CFOs drive growth strategies as banks alter finance models

New York, 1 April 2008 — The chief financial officers (CFOs) of global banks are wielding increasing influence — and feeling the responsibility that comes with it — as senior management and directors expect CFOs to sharpen their focus on strategic issues rather than concentrate solely on monitoring and reporting financial information, a new survey finds.

Ernst & Young and CFO Research Services’ "The Finance Operating Model Matters" (pdf, 366kb) reveals that in order to rise to the standard now expected of them, CFOs must first improve their financial operations, which have become disjointed and inefficient in the wake of rapid growth in the industry. Only then can CFOs become true strategic partners, helping to evaluate new products, provide leading indicators on business performance and drive merger and acquisition opportunities.

“Finance has always played a crucial role at the world’s leading banks, but the job is evolving,” says Sam Knox, Vice President and Director of Research at CFO Research Services. “CFOs need to spend less time keeping score and more time leading.”

As the lingering credit crunch compels firms to boost their balance sheets and safeguard against future market shocks, the need to invest in finance has never been more urgent. The survey — which involved executives at 14 of the world’s largest banks — found that CFOs who bring their business acumen to bear on strategy can have a lasting impact on their firm and the industry. Banks are aiding this evolution of the CFO by centralizing responsibility for a wide variety of finance roles to allow a CFO’s holistic perspective to flow to all parts of the organization.

Other leading practices that CFOs and their firms could pursue, according to the survey, include:

• Using shared services to scale and improve the rigor of finance. Shared services centers can yield highly reliable, timely, and cost-effective production of the daily transactions for large global banks. CFOs can start to get meaningful benchmarks and use them to drive improvements
• Repairing fragile information infrastructures. Finance could establish a firm-wide “golden” source of information and analysis to help ensure high performance in complex, multi-line businesses
• Aligning finance and risk. Having common frameworks for measuring business unit performance provides the visibility needed to manage growth, cost and risk
• Developing a long-term plan for finance. Just as other functions within a bank craft multi-year plans, CFOs should have a vision for how finance can contribute to growth. These plans can also encourage innovation and seek to develop talent

“CFOs are elevating their game to meet the demands of today’s market conditions,” says T.J. Letarte, Head of Ernst & Young’s Americas’ Finance and Performance Management practice for financial services. “In addition to the important work they’ve always done monitoring and reporting, they’re also helping to provide their firms with a comprehensive, actionable view of risk. By doing so, they’re creating more competitive institutions that can face future challenges more resiliently.”

About Ernst & Young’s Global Banking & Capital Markets Center
In today’s globally competitive and highly regulated environment, managing risk effectively while satisfying an array of divergent stakeholders is a key goal of banks and securities firms. Ernst & Young’s Global Banking & Capital Markets Center brings together a worldwide team of professionals to help you achieve your potential – a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately it enables us to help you meet your goals and compete more effectively. It’s how Ernst & Young makes a difference.

About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 130,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve potential.

For more information, please visit www.ey.com.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.

About CFO Research Services
CFO Research is the sponsored research unit of CFO Publishing Corp., which publishes CFO magazine in the United States, Europe, China and Asia. CFO Publishing is an Economist Group business.