What’s going to keep CFOs awake in 2020? Disruption in the financial services sector and governance are front and centre, but there’s also trade tension and managing risk at a tumultuous time. Three experts weigh in on the economic outlook.
Rodney Jackson FCPA
CFO of Westpac International
How to leverage technology in the disruptive age is key; it’s a reality in the financial services industry – particularly in the banking and payment/transaction space.
At Westpac, we’re embracing it through collaborative projects in Sydney, Singapore, Shanghai and London. We use these projects to bring in fintech organisations and work with small start-ups with mutual interests. There are over 330 fintechs operating in Singapore and this number is growing, so it’s a huge area.
Regulatory environments will continue to be a challenge; this has only grown and escalated since the global financial crisis (GFC).
It’s a constant journey, staying on top of each country’s individual requirements, and it puts us under enormous pressure because it is so granular. For instance, the MAS (Monetary Authority of Singapore) Notice 610 Submission of Statistics and Returns was about 30 pages of data, and the new one is going to be 240 pages of data. It means more and more investment is being directed to the regulatory and compliance space, which leaves less for investment, customers and improving the efficiency of our business.
In terms of risk, credit was always the focus, and we’re in strong shape there. What have come to the fore are the remaining risks: operational, reputational, and financial crime risks. Strengthening detection capabilities here is key.
From a macroeconomic perspective, global tensions are as unprecedented as we’ve seen in a long time: the US-China trade tension, Brexit and the UK elections, tension in Hong Kong, the yellow vest movement in France, and issues in South America and the Middle East.
In contrast, Singapore looks like a bastion of stability. Such global tensions don’t make for an environment conducive to business investment, but can create opportunities elsewhere – for example, for a country like Vietnam to become a production hub for the US. Understanding these flow-on impacts is critical.
Director, Robert Half
Technology is changing rapidly, and CFOs need to be able to stay abreast of it.
Often, by the time some changes are implemented, something can come out that is even better. There is nearly a job there on its own, just to keep on top of it, so in a way, it’s not just about the CFO in isolation. It is about the CFO and who they have on their team. They really need to have a number of experts around them, because it is impossible to know everything.
Depending on the size of the company, specific change management may be required. Automation is such a key thing, and it is important to get it right – not only on a technical level in terms of implementation and interpretation, but also on a communication level.
Humans are a long way from being redundant; roles will change, but there hasn’t been a significant head count drop due to automation. However, CFOs need to almost over-communicate this with people to make them feel comfortable about change and its positive impacts. Take an open, direct approach to communication; staff turnover can occur due to rumour and innuendo.
Integrity and governance will also be key issues going forward, particularly for CFOs of rapidly expanding companies. When an organisation is growing rapidly, things can become a little harder to maintain when it comes to governance and control, so it pays to think ahead.
That means speaking to every level of business – working together with every part of the organisation, not just HR and IT. The role of the CFO has evolved. A CFO is now an integral part of the overall business, not just the money side.
Nazmi Bin Othman CPA
CFO, Tenaga Nasional Berhad
The trade tension between the US and China is certainly causing many issues and could affect demand and business overall.
We are managing our exposure well, but we have to be mindful of risks with foreign loans, particularly with the US dollar and the Yen.
Being in the power business, going forward, a significant area of focus for us will be renewables and the broadening role they will play in the market.
Every time someone installs a solar panel on their roof, there is some level of disruption to our business.
At the moment it is not significant, but we don’t know what is going to happen in the future. We need to be agile and handle future efficiencies, but also careful about where we spend our money. There is no point investing in future technologies if at the end of the day there is no yield.
Considering our customer base of nine million, we place a lot of importance on data and analytics, and how these are managed. We have a department that manages these functions, but we always have to find the middle ground between using information and being mindful of privacy.
Managing risk is vital to us, and accordingly we have a department that looks at risk for the group. In general, Malaysia is pushing hard for more transparency and business disclosure, and as one of the largest publicly listed companies in the country, we are supportive of these initiatives.
Rodney Jackson FCPA
Rodney Jackson FCPA, CFO of Westpac International, based in Singapore, oversees the financial and strategic management of the group across eight countries. He has spent 20 years in CFO roles across the organisation, and marks 40 years with the bank in January 2020.
Andrew Morris is a Sydney-based director of specialised recruitment and employment services firm Robert Half. He works with the group across New South Wales, Queensland and New Zealand, helping to provide recruitment solutions for businesses in areas such as finance, accounting, technology and administration.
Nazmi Bin Othman CPA
Nazmi Bin Othman CPA is the CFO of Kuala Lumpur-based Tenaga Nasional Berhad, the largest publicly listed power company in South-East Asia. He provides strategic recommendations to the CEO and the Board on key financial decisions, in addition to commercial insights for long-term business and financial planning matters. He also drives the continuous improvement of financial procedures, processes and policies to mitigate and minimise financial risks faced by the company.