By Darren Parkin
by Alwyn Jones, CFO at Luno
From supply issues to soaring utility costs, lockdown and dramatically changing working patterns, uncertainty has dominated business operations for the best part of the last three years.
Contending against volatile market conditions, fears of a looming recession, or perhaps one already underway, continue to grip UK businesses. A new leader in government, and her cabinet, brings further change as businesses continue to operate under strain. The CFO role – once siloed in a business as the umpire and reporter, concerned primarily with budgets – has been thrust into a new dawn which revolves around strategic and long-term value creation. This role is not just about survival but ensuring that a business is agile enough to withstand change and drive the growth required for the business and ultimately the UK’s economy to prosper.
With a unique level of enterprise-wide visibility, the modern CFO must act as the strategic soundboard to the rest of the c-suite, the board and investors. Looking forward is crucial, and despite uncertainty, CFOs must make informed decisions on what is next for the enterprise in terms of opportunity and key strategic priorities.
The UK continues to be Europe’s most attractive location for international investment, particularly in modern finance with thefintech sector securing more than $9bn in the first half of 2022. The UK must embrace the future of finance to remain ahead of its counterparts and as the global economic slowdown takes its toll, UK CFOs must lead their organisations and broader industries into this future and be the driving force behind strategic growth.
Tomorrow’s CFO, today
Long gone are the days when the CFOs sole job was to be responsible for managing the finance and accounting divisions of a business. In fact, the modern CFO does not necessarily come from a traditional finance background – instead, they need to be alive to current trends and drive value through high quality strategic decision making.
This requires a balance and blend of traditional and non-traditional CFO skills. Beyond financial aptitude, adaptability and pace are key. The finance team needs to be infused by people who can thrive in an uncertain environment.
Working in the cryptocurrency industry intensifies the need for this agility. Natural fluctuations in the market make forecasting very challenging, almost impossible, but a growth mindset still needs to be forefront despite the uncertainty. That is why the ‘horizon-scanning’ element of the role is so important; looking out for opportunities and gaps for growth through new technology or innovations will ensure the business remains competitive and alive to seizing opportunities.
Taking an enterprise-wide view
Bar the CEO, CFOs are one of the few people in the organisation who are privy to seeing everything at an enterprise level. It’s about people, processes, systems, identifying where the risks are, seeing round corners, and ultimately, being able to look at the bigger picture of how you want finance to operate alongside what you know about the business’ trajectory.
In this rapidly changing economic climate, finance teams are tasked with putting together business plans for the year amid unprecedented uncertainty. But what defines a strong CFO is the structured way they respond to the unpredictability and decisions asked of the business.
The CEO relies on informed insights from the CFO for high quality decision-making and as a key strategic sounding board. To perform this role seamlessly, however, the finance team needs to ensure that the right data and insight is readily available as well as ensuring the business lean with fully controlled and streamlined operations. With a clear enterprise level vision, a CFO is able to communicate the threats and opportunities on the horizon to the CEO, helping shape potential responses and ultimately enabling agility of strategic decision-making.
Exploring crypto use cases
In the crypto industry, change is constant, accelerating and presenting at breakneck pace. The industry is still massively nascent, regulation is coming, and market volatility extreme and unpredictable. It’s been well documented that huge organisations such as Microsoft and PayPal are now allowing their users to pay for services using Bitcoin, and nearly75% of retailers plan to accept cryptocurrencies as a form of payment within the next two years. CFOs should be recognising and exploring the opportunity and potential of the emerging technology and the UK can take a lead in this industry.
The benefits of offering crypto as a payment method aren’t just limited to satisfying consumer demand. They’re also grounded in the ability to exploit the increased security and privacy protocols inherent in blockchain technology. Instant and verified transactions, protection from fraudulent chargebacks, reduced transaction fees due to limited interaction with third parties and a borderless customer base with no need for cross-border banking with all the friction and fees that implies.
The industry obviously does not come without its own risks. Finance leaders should be thinking long-term about how or where crypto or blockchain technology is right for them and could fit into their future plans. Knowing when to adopt emerging technologies in future strategies is of course key to success and long-term competitiveness for both businesses and the economy.
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