What is the difference between an installation and an intervention? For an artist, an installation is the less predatory of the two, it does not attempt to spread its influence across the space. It may often involve three or four pieces of art. An intervention is more dominant, transforming the architecture, changing it completely.
Why should this interest even the most esoteric of finance officers?
The advent of Fintech provides the answers.
No finance department has been immune to the technological developments of the past decade. Boards and C-suite executives are bombarded with pitches from tech companies promising added value to their company through investment in the latest available software.
Installing these systems is tempting, but the possibility of disruption is always there. In many senses, this is seen as a good thing. Disrupting operational chains and introducing disintermediation are the way forward. But internal disruption can be a problem. Many companies invest in new technology without understanding that they may not be getting maximum value from their existing systems. Inter-departmental processes can be inadvertently disrupted by introducing a new piece of software.
This is where the artistic analogy comes into play. The current installation working across disciplines such as strategy, procurement, sales and marketing may be disrupted by the purchase of a single piece of Fintech which on the surface smooths the path and adds profit in one department.
A holistic approach to Fintech will provide better results, this is an intervention.
What this means is that CFOs must look at the overall impact of any new software, no matter what it may promise. The finance department remains the key to the advancement of the company and carries the burden of justifying the investment. Added value will always be the result which stakeholders demand.
Review
Such treasury transformation, involving strategy and its implementation, will dictate the success of the future architecture of not only the finance department, but also other subdivisions of the company. This will involve the banking landscape, system infrastructure, treasury processes and workflows across the organisation.
CFOs understand that the treasury is the driver of transformational projects and yet they are influenced by external events. Prime among these is the explosion of Fintech and processes such as blockchain which are impacting a wide range of corporate tasks. This increases the demands and expectations on the finance department to keep abreast of innovation, understanding how the introduction of new software is likely to impact on corporate-wide operations.
There are several steps which guide the implementation of new technology and its possible results.
Review and assessment, as in any exercise, is essential in achieving an in-depth understanding as to the possible impact of new technology within the firm and on external relationships with customers or providers. Reviewing existing processes and comparing them with the possible outcome of the transformation exercise will help to identify disruption, positive or negative and its ramifications for potential value.
This phase will involve risk management and the overall corporate finance structure, including governance, strategy, treasury system infrastructures and how changes will impact on other departments.
The ideal solution will be found by examining sub-projects across different departments. Again, a holistic approach is the way forward. This will help to iron out any kinks in the overall operation of the business. Incorporating a system which means inter-departmental relationships are overseen by one coherent programme will mean that a roadmap is in place when boards analyse the success of new technology during a transformational programme.
This is where CFOs will be challenged on the business case they have proposed. Aiding strategy, providing analysis tools and ease of management, including planning and governance, should be the results of the transformational process of the new technology introduced into the business. Financial results will follow from these improvements.
Ensuring that the introduction of new technology is executed seamlessly will mean that all divisions avoid disruption and by having run sub-projects, the finance department should be able to understand the corporate-wide impact of the investment. Analysing the results over time, after implementation, will ensure that there are no surprises to adversely influence results.
There are internal and external factors at play with Fintech, but the polymath CFO will understand that an intervention rather than a cross-departmental piecemeal installation is the only viable option.
Simon Lynch is the owner of Treasury Talent.
Treasury Talent is a specialist treasury talent provider solely focussed on the treasury market with offices in Sydney covering Australia, Singapore covering Asia, and San Francisco covering California and the USA. To make contact simon@treasurytalent.net