zeb.CFO Study 2020
Chief Financial Officers (CFOs) of European banks are more and more confronted with a growing number of tasks. In addition to their traditional topic areas such as reporting, they increasingly have to consider value creation and strategy development in order to discharge their duties for their respective institutions to the full extent. At the same time, the majority of CFOs find little to no time to support or actively drive forward the vital strategy processes within their bank, although—in light of the rising complexity of their own tasks—they should actually take charge of them.
This is one of the results of the latest CFO study from zeb. For the third time now, the strategy and management consultancy with a focus on the European financial services sector examined in mid-2020 how the finance executives of European financial institutions can succeed in creating strategic added value for their bank despite high cost pressure and limited budgets. More than 60 Chief Financial Officers of large Western and Eastern European institutions were interviewed. Just under half of them work for universal banks, while the others are distributed among specialist and retail banks and other institutions.
“Our study shows that complexity is increasingly turning into a limiting factor with regard to saving costs and generating added value in the CFO’s area of responsibility,” says Dr. Dirk Holländer, Senior Partner at zeb and co-author of the study. “Only if bank CFOs succeed in boldly tackling and reducing the complexity in their area will they be able to resolve the conflict of objectives and play an active part in shaping their company’s future.”
More specifically, the CFO study revealed that most of the finance executives at banks currently feel unable to devote sufficient time to strategic tasks. Over 60 percent of the finance executives surveyed also stated that they were not sufficiently involved in their bank's strategy process. At the same time, more than 60 percent cite the preparation of mostly standardized external reports as their most time-consuming task. The majority of daily operations are thus still dedicated to traditional financial activities, although CFOs would like to invest more time in strategic tasks.
These include above all the areas of value creation and strategy development, so-called “CFO+” functions. Less than 40 percent of respondents say that data analysis is already part of their finance function, but three-quarters see it becoming an integral part of a CFO’s job over the next five years. Similarly, around 40 percent of those surveyed state that they are concerned with strategy development, while more than 60 percent expect this to become standard practice in the next five years.
Volker Abel, Senior Manager at zeb and co-author of the study, explains: “In order to actually take on the new tasks, finance executives will have to increase productivity in their traditional areas of activity, as their importance is unlikely to decrease. A central lever is the use of new technologies, such as those already successfully used in some institutions.”
Against this background, finance executives are well aware of the potential for optimization. 29 percent expect that new technologies in the field of advanced analysis (artificial intelligence and data lakes) will lead to significant performance improvements. However, almost half of the respondents state that a lack of understanding of the potential of new technologies, as well as too little time and resources, are among the biggest obstacles to digitalizing their own CFO tasks.
In this context, CFOs consider cloud computing and block-chain technology to be the least promising options for innovation in finance departments—even if use cases for cloud-based services offer significant benefits. According to the authors of the study, the implementation gap in innovative technologies means that the potential for performance optimization in banks is considerable, especially through simplified, standardized and automated processes.
Dirk Holländer concludes: “Our study shows considerable potential for improvement in the area of responsibility of bank CFOs. Most of the people involved are aware of this and it has been a long-standing motivator for continuous optimization. The biggest difficulty for executives is to find the right starting point for the necessary management measures, as the fields of action are closely interwoven in complex patterns. Positive examples can then show how best to handle the increasing number of tasks and do a great job at the bank.”
Details of the current zeb.CFO Study 2020 are here available.
As a leading strategy and management consultancy, zeb has been offering transformation expertise along the entire value chain in the financial services sector in Europe since 1992. In Germany, we operate offices in Frankfurt, Berlin, Hamburg, Munich and Münster (HQ). Our international locations are in Amsterdam, Copenhagen, Kiev, London, Luxembourg, Milan, Moscow, Oslo, Stockholm, Vienna, Warsaw and Zurich. Our clients include European large-cap and private banks, regional banks, insurers as well as all kinds of financial intermediaries. Several times already, our company has been classed and acknowledged as “best consultancy” for the financial sector in industry rankings.
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