Payments Trends: Four CFO Priorities for 2022
The past 18 months have tested Chief Financial Officers (CFO) across the globe. Here, Fadi Moukaddem, Senior Vice President and Chief Financial Officer for Central and Eastern Europe, Middle East and Africa (CEMEA) at Visa, highlights the ways in which the role of the CFO is set to evolve in 2022, and outlines the principal challenges facing businesses as well as the finance function in a post-pandemic world.
The role of the Chief Financial Officer has changed dramatically in recent years. According to McKinsey research, modern CFOs now have more people reporting to them than ever before, and their responsibilities have extended well beyond the finance function.1 Put simply, CFOs are now viewed as strategic advisors to business and stewards of long-term value for shareholders.
As CFO of Visa CEMEA, Fadi Moukaddem is in an ideal position to understand this transition and to anticipate how the role of the CFO is likely to evolve further over the coming year. CFOs had to adapt quickly during the pandemic, he explains. From a financial perspective, the focus was on driving down non-essential spending and identifying areas where “opportunistic spending” would help drive value. “Was there an opportunity to dial up spending in certain areas for a better return in the short or mid-term?” he asks. Data and digitization have also changed the way a CFO operates: “We realised during the pandemic that the ability to respond to ambiguity depends on the sophistication of your data – and your adoption of artificial intelligence and bots,” he says. “This is because they can establish patterns faster than human beings and without the influence of human emotions.”
Moukaddem said that, in 2020, Visa’s priorities were: securing jobs across the company and maintaining the wellbeing of all employees; helping Visa’s clients accept digital payments across myriad platforms; analysing data to deliver better outcomes; tracking partners network liquidity to anticipate any problems before they arise; and sharing learnings and insights with stakeholders, clients and the government. In 2021, as the world moves into a post-pandemic recovery phase, these challenges have changed.
Moukaddem believes there will be four areas of focus for the CFO in 2022: talent; risk; data; and changing client behaviours.
#1: The battle for talent
As we emerge from the pandemic, the future of the workplace has changed, along with talent needs and preferences. Employees can now work anywhere as efficiently if not more than in the traditional workplace. This creates an opportunity for companies, to grow their talent pool exponentially without geographic boundaries. If companies want to win the battle for talent, then planning needs to start now, and it will require major revamping and modernization of workforce policies. The race for top and relevant talent requires a deep understanding of what candidates are seeking in their next roles.
Moukaddem adds that when it comes to talent, the CFO now has a permanent seat at the table. From rising costs of acquiring and retaining talent, the shortages in areas such as software development and data analytics, to the financial implications of hybrid working models. Moukaddem explains: “There will be a significant demand for people who can work easily with a plethora of data and turn it into a means to solve clients’ problems. This will result in a battle on talent, and you will see big corporates continuously poaching talent from each other. CFOs must watch out for these shifts and, with the help of the human resource department, fund and develop attractive retention plans for such rare profiles.”
Other changes are expected too: “Many companies will make either a permanent shift to remote working or a blend of workplace and remote, which means less investment in real estate. The CFO will have to propose how these savings can be invested in the tools that foster remote collaboration and satisfy the needs of the emerging talent pool.”
#2: The expanding definition of risk
The CFO’s list of potential risks grew exponentially during the pandemic and this outlook is here to stay. “We learned to expand the list of macroeconomic indicators with some more operational ones,” he says. “These days, you also need to look at supply chain routes, production output, even continuous validation of which travel corridors are open and the freight cost between countries.”
Cashflow levels are of paramount importance to today’s CFO. ”Your access to liquidity is important,” says Moukaddem. “Look at how the pandemic is evolving: you never know when the next wave will come. The cost of borrowing is set to increase and liquidity levels that are suitable for normal times may not be enough for an extraordinary situation and could lead to bankruptcy.”
Increased digitization also means greater cyber risk. “A few years ago, it was difficult to convince CFOs to invest in cyber risk containment but now it must be as fundamental as their investment in R&D. The CFO is the steward of long-term shareholder value, and a single cyber-attack can cause permanent damage to the brand and erosion to shareholders’ value.
#3: Data, machine learning and artificial intelligence
Technology is set to play an even greater role in finance over the coming year, according to Moukaddem. “CFOs need to understand how they can integrate AI and machine learning into support functions like finance, HR, risk and legal. Harnessing data in these areas is now just as important as in product, sales and marketing.”
They must also be prepared for an increased investment in the technology space: “There will be greater investment in digital platforms to enable faster e-commerce growth,” he says. CFOs have the opportunity to be pioneers, by adopting new technologies that bring transparency across the whole finance spectrum. As an example of this, he foresees the rise of a whole new service line – treasury-as-service – which will use automation and digital tools to track liquidity levels and propose funding sources through a network of financial institutions offering competitive rates.
#4: Give the clients what they want
The repeated lockdowns during the COVID-19 crisis accelerated digital migration; many consumers, who had never bought certain items online, converted to e-commerce. Moukaddem believes that every CFO needs to take another look at their customers and assess how their needs and requirements may have changed, as a result of the pandemic.
“No company will be successful if it is not client-centric,” he says. “The behaviour of the consumer has changed dramatically and that impacts everything from what products they want to how they want to access them.” Once you have painted a detailed picture of your customer, it’s important to ensure your offering becomes irresistible, Moukaddem adds: “Many products have become a commodity so you may need to reduce prices while increasing the penetration of value-added services which generates higher yields. Do the things that the client cannot do on their own.”
As a CFO, you must understand how addressing all these challenges can create opportunities for growth, says Moukaddem. The right talent will push to better automation which will generate cleaner, more useful data which helps to create more targeted products for the client. “If you are a CFO, these issues must be top of mind. This is the time to take stock of the changes brought by the pandemic and turn-them into systematic, long-term business learnings.”
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