CFOpinion: Digital Transformation of Finance Series – Ger O Sullivan, Fexco

As part of our interview series on the Digital Transformation of Finance, we spoke to Fexco’s Chief Financial Officer, Ger O Sullivan about the evolving role of the CFO, Artificial Intelligence in the finance function and more:

1. How is the role of the CFO evolving?

Over a forty-year career, I’ve seen the CFO role really change over the past ten to fifteen years. While traditionally the role revolved around reporting, compliance and cost containment, the responsibilities have moved from the traditional finance expertise to driving C-suite agendas and evolving strategy. Many CFOs over the last decade have taken over CEO roles in fortune 500 companies as the core skills combined with other competencies seem to be the ingredients many firms are seeking. The fundamentals in the position must be solid but the value added is moving well beyond the conventional definition of the role. An integral part of this evolution is the level of automation and reduced need to be in the weeds.

2. Finance has traditionally been viewed as a back-end function in the past. Do you see it having more of a strategic role in the organisation going forward, with more input into areas like product development?

Finance is playing a bigger role in products and strategy as the core competencies can make a major contribution. Other Executives and managers can be way too optimistic about opportunities and what can be achieved. Finance staff can provide a reality check around the risks while being supportive of any initiative. Any action plan involves resources, getting accurate cost estimates and ensuring no omissions to avoid a good idea being derailed early. A strategy needs solid modelling and verification of the underlying assumptions. In addition, key metrics need to be monitored to know how successful any strategies were so that decisions are well informed.

3. When it comes to digital transformation, do you feel that the finance function is slower to adapt compared to other business departments?

While many finance shops like ourselves are keen to seize the opportunities that digitisation offers, it is very spotty regarding progress. Constant conversations revert around RPA and AI but many of the functions prove difficult to transform due to disperse systems beyond the primary ERP systems. As a result, upgrades of various underlying software can create another major project. At the end of the day, finance needs to get on the bus but spending approval and the business case can be difficult without large volumes to justify the outlay.

4. What do you see as typical barriers to digital transformation in the finance function?

The main barriers I’ve seen is the complexity of existing systems, difficulty getting IT resources internally to focus on such projects, getting budgets approved as it is a multi-year return, and a lack of vision for digital with the Executive level in an organisation as it relates to the finance function.

5. There have been many changes in finance in recent years. What do you consider to have been the biggest catalyst for transformation in the Finance function?

There is a greater expectation in recent years for finance functions to provide greater insights and add value. Straight reporting without in-depth analysis is no longer valued. Furthermore, cost savings have been a huge focus through the financial crisis and COVID. As such, eliminating inefficiencies across processes and seeking greater automation is essential for a modern-day finance function. Many Executives rely on finance to produce key data in a timely and accurate manner to assist decision-making in a much faster-paced world. These have all contributed to the transformation.

6. What impact, if any, do you think AI will have on the finance function?

AI will have a major impact over time in shrinking the finance community related to mundane and repetitive tasks. Finance personnel will need to upskill and have more influence over strategy and decision-making to stay in the game. It is really only a timing factor and I see a huge change coming in the next three to five years. It is a critical evolution in any event as we get swamped by the volume and breadth of data coming our way. However, key elements such as cybersecurity will be critical in this journey given the nature of the data.

7. What technologies do you think will offer the biggest opportunity to the accounts payable/receivable functions?

Given that both are repetitive and can be high volume, I see RPA as one of the main routes for the future. In addition, any analytical technologies that can provide insights, risks and other features will prove extremely valuable

8. As businesses are going global, how do you think technology could help to foster better relations between organisations and their international suppliers?

When you see the potential of blockchain, AI Machine Learning and enhanced payments automation, I see a combination of technology enhancing relations between all parties. That may be related to greater security and automation. However, I would not underestimate the difficult governance challenges when dealing with cross-borders. Regulation, licencing, taxation, etc. may have to evolve for these elements to bear fruit.

9. According to the banking association UK Finance, a total of £207.8m was lost to bank transfer fraud alone in the UK in the first half of 2020. What role will technology play in the battle against financial fraud?

Technology advancements need to be constantly leveraged to stay ahead of fraud and the criminal element. Without considering elements such as blockchain, AI and machine learning, it is difficult to spot patterns of behaviour which are well beyond human capability. The evolution of cloud computing has been another ingredient in security. Without technology, firms will struggle to stay compliant and will remain vulnerable to fraud and other criminal activity.

CFOpinion explores the thoughts of CFOs and finance leaders on the topic of digital transformation of finance. Each week a CFO will offer their thoughts on matters like security, the role of AI in finance and how the finance function compares to other departments when it comes to digital transformation.

Fexco International Payments provides automated solutions for international payments and receivables. We remove the friction in cross-border payments, giving your businesses more time to concentrate on strategy and success. You can talk to us on UK 0800 840 2887 or email us at edinburghdealers@fexco.com.