targeting areas of new value across the enterprise.

Identifying and targeting areas of new value across the wider business ecosystem.

Driving business-wide operational transformation.

Exploring how disruptive new technologies could benefit the entire enterprise.

Leading efforts to make entire enterprise more efficient, through adoption of digital technology across the business.

Providing real-time/near-real-time insight of business performance to highlight risks and opportunities.

Identifying and preparing the business for increasingly volatile future scenarios.

FIGURE 3Enterprise-wide areas of emphasis for CFO banking respondents. (Sum of percentages may not equal 100% due to rounding.)

A major focus, taking significant time

Don’t know/NANot a focus, spending no time at all

On the radar but with limited time spent

Source: The CFO Reimagined: from driving value to building the digital enterprise, Accenture 2018.

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Getting up to speed with cloud Banks have been relatively late adopters of some leading technologies—cloud in particular.

This has often been a result of regulatory constraints, inflexible but still important legacy systems, and understandable concern about the risk of uploading sensitive data to off-premises environments.

In our survey, banking is the least likely sector (with the exception of energy) to have adopted software as a service (SaaS) beyond isolated pilots. And Accenture’s “Cloud Readiness in Banking”3 research finds that 43 percent of banks do not have a cloud strategy in place or have only started to implement basic cloud practices.

3. “Cloud and Clear—Accenture Cloud Readiness Report—Banking,” Accenture, September 2018. Access at: https://www.accenture.com/us-en/insights/financial-services/tech-advisory-cloud-readiness-banking

43%of banks do not have a cloud strategy in place or have only started to implement basic cloud practices.

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This may change as CFOs play a stronger role in steering the direction of banks’ digital transformation. After all, when it comes to cloud, the argument from a finance perspective is compelling. “Cloud is a key enabler of a bank’s digital journey,” says James Benseler, Managing Director in Accenture’s Banking industry group. “The evidence is clear: cloud increases agility, accelerates the roll-out of digital services, and actually improves security. Also, much advanced analytics requires rapid increases in processing power, and it’s much easier for established businesses to harness this via cloud solutions.”

Our CFO Reimagined survey shows that CFOs are playing a key role in digital transformation. About three in four (77 percent) say they are

helping to drive business-wide transformation, while a similar proportion (74 percent) are using digital technology to make the enterprise more efficient.

“Previously, organizational transformation was the responsibility of the chief operating officer,” explains the managing director of the UK arm of a European banking group. “But now it’s a shared responsibility with the CFO, because you cannot run transformation without considering how you manage your financial strength.”

With CFOs playing this important role in transformation, and the case for cloud adoption so clear, we expect finance to increasingly prioritize that adoption as a strategic goal.

74%are using digital technology to make the enterprise more efficient.

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Pivot the workforce To provide greater support to the organization—whether creating new value or measuring and managing risk—the finance function should reposition itself as a strategic insights center.

However, this presents a workforce challenge on two fronts: organizations need new skills and a revamped working culture.

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Metals and mining

Insurance

Banking

High-tech

Comms and media

Oil and gas

Utilities

Consumer goods

Retail

33%

31%

27%

25%

22%

22%

20%

20%

16%

FIGURE 4CFOs that consider the ability to ask the right questions of varied and

combined data sets to be a core requirement of their role, by industry.

New skills

Surveyed CFOs in banking are more likely than their peers in other sectors, with the exception of high-tech, to say that the ability to interrogate data is a core requirement of their role (see Figure 4). And they consider data science to be the most important skill for their junior finance executives to have.

“The skills are changing,” says a head of corporate finance at an Indian banking corporation. “It’s no good hiring people with pure MBA backgrounds if they don’t understand and appreciate new technologies, like how the data will work. We’re looking at people, with some finance background, who are comfortable analyzing data. People like that will definitely add a lot of value in the traditional finance team of our organization.”

Source: The CFO Reimagined: from driving value to building the digital enterprise, Accenture 2018.

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New culture

Repositioning the finance function does not just demand recruitment and upskilling; banking CFOs are strongly encouraged to also update the function’s culture.

Much of the focus is to encourage an environment where finance teams are comfortable working with robotic process automation (RPA) and AI. These technologies can play an increasingly important role in freeing up the workforce’s time

by undertaking routine, process-oriented tasks and processing data, and yet some employees may see them as a threat.

In our CFO Reimagined survey, 40 percent of banking CFOs say that employee resistance to working with non-human colleagues is a principal barrier to adopting automation technologies. Attitudinal change is therefore a clear area for improvement, and many will look to the CFO to lead by example.

40%of banking CFOs say that employee resistance to working with non-human colleagues is a principal barrier to adopting automation technologies.

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Conclusion: time for action in banking “Banks are between two worlds,” says Accenture’s McIntyre. “They have weathered the challenges of the last decade but are now operating in a world that is increasingly unfamiliar.”

“The CFO will perform an increasingly difficult balancing act between managing risk and unlocking new value. It’s difficult, and there are risks ahead, but data and the broader adoption of digital also offer an extraordinary amount of opportunity.”

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Embody a smart-tech culture—automation and AI supported finance teams can carry out more interesting work and create more value than ever before. To instill a culture in which employees are more comfortable with these tools, CFOs should lead by example—embracing these technologies in their own work and demonstrating their benefits.

As banking CFOs look to the future, our findings show that they should address four key priorities:

Champion the cloud—as CFOs play a stronger role in digital transformation across the enterprise, they should look first at supporting the adoption of cloud. They are better placed than the CIO or CTO, for example, to lead the enterprise-wide structured operational risk assessment that is required by regulators. Cloud helps increase agility, supports cost reduction, and provides a foundation for sophisticated analytics, so this is a clear CFO priority.

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Embrace innovation—competition between banks is fierce. To get an edge in innovation, it may be worth looking at skills outside the data science realm. Whatever the discipline, CFOs should be pushing to expand the role of innovation while making their own contribution to creating value.

Find new answers to the talent question—the struggle to recruit data scientists and digital savvy talent is not going to get any easier: attracted by the buzz and remuneration offered by tech firms, bright young graduates may not be drawn to banking in the same way that prior generations were. To counter this, CFOs can consider pooling resources across the enterprise in order to benefit from existing talent elsewhere in the company. Acquisitions are another option: banking CFOs are among the most likely of the sectors in the CFO Reimagined survey to consider acquiring start-ups as a viable way to bring in fresh talent.

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Join the conversation@BankingInsights @AccentureFSRisk

About AccentureAccenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 459,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com

Copyright © 2018 Accenture. All rights reserved.

Accenture, its logo, and High performance. Delivered. are trademarks of Accenture.

www.accenture.com/CFOReimaginedThis document is intended for general informational purposes only and does not take into account the reader’s specific circumstances, and may not reflect the most current developments. Accenture disclaims, to the fullest extent permitted by applicable law, any and all liability for the accuracy and completeness of the information in this document and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit, or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professionals.

ContactsSteve Culp Senior Managing Director, Accenture CFO & Enterprise Value, and Finance & Risk, Chicago, USA steven.r.culp@accenture.com

Alan McIntyre Senior Managing Director, Accenture Financial Services, Banking Lead, New York, USA a.mcintyre@accenture.com

Ambrose Shannon Managing Director, Accenture CFO & Enterprise Value, Financial Services, Manchester, UKambrose.shannon@accenture.com