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Below Finance Monthly hears from Jayakumar Venkataraman, Partner at Infosys Consulting on the key predictions for 2020’s finance sphere, considering key topics including the rapid growth of the API Economy and data, as well as operational resilience, fintech acquisitions by banks, the growth of Regtech and new ways to reduce costs.

1. 2020, the year of the Ecosystem Approach and the API Economy

In 2020, we will see the rise of the ecosystem approach in creating new propositions and delivering banking and financial services to customers. Globally, open banking and PSD2 have enabled newer players to enter the market and gain access to customers’ data that was previously the sole preserve of the banks. This has given rise to many third-party providers (TPPs) that are developing more exciting product propositions for customers, particularly in personal financial management, using customers’ financial data from the banks.

We will see this approach growing significantly in the world of Trade Finance. As well as this, banks will bring together multiple players such as shipping companies, local chambers of commerce and insurance companies to create richer product and service propositions for their customers. We will see blockchain-based solutions continue their pivotal role in helping bring a digital ecosystem’s players together.

All of this will be underpinned by rapid growth of the ‘API economy’, where banks and the other players in the ecosystem are exposing APIs for all their key capabilities, using this to integrate and orchestrate new products and services for their customers.

2. In 2020, data will drive more customer insights than ever

In the last few years, we have seen a significant rise in digitalisation and the amount of data that is collected on customers and their preferences, transactions, and market and industry data.

In 2020, we will see the emphasis shift to using this data to drive a much richer understanding of customers, predicting and responding to their needs and transactional patterns. This will generate much greater insight into their lifecycle stage, and help create personalised offers that address their needs. Equally critical will be the use of this good quality data in risk assessments, compliance and fraud monitoring, to deliver safe banking services to customers.

For commercial customers, banks will bring together the vast amounts of transactional data across multiple product lines – such as lending, trade finance and payments – to create a much richer understanding of transactional patterns, business seasonality and the resultant impact on their financial needs. This means that they too can proactively engage their customer with tailored propositions.

To make this intensive, customer-centric approach to data work, we will see more banks adopting AI and machine learning technologies across their businesses to make sense of all their data. These initiatives are currently constrained by the availability of good quality data, which does not help in building models that are robust and yield correct decisions. In 2020, we will see banks scale their investment in data initiatives that focus on improving the comprehensiveness, availability and the quality of data, so that AI and ML can be used effectively and reliably.

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3. Operational resilience needs the right technologies

Operational resilience is emerging as one of the top agenda items for senior executives in banks – and also for the regulator, to avoid the threat to their individual and organisational brand. Certainty and continuity of service availability is very important for customers, so it is important for regulators too. Operational resilience relies on tightening controls and governance around business and IT operations, while continuing to invest in the infrastructure for the future.

Modernisation and transformation of the IT infrastructure in banks – in particular the adoption of cloud and migrating the hosting and delivery of key capabilities in the cloud – is emerging as a major strategic direction. As well as eliminating the costs from maintaining their own data centre operations, migration to the cloud also offers resilience, agility and flexibility, advanced analytics, and innovative applications that are built on a cloud-first approach. All of this significantly improves integrated working and removes some serious challenges.

4. Fintech acquisitions on the horizon for banks

The trend of fintech firms disrupting the way banks and financial services players deliver products and services to their customers is here to stay. The way banks think about the fintech players has also undergone a significant shift. While they were once seen as fringe players, this year, banks will be looking at using fintechs to fill gaps in their own offerings, giving much richer propositions to their customers.

Banks are acting as investors, incubators, collaborators and strategic partners. Banks have set aside formal bandwidth to engage with the fintech community to identify the upcoming stars, to understand how their capabilities can be integrated into their product propositions, and to ensure they don’t fall behind their competitors. In some cases, banks have also bought out the fintech firms outright, as a move to gain competitive advantage over their competitors. Santander’s acquisition of ebury is one such example, and we will see many more acquisitions of fintechs by banks in 2020.

Banks have set aside formal bandwidth to engage with the fintech community to identify the upcoming stars, to understand how their capabilities can be integrated into their product propositions.

5. Regulatory compliance and the growth of Regtech

Regulatory compliance will continue to be a top spend area for banks, as the need to comply with existing and emergent regulatory and industry initiatives continue. There are plenty on the agenda: FRTB, EU Anti-Money Laundering Directives and other industry initiatives such as ISO20022 adoption and IBOR Transition, as well as a slew of other national and regional requirements. With all of this, banks will have their hands full in 2020. Banks will be looking to be efficient about how they approach these initiatives, to then structure their programmes of work so as to minimise duplication and rework in their efforts.

The emergence of RegTech firms is a key development that can aid the banks in their compliance initiatives. Estimates on the size and the growth of the RegTech industry vary significantly, but we know that this sector is set for rapid growth. Regtech firms are focused on developing solutions in data collection and reporting, decisioning, predictive analytics and risk identification and management. Like with fintechs, we expect banks will co-opt these firms to aid their compliance initiatives.

6. New ways to reduce costs

Given the recent trend of results posted by the banks, cost reduction and rationalisation will be an important focus for 2020.  As opposed to outsourcing and offshoring of work to lower cost locations, and the adoption of automation and RPA to drive costs down, in 2020, cost rationalisation will focus on a more fundamental operational transformation.

This will involve a radical rethink of the way banking processes are designed and delivered, and the adoption of an automation-first approach. This approach will be supported by a much smaller team of multi-skilled expert operations teams that oversee business processes, and can jump in to manage any exceptions or incidents with expertise.

As well as a radical redesign of operations, we will also see banks drive operational costs down through the monetisation of assets and mutualisation of costs. Banks will carve out operations and technology capabilities to a strategic partner that also offers such services to other banking clients. We have already seen some of these deals executed, and we will see these conversations picking up scale in the coming year.

According to Pierre-Antoine Dusoulier, CEO and Founder, iBanFirst, they need these qualities in order to make accurate projections and ultimately to develop strong business strategies.

Whether for internal planning or securing external investment, managers need to have a clear handle on how much they are going to be charged for goods, services and people – and how those costs stack up in the wider marketplace.

But while some business costs are relatively easy to predict and calculate, others can be somewhat murkier, particularly for small and medium sized enterprises (SMEs). Foreign currency exchange payments are one such area.

In a globalised economy, being able to make and receive foreign currency payments in a fast and reliable way is crucial for more and more businesses, even the smallest. Foreign currency payments enable businesses to forge relationships with customers, partners and suppliers all over the world and to expand into new markets.

In a globalised economy, being able to make and receive foreign currency payments in a fast and reliable way is crucial for more and more businesses, even the smallest.

Indeed, back in 2013, Oxford Economics statistics predicted that the number of small businesses doing business in more than six countries would increase by 129% over the next three years, whilst the most recent Oxford Economics SME Pulse report found optimism in the global economy and an international outlook. In November of last year, the ONS reported that the number of UK SMEs exporting internationally had increased to 232,000, representing around 9.8% of all SMEs.

International business requires international currency payments. However, there are multiple costs associated with such payments, and small businesses are disproportionately affected.

First, and most obviously, banks levy fees for making and receiving foreign currency payments – and unfortunately, these can be substantial, particularly for SMEs. Additional costs are often hidden and absorbed into the exchange rates offered. This makes it very difficult for smaller organisations to understand both exactly how much they are being charged for foreign exchange currency payments, and how those charges compare to those offered to bigger businesses. Studies have found total spreads of up to 3.71% being charged, including fixed fees, and as a result it has been suggested that the UK’s small businesses hand over around £4 billion to the major banks every year, simply in order to buy goods and services abroad.

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Then there’s the question of currency hedging. Organisations of all sizes engaged in transactions in foreign currencies are exposed to currency risk, which can in turn have a significant impact on commercial margins. Once again, SMEs are particularly at risk, because their banks are less likely to offer them currency hedging solutions compared to those on offer to larger organisations. The Brexit referendum result was a stark reminder of how quickly currencies can suffer sharp devaluations, with pound sterling diving against the euro. Many small businesses experienced double-digit losses thanks to that devaluation, because their banks did not offer them a currency hedging option.

So what is to be done? All organisations, but particularly SMEs, need a foreign exchange model which is cost-effective, efficient, transparent and reliable. They need to be able to have greater visibility of the costs of foreign exchange payments by incorporating them into their existing business plans to manage risk effectively.

For businesses to thrive in an international environment they need to harness financial solutions that can equip them with a foreign exchange offering which helps them facilitate transactions in real time, providing the most favourable currency rates to drive cost savings across their business.

By harnessing new FX technologies CFOs can reduce the time spent on foreign exchange transactions and their associated costs. Meanwhile, through having greater visibility over foreign currency payments, CFOs can effectively mitigate risk and focus on what is important: taking a strategic role in growing the business.

Credit management has a vital role to play within any business. Its primary aim is to ensure customers pay their outstanding balances within the pre-agreed timeframes. When implemented effectively, it helps reduce late payments and improve cashflow, in turn driving a more positive liquidity position for the business. Below Martin de Heus, VP of Direct Sales at Onguard, explains for Finance Monthly.

All of this is fundamental to the work of the credit manager. Unfortunately, however, credit management departments don’t always believe their job also entails keeping the customer happy. Whereas sales and customer service departments might be trained in the arts of charm and diplomacy, credit management teams are more likely to value persistence and tenacity. After all, organisations want outstanding invoices paid as quickly as possible.

The issue is that the role of the credit management department also needs to be about maintaining positive customer engagement. Sales and customer service departments will have done their best – with the help of various tools and technologies – to get to know the customer and ensure their satisfaction. Maintaining this positive relationship is generally much trickier if the customer falls into debt.

It’s a delicate situation. The wrong approach may negate any early groundwork and jeopardise a potential long-term relationship. Nonetheless, these customers are in the credit manager’s portfolio for a reason: experiencing payment difficulties, in arrears or have already been transferred to a collections agency.

The organisation wants to keep Day Sales Outstanding (DSO) as low as possible, however the customer still expects to be treated well and with respect. Respectively, how can organisations create a positive customer experience despite these payment difficulties?

As credit managers are aware, the reasons for non-payment differ greatly between customers; there is never a ‘one size fits all’ approach. Some may be experiencing temporary difficulties. For example, an understaffed accounts department with a high workload might mistakenly overlook an open invoice. While some always pay late as a matter of policy, and others are genuinely facing cash-flow problems.

Because of these differences in circumstances, all these will act favourably to a personalised approach.

Today there is technology available that monitors each customer’s order to cash journey and this will segment customers, assessing who the customer is, what they need, what the risks are, their payment behaviour and how they prefer to communicate. Automated reminders, processes and actions can be created based on these segments. Consequently, communication with a customer who always pays late will differ from those with the customer who simply forgot to pay an invoice. This functionality provides customers with the attention they need, while at the same time, giving credit managers more time to focus on exceptions.

Because this software provides insights on the entire order to cash process, all stages of the journey can be optimised and KPIs achieved. This may include lowering the DSO, optimising cash flow, improving the ability to focus on the core business and focusing on a positive customer experience. It also gives a fully integrated overview of the cash flow forecasting and outstanding debts.

In short, a positive experience and the lowest possible DSO can co-exist – and a credit management team can focus on the customers’ needs and requirements. After all, with the right care and attention, a late-payer can suddenly transform into a loyal customer – and one that pays on time.

The arrival of the GDPR (General Data Protection Regulation) is less than a week away. However, many businesses are still not prepared for the legislation shake-up that could see huge sanctions imposed for non-compliance. Experts at UK based IT support solutions company, TSG, explain for Finance Monthly what the key considerations are when it comes to the finance sector.

If your business is unprepared for GDPR, you are not alone. A Populus survey conducted only this year revealed that 60% of UK businesses do not consider themselves “GDPR ready”. It’s definitely not too late to put measures in place to ensure compliance with the regulation. Following the introduction of GDPR on 25th May, complying with GDPR will be a continuous journey.

What are the key areas you should be considering in light of the looming GDPR deadline?

Cyber-security tops the list

In this digital world, we produce, store and disseminate huge amounts of data. And a significant portion of that will be Personally Identifiable Information (PII); this is the data that matters under GDPR.

Even if, as a business, you don’t store customers’ sensitive data, you’ll still store the data of your employees. Therefore, all businesses must put measures in place to safeguard that digitally-stored data.

Encrypt everything

Arguably the most valuable cyber-security tool at your disposal is encryption. Not only is it a robust way to keep your data inaccessible to cyber criminals, it’s the only method that’s explicitly mentioned multiple times in the GDPR. Should any PII data you hold fall into the wrong hands – whether deliberately or accidentally – encryption will render it unintelligible. Encryption can operate at a file, folder, device or even server level, offering the level of protection most suited to your business needs.

Review your policies and processes

The GDPR requires you to implement policies that detail how you intend to process personal data and how you will safeguard that data. It also states that data controllers – that’s your business – must “adopt internal policies and implement measures which meet in particular the principles of data protection by design and data protection by default.” All new policies, whether specifically related to GDPR or not, must be compiled with a ‘privacy by design’ model. Existing policies, including your data protection policy, privacy policy and training policy should also be reviewed in light of GDPR.

Don’t forget subject access requests

Much of the coverage of GDPR has focused on two areas: data breaches and the potentially eye-watering fines. An area that’s arguably been overlooked is complying with subject access requests. Individuals can request access to the data you hold on them, verify that you’re processing it legally and, in some cases,, request erasure of their data – also known as the ‘right to be forgotten’. Under GDPR you’ll have only a month to respond to these requests, otherwise you’ll be at risk of non-compliance. More guidance on this can be found on the Information Commissioner’s Office (ICO) GDPR guide.

Don’t forget your reporting obligations either

Another element that’s received significantly less coverage is your reporting requirements. In the event of a data breach, businesses must report it to the Information Commissioner’s Office (ICO) within 72 hours of discovery. It’s especially important to note this, as failing to meet this obligation could be considered a bigger breach of the GDPR than the data leak itself. Both Uber and Equifax have come under fire in the past year for covering up breaches, reporting them late and keeping the extent of the breaches under wraps.

A good example to follow is Twitter. Following the discovery of a bug that stored users’ passwords in plain text – which is a bigger deal than it sounds – Twitter not only reported on the breach, but immediately informed its users of the bug, what caused it and the potential repercussions, and advised customers on how to keep their data safe. The second element of this is critical to GDPR too – if the breach poses a risk to individuals’ “rights and freedoms”, the victims of the breach must be informed too.

The key takeaway

The GDPR wasn’t created to punish businesses or to catch them out, but rather to empower individuals and consumers. Whilst there has been a lot of confusion around exactly what has been required for businesses, it’s clear that cyber-security is imperative, as is clueing up on your reporting and response obligations. It’s important to note that simply experiencing a cyber-attack or data breach won’t automatically result in financial punishment; the GDPR clearly states that, should you prove you put in place measures to protect your PII data, you won’t be hit with the most severe fines.

For an Agile transformation to be truly successful all departments within an organisation need to be part of the journey. For finance teams this can be a particular challenge as historically change happens infrequently within finance practices.

Often finance departments are blamed for slowing innovation. In today’s marketplace the ability to pivot and quickly try new ideas has become critical to success. Below, Paul O’Shea, CEO of Kumoco, the management consultancy that specialises in Agile working and cloud consulting, looks at some of the simple steps finance can take to become an enabler of innovation

  1. Adopt a VC model for funding projects

Finance departments usually do not have a culture of reviewing value generated by projects as they proceed. Typically they engage at the start to approve budgets and at the end of projects to review ROI and manage depreciation. Working in an Agile way requires continual assessment of the value being delivered. This means that projects that are not delivering value can be identified and stopped earlier. Conversely those that are, can be promoted and additional investment assigned.

In practice this means finance departments should be encouraged to adopt a venture capital model. An initial budget should be allocated to kick-start a project, then value delivered is continually measured to trigger further releases of funding.

A finance department usually works to longer-term goals and does not have a culture of reviewing projects as they proceed to make sure what is undertaken is still valid and has not been overtaken by changes in the business or the market in which it operates. However, a more flexible approach is increasingly necessary as the pace of change in economies and markets has never been faster and companies need to be fleet of foot to survive. Finance departments should be encouraged to perhaps adopt a venture capital model, nurturing projects over defined periods of time. They could provide an initial budget to kick-start a project but then continually assess the project’s progress and validity before releasing further funds for subsequent stages to ensure that what is being funded is still relevant and is valuable for the business.

  1. Embed the finance team in projects

Typically finance departments sit apart from actual project teams.

This is in direct opposition to an Agile way of working, which involves continual assessment and development, to drive efficiencies and ensure projects are on track and are meeting evolving goals. To address this, businesses should consider embedding finance department members in the project team so they have a better understanding of the work being done and the strategy and goals. Finance team members could also benefit from Agile training where they receive an introduction to Agile and to understand its ethos and integrate more effectively with project teams.

  1. Use a range of metrics to measure value

Assessing value is not easy. A 2017 global survey by the Scrum Alliance showed that for 41% of participants[i], measuring value was their greatest challenge. To help finance departments correctly assess the value of Agile projects to a business there should be regular reassessment, the metrics should be standardised and value should be measured not solely by financial gains but through a range of key performance indicators (KPIs) to have a more holistic view of the benefits of the project on a business.

  1. Foster an Agile finance function

As well as the above measures, which apply across a business, fostering an Agile approach in finance departments is also a key part of helping to encourage an Agile and lean way of working in an organisation.

Adopting Agile will help finance functions to increase efficiency and speed through simpler data management by accelerating financial processes such as capital expenditures, resource allocations, reporting and analysis, leading to fewer controls and more real-time information. The result is more timely and actionable financial information that allows managers to be more Agile and responsive and avoid problems and recognise opportunities that will help to transform a business. This is supported by the 2017 CFO Indicator Report that found that 36% of CFOs would like their teams to spend less time on report preparation and data collection more time on forecasting and scenario analysis.

Simple techniques could be embraced, such as understanding how Kanban, a process designed to help teams work together more effectively, can help streamline processes and drive efficiencies. It may also be useful for the finance department to have a Kanban board, updated daily, so that everyone can see and understand how and why these tools work.

CFOs and their teams should also monitor and analyse non-financial KPIs, including customer satisfaction, customer relationships and brand reputation, which can be used to make more accurate forecasts, minimise risks and identify new opportunities.

  1. Training & preparation

Finally, finance departments should also make themselves transformation-ready and educate staff on the key role the finance function plays in helping to develop an Agile ethos in a business focused around developing a strong customer-centric culture, making a company more flexible and able to achieve goals that are rapidly evolving. The truly Agile finance function has the adaptability, skills and nimble effectiveness to help transform businesses of whatever size or sector - and take them to new heights.

[i]https://www.scrumalliance.org/scrum/media/ScrumAllianceMedia/Files%20and%20PDFs/State%20of%20Scrum/State0fScrum_2016_FINAL.pdf?aliId=270113596

We've seen some huge deals in 2017, from Qualcomm/Broadcom earlier in the year, to Gemalto/Atos in the last few weeks. We also had the 10-year anniversary of the financial crisis and the seating of Donald Trump into power.

As part of this week’s Your Thoughts, Finance Monthly reached out to experts far and wide to ask about their favourite moments in this financial year, from the most significant changes in regulation and announcements of further regulatory developments, to highlights of the most impacting acquisitions and mergers in the UK and beyond.

Andrew Boyle, CEO at LGB & Co.:

A key 2017 highlight for me surrounded Brexit and came in November at an event organised by the Edinburgh law firm Turcan Connell, which featured an SNP MP and a Conservative MEP. I expected a lively but entrenched debate carried out in a partisan fashion. To my complete surprise, the mood at the event was calm, points were made politely and there was an obvious willingness to compromise. It seems this more constructive spirit foreshadowed that of subsequent UK/EU negotiations given the breakthrough in talks with the EU and the clear indication that all parties, including the EU Commission, wanted to move forward. At the moment, the prospect of a transition period will keep the financial markets and company directors guessing what the final outcome will be. However, it is becoming increasingly clear that a failure to reach a deal will be in the interest of neither of the parties, whose economic viability is so deeply intertwined. I hope the new more constructive mood continues into the New Year.

Another highlight was the Budget. Fears of a radical change to EIS and VCT investing rules were unfounded. The Chancellor did refer to limiting EIS investment that shelters low-risk assets, but he offset this by promising increased EIS limits for investing in knowledge-intensive companies.

Continued support for early-stage businesses is key to what the Chancellor described as Britain’s position at the forefront of a technological revolution. UK SMEs will increase their total economic contribution to £217bn by the end of the decade –up significantly from 2015. In spite of the economic uncertainty around Brexit, British SMEs remain hungry for growth and are generally optimistic about the future. What often holds them back is a lack of funding, particularly through conventional avenues. SMEs often need to raise money quickly to adapt to changing markets or new opportunities, but obtaining bank financing can be a slow and cumbersome process – and that’s where EIS and VCT investors and indeed alternative lenders can help fund the gap. Specific measures announced in the Chancellor’s budget were positive for companies and investors. For now, government policy remains to support innovative companies notwithstanding the pressure to reduce tax breaks and apply funds elsewhere.

Richard Anton, General Partner, Oxx:

The biggest financial story of 2017, in the world of venture capital and technology start-ups and scale-ups, was the European Investment Fund suspending investment in UK VC firms. As an immediate result of the Brexit vote, FinTech lending was the first to suffer, before full suspension of investment into UK VCs. The EIF had been by far the single largest funder of UK venture capital firms and with the options for supply reduced so significantly, not only does this make competition for funding even more intense, the lack of on-the-ground European experience presents yet another challenge to businesses trying to grow to the next stage.

Thankfully, the British Business Bank has moved quickly to help mitigate the EIF’s withdrawal. The £1.5 billion Enterprise Capital Fund programme has got to work to support UK-based start-ups, recognising that the entire market needs to see small firms confident to apply for finance in order to grow. Perhaps the most encouraging indication that British funding is filling the void is the success of Episode 1 Ventures in recently raising £60m for its fund targeted at British early stage start-ups - £36m of this coming from the British Business Bank.

The withdrawal of the EIF shook up the market more than perhaps was covered at the time. Of course for any business to survive and grow, it needs to adapt to a range of situations, yet the sudden absence of European funding was particularly challenging. It is also one that will have long-term ramifications and when the dust settles the European funding market will look very different.

Peter Veash, CEO, Bio:

Amazon’s purchase of Whole Foods in August is my most significant financial moment of 2017. The deal was lauded by many industry pundits as a match made in heaven, with Whole Foods’ glowing reputation for offering high-quality goods marrying with Amazon’s unsurpassed track record for fast, efficient logistics – a new retail power couple was born.

The upshot? Aside from a slashing of prices across the board at Whole Foods (many by up to as much as 40%), the deal also meant that Amazon tech like the Echo, Dot, Fire and Kindle products are now available to purchase instore, while Whole Foods products are now available to buy online via Amazon. ‘Try before you buy’ Amazon Pop-Up stores have opened in locations all over the country, and Amazon Lockers have also been introduced instore, allowing customers to pick up packages and drop off returns. The deal has also given rise to rumours around the potential roll out of Amazon concept stores, including cashier-free checkouts, which would allow Amazon to push commerce tech to a new level.

The $13.7 billion megadeal knocked some competitor share prices sideways and boosted Amazon's – it rose so much on the news that some were saying they’d essentially bought it for nothing. Most importantly, it gave Amazon the physical outlets to develop the future of truly omnichannel retail, particularly within the coveted fresh grocery market (which the ecommerce giant had been preparing to attack for some time).

Marina Cheal, Chief Marketing & Customer Officer, Reevoo:

2017 marked 10 years since the financial crisis, and it’s been a story of reputations - new players trying to forge a new one, and old ones clinging desperately on to theirs.

The world’s big banks took a spectacular fall from grace, the likes of which hadn’t been seen since The Great Depression: after being perceived as trustworthy, powerful corporate behemoths for decades, consumer trust in these institutions was at an all-time low, with many feeling shaken and disillusioned by the lack of ethics displayed by those responsible for the crash.

Meanwhile, a new breed of disruptive, digital-first fintech brand was evolving to challenge the status quo. In 2017 this group of app-based banks have broken the mainstream. Monzo, Starling, Atom and others are now household names, appealing in particular to Millennials who came of age during the crisis years and had the least trust in the financial sector.

Where big institutions once represented trust, newer and nimbler banks have taken their place. Legacy is a dwindling commodity, replaced by convenience and transparency.

What we’re seeing is the next stage on the road to rebuilding consumer trust, but what people want most of all now is a sense that they are in control of their own money, coupled with an ease of use and friendly, authentic communications from their bank – and right now, the challengers are beating the legacy brands to the punch.

Howard Leigh, Co-Founder, Cavendish Corporate Finance:

This year’s November Budget was my highlight for 2017 as it provided some welcome news for the UK’s thriving Financial Services industry and saw the Chancellor confirm his commitment to maintain the UK‘s leading position in technology and innovation post-Brexit. Although it was anticipated by some that EIS and SEIS investments, were going to be in the Chancellor’s firing line, he instead doubled the EIS investment limits for “knowledge-intensive” companies, demonstrating the Government’s commitment to help UK start-ups. The Chancellor also chose to continue supporting Entrepreneurs’ Relief, which, along with other business-friendly policies, is predicted to support the inflow of billions of pounds worth of investment into growth businesses.

With Britain soon to lose access to the European Investment Fund, it was encouraging to see the Chancellor outline his plans to establish a new dedicated subsidiary of the British Business Bank to become a leading UK-based investor in patient capital across the UK. The new subsidiary will be capitalized with £2.5 billion. and will provide a cushion if negotiations with the EIB and EIF do not encourage then to continue investing in the UK. I hope, as some of it is our money and London is clearly Europe’s centre of social impact investing the EIF will now recommence its activities in the UK.

Finally, another key measure in the Budget was the introduction of a policy that will compel online ecommerce companies, such as eBay and Amazon, to police their own websites, thus helping to stem the £1.2 billion yearly tax loss due to fraudulent sales. I first raised this issue in an Oral question in the Lords some 2 years ago and am delighted to see that the campaign run largely with VatFraud.org and Richard Allen has been successful.

The Autumn Budget was a pivotal moment for the UK’s Financial Services sector and the policies laid out by the Government firmly position it as a friend to business. Not only will these policies help to boost UK businesses in the tech and digital sectors, but it will help enhance the City’s position as a leading global centre for finance and innovation.

Tsuyoshi Notani, Managing Director, JCB International (Europe) Ltd:

PSD2 can revolutionise retail banking, generate further investment into fintech, and drive innovation. We’re focused on increasing partnerships with PSPs and fintech firms, enabling them to secure global reach as a gateway to Asia, so February 2nd, when the UK government confirmed its PSD2 timetable, was a really promising step in the sectors’ quest to level the playing field."

We would also love to hear more of Your Thoughts on your favourite moments of 2017’s finance world, so feel free to comment below and tell us what you think!

The C-Suite landscape is changing. With the introduction of several new C-level executives to manage HR (CHRO), Marketing (CMO) and Strategy (CSO), it is not easy for each of these individuals to have a prominent, influential seat at the table. Here Robert Gothan, CEO and founder of Accountagility, talks to Finance Monthly about the importance of the working rapport between C-level executives, for any business.

After the Chief Executive Officer, the secondary ‘leader’ of the business has historically been the CFO. Once responsible for departments such as HR and IT, as well as keeping the business financially stable, the CFO held an undeniably strategic role within the business.

The introduction of advanced technology has changed this however. Businesses across the globe now hold a CIO or CTO amongst their most trusted boardroom members, with influence and budget behind them. Our increasing reliance on technology has led to the rise of the CIO, who not only fulfils the ‘technical director’ role, but also acts as a key strategist, marketer and adviser to the wider organisation.

With different executives vying for boardroom prominence, offering high level strategy to benefit the growth of the business is vital. As such, the CFO and CIO must consider how they can form a partnership and add maximum value to their individual departments, and the business as a whole.

The focus on finance

The CFO’s role has now returned to its original focus – finance – but CFOs are also contending with mounting pressure to be a strategic presence within the boardroom. Today’s CFOs are not only expected to make recommendations on the future of the firm’s growth and profitability, but also to ensure the very existence of the firm itself. However, the main focus needs to remain on the finance function within a business.

For the financial services sector in particular, frustration with the IT function is not uncommon for CFOs – delays in projects, insufficient resources and constant restrictions can lead to discernible tension between the CFO and CIO. Further still, CIOs are often given budgetary freedom that has led to the rise of the ‘vanity project’ phenomenon, where senior IT directors use up capital and resource on highly technical projects which add questionable value to the business.

At the same time, IT departments often fail to meet the needs of the finance function. As a result, these employees are often left to rely on ineffective, quasi-manual tools such as Microsoft Excel. These solutions not only add to the increasing resource pressure on the finance department, but can also bring with them significant corporate risk.

That is only one side of the story, however. EY’s recent report ‘The CFO Agenda’ has highlighted a key setback in the CFO-CIO relationship – CFOs’ lack of understanding when it comes to IT issues. With clear collaboration needed between these two roles, a more productive relationship must be fostered.

Mutual understanding

In most organisations, these two boardroom heavyweights ensure that current business operations run efficiently and effectively. Alongside this, they also shape the strategy for future business growth.

EY’s report also shows an increased desire for these two roles to collaborate more often, with 61% of CFOs reporting increased collaboration over the past three years. The areas most improved in terms of collaboration were CFOs involving themselves in the IT agenda and adding value to the CIO by managing costs and profitability across the business, both of which are undeniably a positive step forward.

Despite this progress, the convergence of technology, investment strategy and risk in today’s digital business world has elevated the collaboration required between these two roles to new heights. As such, any disconnect will have a ripple effect throughout the organisation, and consequently put a spanner in a business’ technical advancement. For organisations to maintain their competitive edge, it is clear that the productive relationship needs to be kicked up a notch.

The future relationship

To date, the relationship between the CFO and CIO has historically been focused on cost, with the IT department’s budget a constant sore point. In fact, many CIOs have found themselves reporting to the CFO to keep an eye on hidden costs during the management of IT projects.

Nevertheless, technology is crucial to operational excellence and business growth in today’s business landscape. CFOs are already becoming far more aware of the strategic value that IT brings to an organisation, but need to see it as an essential tool for achieving broader efficiency goals and driving future innovation.

There are potential roadblocks ahead, however. Effective communication between these two roles is often prevented by the difference in language – another finance vs technology battle. There are also personality differences to contend with – CIOs are typically big-picture thinkers, whereas CFOs value logic and results. Being aware of these differences and barriers to communication will be a crucial part of creating a business partnership between these executives.

To achieve this goal, CFOs should consider employing a ‘Business Partnering’ approach in order to provide more technical, commercial business insights. To provide a higher level of strategic thinking, the CFO must utilise data which has been extensively analysed. The analysis itself will sit under the CIO’s remit, and demonstrates just one small area where these two roles can overlap and work together in modern businesses.

Ultimately, the relationship between the CIO and CFO can directly affect a company’s success, so both must come together to provide the strategic ideas which will propel the business forward. With some bold technology decisions coming up in the future, these two roles must work together to not only increase the CFO’s involvement in the IT agenda, but also to push data-driven decision making into the heart of an organisation’s future business strategy.

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