FinTech is an engine for growth, pushing the boundaries of innovation and transformation within the financial services sector. According to Deloitte, the UK market has the potential to drive a GVA uplift of £3bn in the next three years, creating more than 50,000 jobs in the process. To tap into this growth, you need a strong team that is well-versed in the financial performance of the business, and that team may include a talented Chief Financial Officer (CFO).
Broadly speaking, a CFO will seek ways to bring more money into the company, meanwhile looking internally at how the business can be more financially efficient. This only touches on the surface of what a CFO could bring to your business, as their daily responsibilities can encompass M&A strategy, regulatory relations, strategic planning, performance tracking, providing leadership with budgets, and more.
That still leaves the question, What makes the role of a FinTech CFO unique?
CFOs provide invaluable insight into the rapidly evolving FinTech space
With technology advancing at dizzying speeds, FinTech companies need to be dynamic and assess everything through an entrepreneurial lens. A CFO will do just this, ensuring the company stays relevant and maintains, or grows, its market share. Warding off competition is a top priority for any business, particularly those in the FinTech market, as more start-ups enter the scene, attracting fresh injections of capital. According to KPMG's Pulse of FinTech report, H1 2021 recorded a ground-breaking $98bn in investments, with a sizeable $5m share attributed to private equity.
A CFO will keep a watchful eye on shifts in the market, adjust their strategic planning accordingly, and advise key stakeholders about the right steps to make.
CFOs have a proven ability managing relationships with stakeholders
In any FinTech company, the CFO must work closely with stakeholders, particularly during the capital-allocation process. Whilst evaluating the different projects, a CFO will aim to balance the conflicting objectives of different stakeholder groups, and find a solution that works in the best interest of the business. Particularly for FinTech businesses, this means balancing the promises and risks of innovation - an art that when perfected, has the power to drive investments.
Gartner found that new-to-role CFOs who adopted a strategic approach to stakeholder management and relationship building were 50% more likely to be successful in their transition. Considering that a poor hire can incur huge costs for FinTech companies, looking for strategic CFOs should be a top priority for any talent acquisition team.
CFOs have a working knowledge of risk mitigation
Many FinTech teams will consider hiring a general counsel to assist with risk mitigation. However, if you're still weighing up this decision, don't overlook the role your CFO will play within risk management. CFOs assist in streamlining business operations, keeping the company on track during the good times, but more importantly, making sure all runs smoothly during challenging times, such as the pandemic. As we transition into the post-Covid landscape, CFOs will be keeping a sharp eye on managing business continuity (BC) risk and building resilience at all levels.
Should you hire a CFO, or outsource an interim CFO?
The needs of a business depend on its size, structure, market and goals. Therefore, the role of a CFO will differ from one company to the next. The CFO Magazine outlines four core roles:
- The strategist - crafts corporate strategy
- The change agent - generates business value
- The producer - standardises and automates transactional processes
- The guardian - standardises control and compliance processes
Just as the role of a CFO will change depending on the company, their role within that company will also change with business needs. If you're looking for a trusted advisor who will act as a sounding board and sense-check KPIs, a CFO should be your next hire. Alternatively, if you want a consultant who has worked with many businesses and therefore has a breadth of knowledge and experience, an interim CFO could be better suited to your company.
