The role of the chief financial officer (CFO) in a large global bank has changed dramatically, bringing with it increased opportunities to excel—but also many and various challenges. Now seen as a key and trusted partner of the CEO, the CFO has an essential role to play in the transformation of a business, with a lengthening list of critical tasks, extensive responsibilities, and major objectives.
The global financial system has undergone profound change since the crisis of 2008, driven largely by increased economic and geopolitical volatility, and reregulation. And the relatively static competitive landscape has been shaken up by a range of issues:
- large remaining stocks of nonperforming loans and noncore assets not only in Europe but also, increasingly, in China and India;
- progressively unsustainable cost structures;
- enhanced regulatory and compliance standards; and, finally;
- the digital revolution.
As a result, a wave of financial technology (fintech) companies and shadow banks has arisen to challenge the incumbents’ business models. Finding solutions to all of those challenges and identifying what comes next for the financial services industry have therefore become more and more important to the boards and CEOs of the main banks, and as a consequence, those main banks’ CFOs are taking higher-profile roles in addressing such critical issues. CFOs are helping figure out how to balance the trade-offs between effective restructuring and a return to growth and between digitalization and regulatory best practice.
THE IMPERIAL CFO: AUGUSTUS OR NERO?
It was The Economist that recently identified this elevated role as the “imperial CFO”, noting that CFOs are now at the heart of most of the world’s big companies and are accumulating power, which may or may not be a cause for concern.1 For example, The Economist observed that CFOs:
- are deeply involved in the corporate strategy setting, acting as CEOs’ copilots
- allocate capital and other scarce resources to bring strategies to life
- play growing roles in overseeing corporate operations and cost-cutting programs
- talk to investors, board directors, and regulators, among others.
But who is the role model? And can the term imperial ever be a good thing when applied to a corporate officer? The Economist concludes that it cannot. Certainly, as the articles states, the days of the Imperial CEO are long gone. Think of Julius Caesar as the prototype, and remember how his tenure ended. As for an imperial CFO, it may depend on whether the emperor in question more resembles Augustus by successfully leading the company through new cycles of growth or more resembles Nero, ready to set the Eternal City ablaze for glory and revenge.
However we tag it, the role of the CFO at a global, diversified bank has certainly changed significantly in the past 20 years—much more so than for the corporate counterpart. And that change has accelerated in the past six, following the Lehman Brothers bankruptcy. Now the role is even more relevant, critical, and powerful: some might say almost impossible to bear. Let’s look at how it has evolved.
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1 Schumpeter “The imperial CFO: Chief finance officers are amassing a worrying amount of power,” The Economist, June 18, 2016.