Business
From financial officer to business strategist: the evolving role of the modern CFO
Source: Finance Derivative
By Ronnie Wilson, Group Executive Vice President, at Serviceware
The role of the Chief Financial Officer (CFO) has undergone significant change. Now seen as a trusted partner of the Chief Executive Officer (CEO), CFOs have an essential part to play in the transformation of a business, with a lengthening list of critical tasks and responsibilities. According to McKinsey, four-in-ten CFOs say they create the most value for their organizations through their strategic leadership and performance management. It has, therefore, become critical for companies to give CFOs the tools and technologies needed to focus on organizational transformation, performance management, and cost discipline, driving growth in the process.
Today’s CEO turns to their CFO to not only generate the cost-savings needed for immediate survival but to also plan for the future – forecast and better position the company for today’s constantly evolving business landscape. CFOs now play a more prominent role in strategy and decision-making than ever before. Of course, accounting, financial and regulatory reporting, and tax compliance remain central functions of their role, however, the CFO’s responsibilities are now expanding rapidly to keep up with the demands of today’s CEO (for example: driving share price up, developing and managing business strategy). The CFO no longer focuses solely on data and numbers. Instead, CEOs are increasingly asking CFOs to drive innovation in areas including sustainability and digital transformation to help fuel business growth.
Redefining the CFO’s role
Even before the pandemic, many companies were facing important decisions about managing their financial operations. However, in 2022, those decisions became more pressing than ever, especially after another year of economic turmoil. For example, Bó, the digital bank developed by high street lender, RBS, to challenge the likes of Monzo and Starling, closed in 2020 due to the pandemic’s financial impact, which caused profits to sink. CFOs have had to work closely with their CEOs to restructure and refocus businesses – scaling back workforces whilst making other cost-saving measures just to stay afloat. The current challenge lies with businesses trying to balance the demand for innovation and investment with the need to secure i IT cost savings during a recovering economic climate. CEOs need to invest now and prioritize technology investments as this can help unlock new paths for future growth whilst also helping to align to business strategies set by the CEO.
The dynamic development of technology and business processes has also made the CFO’s role an increasingly important one. According to a recent Accenture survey, 49% of banking CFOs say identifying and unlocking value, such as through the development of new business models, has become a major focus in the last two years. CEOs are also looking to their CFOs to help drive innovation and transformation within their organizations. For example, last year, Deutsche Bank partnered with software firm Oracle to modernize the bank’s database technology and accelerate its digital transformation, enabling Germany’s top lender to cut costs. In addition, Bank of America recently announced the launch of CashPro Forecasting, a tool that uses artificial intelligence (AI) and machine learning (ML) technology to more accurately create financial forecasts.
How can the CFO keep up with CEO demands in 2022?
To drive future growth and handle these responsibilities surrounding investment and innovation effectively, CFOs require technology solutions that combine performance data from the past with forward-looking scenario-planning. With companies generating more and more data every day, CFOs have numerous opportunities to gather new insights and increase business value. The problem is that the amount of data can be overwhelming. It can also be severely outdated and siloed across departments. For example, many companies use tools such as Excel as a way of managing their IT costs but due to the manual nature of spreadsheets there is a high potential for errors, posing a risk to data integrity and accuracy. Further, CFOs whose businesses have implemented different data repositories in different silos across the business find it harder to manage IT costs and processes.
To keep up with the CEO’s demands, CFOs and their teams need access to the right insights at the right time to make the right decisions. This means providing a holistic picture of cost data across the enterprise and being transparent with the CEO on the insights informing decision-making. To manage this deluge of data, organizations and their CFOs need a practical way to gather vital and real-time operational, project and vendor cost data. Managing data analytics typically begins with implementing financial management tools such as IT Financial Management (ITFM) software, or what is often referred to as Technology Business Management (TBM) solutions. These tools can then be equally applied across the business, helping reduce the time CFOs spend on managing costs, providing more time for value-added activities where the CFO can leverage the insights from the data.
ITFM software also provides senior management with detailed, timely and accurate data to easily understand the cost and effectiveness of the service they are delivering to their customers. During the pandemic, many finance departments that had previously relied on manual processes had to introduce automated tools to get work done during the transition to remote working. AI was increasingly the solution to quickly replicate tasks and processes, including gathering cost and service data, that were formerly carried out by people at slower speeds and higher error rates. In fact, according to a recent Deloitte survey, 86% of financial services’ AI adopters say that AI will be “very or critically important” to their business’s success in the next two years.
A match made in heaven – and in data
To succeed in the digital age and avoid being left behind by the competition, CEOs and CFOs must align more than ever before. Companies value the data-driven and empirical mindset that a CFO can bring to strategic planning, especially around forecasting trends and managing business risk, but this can only be achieved if CFOs have access to software solutions, such as ITFM. These tools provide greater visibility and understanding of all IT service processes. This greater transparency ensures that innovation and digital strategies take centre-stage, optimizing services and paving the way for a successful business future.
With the right data – and tools to compile and leverage that data effectively – the CFO will be best placed to keep up with demands of the CEO in 2022. This will be an ongoing journey. The CFO of the future will need to adapt and respond quickly to change – whether it be supporting their companies’ ability to move into new markets or creating new business models.
Timely, accurate and relevant data has never been more important to the need for agile business decision-making. CFOs are ideally placed to lead the management of data, which supports better-informed management decisions and provides stakeholders with the information and insight they are demanding.
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Business
Technology’s Role in Transforming Insurance: From AI to Cyber Risk
Source: Finance Derivative
Authored by Samiul Chowdhury, Principal Actuarial Consultant, RNA Analytics
The insurance industry is undergoing a significant transformation, driven by rapid advancements in technology. From property and casualty to life insurance, the role of digital solutions has never been more important. Today, it’s almost impossible to imagine a successful, compliant insurance business without technology at its core.
But how exactly is technology reshaping the insurance landscape? And what does it mean for the future of actuarial work, AI, and cyber risk? Let’s explore.
The Essential Role of Technology in Modern Insurance
Technology is the cornerstone of the successful modern insurance business – whether property, casualty or life. It’s no longer optional—it’s essential! Operating a successful and compliant insurance company today without the help of software solutions would be a real challenge. Whether it’s managing customer data, meeting regulatory demands, or assessing risk, technology is at the heart of everything modern insurers do.
In recent years, regulatory compliance has been a top priority for (re)insurers across the globe, with IFRS 17 probably the number one focus. The new accounting standards are highly complex, and their implementation has forced many insurers to rethink and redesign their entire approach to financial reporting and infrastructure. However, this challenge has also been a catalyst for technological innovation.
One of the most significant changes brought about by IFRS 17 is the integration of traditionally siloed such as functions such as actuarial, finance and accounting functions. This alignment gives insurers unprecedented insight into opportunities and risks, enabling them to make more informed decisions. Beyond compliance, accuracy and extensive flexibility, this integration offers insurers a chance to enhance accuracy, achieve greater flexibility, and gain a deeper understanding of their financial landscape.
How AI is Changing the Actuarial World
Much has been said aboutArtificial Intelligence (AI) and its potential to disrupt industries. In insurance, AI is already proving to be a game-changer, especially in actuarial work. With the right approach, AI holds great promise of making processes smoother and bringing faster, more accurate decision-making into play.
However, AI is not here to replace actuaries. Instead, it enhances actuaries’ roles by automating their routine tasks such as data pre-processing, model fitting, and report generation. This automation allows actuaries to focus on more strategic tasks, giving them a more central role within the organizations.
Meanwhile, AI modelling introduces new sources of uncertainty. Actuaries must understand the limitations and assumptions behind the AI models they are using. It’s important to ensure that these are fair, unbiased, and ethical —particularly when it comes to pricing and underwriting. This means actuaries will need to pick up new skills, especially in data science and programming languages like Python and R.
In other words, AI offers actuaries the chance to work more efficiently and strategically, but only if they are prepared to navigate the complexities it brings.
The Growing Challenge of Cyber Risk. How Do Insurers Keep Up?
Cyber risk has emerged as one of the most significant threats insurers face today. Cyber insurance is not the same as it was twenty years ago. The policies were relatively simpler, and insurers didn’t have as much data or experience to rely on. Today, they are more complex, reflecting the increased scale and sophistication of cyber threats.
As cyberattacks have increased, so has our ability to model and understand them. Insurers have gained more data over time, which has allowed them to get a better grip on the risks involved. However, here is the thing: technology evolves, and so do the threats. Whether it’s a data breach, ransomware attack, or even non-malicious technical failures like the recent CrowdStrike outage, the risks are more systemic and far-reaching than ever.
Looking ahead, as we enter the Web3 era where information becomes ever more interconnected and managed by semantic metadata, we’ll have a complete set of new vulnerabilities. Business models will shift, and with that, the risks insurers will need to cover. By 2044, cyber insurance policies will probably look quite different from what we see today.
Conclusion
The insurance industry is at a turning point, driven by the rapid adoption of technology and the increasing complexity of risks like cyber threats. To stay ahead of the curve, insurers need to embrace AI, data-driven decision-making processes, and advanced risk models.
Business
The EPC’s Verification of Payee rulebook: Five things banks need to consider
Source: Finance Derivative
Pratiksha Pathak, Head of Payments Services at RedCompass Labs, shares her insights on the Verification of Payee’s (VoP) impact and what it means for European payment service provers (PSPs).
Fraud is an ever-present threat in the payments landscape, and with the rise of instant payments, the risk has never been greater. While these rapid transactions offer unmatched convenience, they also pave the way for instant fraud, leaving financial institutions with minimal time to intercept suspicious activity.
In October, the European Payments Council (EPC) published the long-awaited Verification of Payee rulebook, which marked a major milestone in the SEPA Instant Payment Regulations (IPR) and a key effort to combat payments fraud.
In 2022 alone, fraudulent credit transfers, direct debits, card payments, cash withdrawals, and e-money transactions across the EEA reached a staggering €4.3 billion, with an additional €2.0 billion lost in just the first half of 2023.
The VoP rulebook aims to standardise how banks confirm payee account details, protecting consumers from fraudulent transactions. However, while the intentions are solid, the new regulations present several challenges that banks must address swiftly and efficiently.
- Tight deadlines leave no room for error
The deadlines are tight. Banks must have a VoP solution in place across all payment channels by 5th October 2025, which is just four days before the IPR comes into effect. Unfortunately, it doesn’t matter if a bank uses an existing domestic verification service since the rulebook standardises how account information is verified in payments across Europe.
This means that every bank will need to adapt or overhaul its systems to meet pan-European standards. Given the verification process will apply to both SEPA and SEPA Instant payments across all payment channels, it will be a big lift for banks.
The challenges are compounded by the rollout of the EPC Directory Service (EDS), which is the centralised database that underpins the scheme. The EDS won’t be ready for testing until late June 2025. This leaves only three months for banks to complete end-to-end testing and fully deploy their solutions.
Some aspects of VoP, such as APIs and channel infrastructure, can be built in advance, but banks won’t be able to conduct end-to-end testing until after the EDS is ready. For institutions grappling with legacy systems or more complex architectures, the timeline is daunting and leaves little to no room for error.
- The 5-second rule is a small change with a big impact
Another key change is the extended verification window. Banks now have five seconds, rather than three, to confirm payee account details across all channels.
Whilst this may seem generous, it is still a tight squeeze given the intricacies involved. This means that both the payment engine and all customer-facing channels—whether online, mobile, phone, or paper-based—must be highly available, fast, and scalable.
Ensuring a smooth customer experience, especially for non-digital transactions, will test banks’ technological limits. While mobile and online platforms might be better equipped, accommodating phone and bulk transactions introduces layers of complexity.
It may be more time than before, but the five-second verification window leaves little margin for error – never mind the one-second timeframe the EPC would prefer.
- Bulk payments are a logistical headache
One of the most complex aspects is VoP’s application to bulk-payment files, such as salary payouts. The rulebook demands that each individual payment in a file undergo verification, potentially creating a logistical nightmare.
Imagine a scenario where thousands of payments trigger a mix of ‘match’, ‘close match’, and ‘no match’ results. As a bank, how do you relay this information to your client within 5 seconds? Do you provide the notifications in a file? Through an app? A checklist?
Handling a flood of verification requests within seconds requires not only a robust infrastructure but also meticulous planning. Banks must devise sophisticated mechanisms to process and deliver results without disrupting the broader payment workflow to prevent operational chaos.
- Legacy systems will feel the pain
For many banks, the biggest challenge lies in integrating VoP into long-established SEPA payment systems because it requires modifications to processes that are already running smoothly.
Banks need to ensure that all their payment channels can incorporate VoP functionality without disrupting the current flow. Banks may need to upgrade or completely rework several parts, making the process complicated and costly.
Verifying payees at the beginning of a transaction requires changes to how these systems interact and handle data. Banks will also need to ensure that existing transactions continue without delays and errors, which will prove to be a big challenge for those with multiple existing payment channels.
- Navigating routing and verification is complex
The new EPC/European Directory Service (EDS) may bring operational challenges. Whilst the EDS serves as a directory, it doesn’t handle the actual routing or verification of VoP requests and responses. Most banks now need to develop their own routing and verification mechanisms (RVMs).
These RVMs will act as connection points for participants and banks must either integrate directly with the EDS or use an RVM to route VoP requests. However, using an RVM doesn’t absolve the responding PSP of its responsibilities under the scheme’s rules.
Banks face a significant challenge in setting up or partnering with an RVM to manage this new process, but finding an RVM supplier will be a good place to start.
The bottom line
The EPC’s VoP rulebook is a decisive step forward in improving payment security across Europe, but it also introduces significant challenges for banks.
As banks start to prepare for this overhaul, balancing compliance with operational efficiency will be key to protecting customers whilst maintaining a seamless payment experience.
European banks have their work cut out for them. The demands of implementing VoP are high, and the timeline is short. But with the right expertise and strategic planning, it can be done.
Business
How eCash and digital wallets will diversify the payments landscape in 2025
Source: Finance Derivative
Written by Fernando Costa-Cabral, SVP Branded Payments, and Ishan Vaid, VP Core Features, at Paysafe.
Throughout 2025, we’ll see two seemingly opposing payment methods – eCash and digital wallets – further reshaping how consumers manage their money. While cash – and future access to it – is still critically important for consumers, digital payments are undergoing a huge transformation.
eCash will continue to bridge the digital divide by ensuring consumers can use physical currency to buy goods and services online. As a result, businesses will leverage it as a democratizing force to promote financial inclusion and serve diverse consumer segments.
Digital wallets also have a major role to play in the evolving payments landscape, with 32% of consumers reporting to have increased their use of wallets in 2024. A notable development is the rise of brand-owned wallets, as businesses outside the financial services sector seek to establish closed-loop ecosystems to control and enhance the customer experience.
With a view to the year ahead, here is how eCash and digital wallets will evolve throughout 2025.
Bridging the digital divide with eCash
Even in today’s digital world, cash plays a vital role in consumer finances. Recent research from Paysafe has revealed that 63% of consumers harbor concerns about losing access to cash, while 44% want the option to buy items online and pay in cash at a brick-and-mortar store.
This preference stems from the unique advantages of cash: it provides tangible financial security, enables precise spending control, and helps users avoid the often-hidden costs commonly associated with credit-based payments. Across geographies, cash remains essential for reducing financial anxiety and ensuring reliable transactions.
Despite its enduring importance, cash has largely remained on the sidelines of the recent payment revolution. Traditional cash-based operations continue to be cumbersome and time-consuming – whether it’s depositing physical money into a bank account, coordinating international cash transfers, or attempting to set up installment payments. Furthermore, the retail sector has generally overlooked cash users when developing modern consumer incentives such as cashback programs, buy-now-pay-later (BNPL) schemes, or subscription-based services, creating a noticeable gap in the market.
That is all now changing. This year, eCash will solidify its position as the right solution to bridge this divide between physical currency and our increasingly digital economy – making cash more relevant and accessible in the modern world. In the year ahead, eCash’s progression will materialize through three main developments: enhanced security measures, value-added features, and a significantly improved user experience. With these improvements, eCash can transform traditional cash into a simple and secure payment method with the same core benefits that make cash valuable to many people.
Digital wallets will diversify the payments landscape
In a similar vein to eCash, digital wallets are diversifying the payments landscape, with non-financial brands increasingly venturing into the territory once dominated by incumbent financial service providers. By acquiring their own digital wallet solutions, these brands are reducing their dependence on external financial institutions and enhancing the payment experience.
The trend toward brand-owned wallets has already gained traction in Asian markets, with e-wallets now being offered by ride-hailing apps and e-commerce platforms – and we anticipate a significant uptake in markets like the UK over the coming year. Specifically, retail chains, gaming platforms, and logistics companies are all exploring how digital wallets can streamline their payment processes, strengthen customer loyalty, and deliver greater control over the user experience.
There’s particularly strong momentum building around white-label wallet solutions, which provide businesses with a sophisticated approach to payment integration. These solutions enable brands to incorporate advanced wallet functionalities directly into their existing platforms while maintaining complete control over their user interface and experience. This development aligns with a broader strategic shift we’ve observed across various sectors – from gaming and retail to mobility services – where brands increasingly want a closed-loop ecosystem that they manage.
In 2025, we can anticipate four key evolutionary trends in the digital wallet space. First, we will see even more seamless integration of wallet functionality into non-financial platforms, allowing users to complete transactions without leaving their preferred brand’s ecosystem. Second, there will be significant advances in real-time currency conversion capabilities and multi-currency wallet features, catering to the growing demands of global commerce and international travel. Third, we can expect enhanced instant settlement capabilities, supported by faster payment rails that align with contemporary consumer expectations for immediate transaction processing and gratification. Finally, there will be an increased emphasis on sustainability, with digital wallets incorporating eco-friendly features such as carbon footprint tracking to meet the growing consumer demand for environmentally responsible financial services.
While these two technologies and their respective journeys aren’t necessarily joined at the hip, as 2025 unfolds both eCash and digital wallets will help to create a more accessible and customer-centric financial system. This evolution isn’t about choosing between cash and digital – it’s about seamlessly bridging both worlds, giving consumers and brands greater control over how they pay and get paid.