Demystifying the role of the fintech CFO

This series of articles looks to demystify the various C-level roles within fintech companies today – exploring the career paths taken by top managers, their critical skills, daily responsibilities and challenges, and even how the pandemic has impacted their understanding of running a successful business.

This fourth instalment in the C-suite Series examines the role of a company’s top-level financial controller – the chief financial officer (CFO).

Like a treasurer, a CFO is traditionally responsible for managing a firm’s finance and accounting arms – ensuring the business remains in strong financial health, its assets are safeguarded, and reports are delivered in an accurate and timely manner. This mandate affords the CFO one of the highest-ranking positions within the C-suite – particularly when it comes to the financial services sector, and fintechs.  

The CFO often works closely with the chief executive officer (CEO) – leading functions such as financial planning, forecasting, cost-benefit analysis, and liaising with investors to secure funding. To fulfil this remit effectively, a financial officer tracks and manages metrics such as cash flow, in order to optimise the company’s performance against company-wide goals.

The post-holder also handles all financial and accounting regulatory matters. In the UK, for example, CFOs must ensure books are kept in accordance with Generally Accepted Accounting Practice (UK GAAP), which dictates how company accounts should be maintained. Other regulations CFOs must adhere to include 2006’s Companies Act – a comprehensive code of company law in the UK.

While such duties remain core to the CFO’s remit, we will see in the coming sections that – as a result of the rapid evolution of technology, the challenges associated with globalisation and shifting regulations, and the increasing number of enterprise risks (both internal and external) – post-holders are having to take on new responsibilities. When it comes to fintechs, such responsibilities can include talent oversight and management, supporting on technological transformations, and even helping to steer the overall strategic direction of the firm.

The rich and diverse role of the CFO can help to streamline businesses and make them more robust – an invaluable asset, particularly during uncertain economic times, as we have seen during the pandemic.

But what unique benefits can a CFO bring to a fintech business? What soft skills are necessary for a CFO to succeed in her role? How has the role evolved in the wake of coronavirus?

To answer these questions, Finextra spoke with CFOs from a clutch of payments services firms around the world, and of varying sizes – namely, Thunes, Paysafe, and Brazilian fintech unicorn, EBANX.

The fintech CFO

Reporting to the CEO, a CFO handles the company's income and expenses, investments, and overall capital structure. As such, a CFO is instrumental in a company's long-term financial success.

According to CFO Magazine, there are four key roles CFOs traditionally adopt:

1. The strategist (crafting corporate strategy)
2. Change agent (generating business value)
3. Production (standardising and automating transactional processes)
4. Guardian (standardising control and compliance processes)

Commenting on his own responsibilities, Izzy Dawood, CFO of online payments solutions company, Paysafe, said: “As CFO I oversee all aspects of the finance discipline, including strategic planning, investor relations, M&A, FP&A, internal controls, and regulatory relations. I work closely with the rest of our leadership team on seeking out revenue opportunities and identifying areas where we can enhance our processes or work more efficiently. I also support our leadership team with budgets, provide access to financial information, and manage compliance with contracts, and reporting. I am very focused on tracking our performance and establishing corrective measures where we need to. With the support of my team, I prepare detailed reports, both current and forecasting for our earnings calls, the management team, and the rest of the company.”

Alexandre Dinkelmann, CFO of cross-border commerce platform in Latin America, EBANX, echoed the significance of working with teams to get the job done: “As a CFO, your responsibilities are very broad, and involve governance topics, financial controlling, strategic decision support, acquisition negotiation, partnership building, and so on. For support with this, CFOs need a multi-disciplinary team, selected for either their professional skills, or personal characteristics. In a fintech like EBANX, it's crucial to be close to the team, and invest time in their growth, and opportunities.”

But what makes the role of the fintech CFO unique? How does the element of technology impact the job?

“Fintech is a rapidly evolving space, with new market entrants and large amounts of M&A activity,” said Dawood. “This means that across the business, CFOs have to work dynamically and retain an entrepreneurial mindset. We also must be prepared to change and pivot. Technology plays a big role in that.” 

Dinkelmann agreed that agility and preparedness is key: “The role of the fintech CFO is less about analysing history, and more about forward-looking skills. In my view, CEOs and boards want CFOs to be in the jet cockpit, to help them navigate turbulent times and anticipate where the mountains will come up. If you can do that – and I'm not saying it's easy – you'll be a better executive for your company.”

“It's also very important for fintech CFOs to be ‘cross-functional’,” added Dinkelmann. “We need to practice a variety of disciplines. It's not just about accounting and financial instruments. It's about understanding channels, digital marketing strategies, how you operate your sales organisation, and so on. The CFO should be able to really grasp the fintech business from different angles – to see the forest for the trees. All this does not necessarily come naturally, you need to study, and put yourself outside your comfort zone.”

These skills are leading to a growth in demand for CFOs of all stripes. According to the U.S. Bureau of Labor Statistics, the job outlook for financial managers will grow by 7% between 2014 and 2024. 

“Businesses now realise that CFOs can create much strategic value,” said Kian Bin Teo, CFO, Thunes. They can support companies with fundraising, M&A activities and financial data analysis to scale business performance. Finance is a potent strategy.”

Accounting for experience

So, what kind of experience should fintech firms look for in a CFO? What indicators are there of a seasoned financial officer? What got Teo, Dawood and Dinkelmann to where they are today?

“I had spent about 20 years in finance before joining Thunes in May 2019,” said Teo. “Previously, I was the CFO at three Chinese tech companies in e-commerce, IT outsourcing and mobile internet. Prior to that, I was an investment banker at Goldman Sachs, Deutsche Bank, and Piper Jaffray – mainly on the corporate finance side. In addition, I assisted many companies with IPOs and M&As in the early days of my career. An old friend introduced me to Thunes, and the company’s commitment to financial inclusion and focus on emerging markets immediately appealed to me.”

Dawood also stressed the importance of exposure to a diverse range of organisations: “I’ve been working in finance for over 25 years now, and have held CFO positions several times before in a few different sectors. My experience spans both private and public global organisations, which is valuable to my role at Paysafe. During my career, I’ve always tried to learn different skills in finance, in order to support the growth of the company. After taking on three different assignments – FP&A, Investor Relations, and Division CFO – I built the skill set needed to take my first Group CFO role.”

Dinkelmann has enjoyed an equally colourful background: “I could split the 25 plus years of my career into three main pillars, which are somehow all connected,” he said. “First, I worked as an investment banker at BTG Pactual, where I was involved in M&A, financial restructuring and capital market deals. Eventually, I became an associate partner of the bank. The second pillar started when I began working as a CFO at several listed companies across the real estate, home building, and software sectors. The final pillar was built when I co-founded Onyo – an order-ahead mobile platform for restaurants.”

According to Dinkelmann, the sale of Onyo in 2020 introduced him to a number of start-ups, which approached him for advice. Ultimately, this proved an invaluable networking opportunity within the fintech space, and Dinkelmann was soon introduced to EBANX, who happened to be looking for a CFO. “During the interview process, I met EBANX’s three co-founders, as well as some of the company’s other leaders,” said Dinkelmann. “I learned a lot about the company directly from the source. It was easy for me to fall in love with the company and the opportunity.”

Evidently, strong experience working with small, large, public and private businesses – irrespective of sector – goes a long way to reaching the position of CFO within a fintech.    

Serviceable soft skills

What should all this experience equate to in terms of soft skills? What traits serve a CFO successfully when it comes to their daily duties?

Teo argued it all depends on the size and stage of the company. “I joined Thunes when it was in its early start-up phase, with only 40 people in the team,” he said. “As such, I needed to be very hands-on in building Thunes’ financial model. I find it very rewarding to help build teams and work with people to develop their capabilities. If you’re joining a fintech start-up, nurturing skills are an essential part of the job. When working in global companies, you must have the flexibility to work with people from very diverse cultures. A CFO also needs to liaise with board members, senior managers, employees, and prospective investors – each of these groups would require you to engage with them very differently.”

Dawood also stressed the importance of working effectively in large groups: “CFOs need to be able to work collaboratively and pull things together from across the fintech. To be successful, you must know what to prioritise and what ‘good’ looks like. As a leader, it’s important to have self-awareness of your limitations, take accountability, and be able to build high-performing teams. Learning, growth and mastering relationships are key to achieving and succeeding in all leadership roles.”

“I believe the key soft skill for a good fintech CFO is the capacity to learn fast and be able to quickly drop old or preconceived ideas which may not be working anymore,” added Dinkelmann. “This can be very challenging for professionals that are not used to working in such dynamic environments.”

This sentiment is reflected in a Forbes article, ‘The New Essential CFO Skillset’, which argues that CFOs must be a key voice in eliminating the old adage of ‘we have always done it that way,’ and encourage employees to instead see the value in new ways of doing things, to support the strength and longevity of the business.

Being able to make fast and effective decisions, and develop robust financial models is a sure-fire way to secure the financial health of a business, explained Dinkelmann. This necessitates “the ability to break down tons of data and information into chunks that one can easily interpret.”

This skill is useful when optimising the company’s capital structure, mitigating and managing risk in real time, and ultimately, delivering business resilience. As a result of the pandemic, the short-term future will require CFOs to make more fast and accurate decisions than ever before.

Operating in an ever-shifting landscape

To gauge how a CFO’s soft skills are put to the test on a daily basis, Finextra asked the CFOs of EBANX, Paysafe and Thunes what the most challenging element of their role is.

Dinkelmann, CFO of EBANX, highlighted the tension between reactivity and proactivity – and striking an effective balance: “I always try to be conscious of what is really important, and how I can help move the needle at the company,” said Dinkelmann. “If you just react to the daily demands of the business, it can become very overwhelming. As a CFO, everybody needs to talk to you, everyone brings you requests. If you aren’t mindful of your routine, you risk expending a lot of energy, always struggling, and not having anything to show for it at the end of the year, in terms of business impact. For me, it's important to constantly align with the key initiatives of the team, rather than just being reactive.” 

Teo, meanwhile, cited the size and geographical spread of Thunes’ team as the source of many tough, yet interesting challenges: “Thunes is headquartered in Singapore, with regional offices all over the world. As the CFO of an international business, I need to be present across various time zones – which certainly keeps me on my toes. Our global, diverse team comprises 40 different nationalities, so there’s never a dull moment. I’m constantly learning and gaining valuable insights into the markets where we operate.”

Dawood, CFO of Paysafe, meanwhile, pointed to the ongoing challenge of regulatory compliance: “Operating in a highly regulated industry, compliance is a constant focus across the business,” said Dawood. “Key workstreams include ensuring that we have robust KYC and AML processes in place. Our approach is to convert new shifts in regulation into opportunity for both ourselves and the merchants that we support.”

Indeed, we have seen in recent years that the financial regulatory landscape can shift dramatically – making compliance particularly challenging for fintechs that operate across multiple jurisdictions. This is certainly the case for EBANX, which serves the markets of Brazil, Mexico, Columbia, Chile, Argentina, Peru, Bolivia, Ecuador, Uruguay, Paraguay, and Central America. “We have a highly complex and dynamic business, which operates in several countries,” said Dinkelmann. “This means coping with many different needs, whether it be around the business, clients, consumers, talent, or regulation. Clearly, EBANX has a lot of opportunities to grab in the market, so there is a lot of homework for me to do.”

With regulators around the world increasingly looking to hold managers accountable for compliance lapses at their companies, it isn’t inconceivable that this compliance function will evolve into its very own C-level role in the future.

Another key challenge for fintech CFOs, in particular, is ensuring the company stays relevant, and can compete on the global stage. One way to do this is to keep abreast of technological developments, such as artificial intelligence (AI) and robotic process automation (RPA), and leverage big data to achieve deeper insights into the business’ operations. By streamlining treasury processes in this way, finance teams can reduce the amount of human resources placed on administrative tasks, and increase the time spent on value-added functions, such as identifying new business models and growth strategies.

“The critical challenge for the future is understanding the impact of emerging technologies,” said Teo. “Developments such as AI and machine learning are revolutionising the industry. Fintech CFOs must understand these trends and continue to invest in the latest technology to enable business growth. At the moment we’re building solutions to automate our treasury system.”

Pandemic-induced evolution

Perhaps the biggest challenge a CFO can face, however, is steering a company through the stormy waters of an economic downturn. The year of 2020 presented CFOs with just that challenge – putting their toolbox of both hard and soft skills to the test. This heightened scrutiny and concern over companies’ financial health during the pandemic arguably made the role of the CFO one of the most important within the C-suite in 2020.

With supply chains becoming constrained, cash flows freezing up, and some firms losing up to 75% of their revenues in a single quarter, the CFO’s challenges have been abundant and varied in recent months. As such, the need to shore up liquidity stores shot to the top of agenda, and optimising cash management strategy became critical to fintechs’ survival.

As ever, technology-enabled data analysis and management was paramount in staying afloat. In a December 2019 recession preparedness survey conducted by Grant Thornton, “70% of respondents reported plans to increase their digital investments in innovation/technology, digital transformation, and/or cybersecurity, amid growing signs of a slowdown. In the February CFO survey, about 70% of the senior finance executives reported they had either implemented key emerging technologies or they would be implementing them within two years.”

This increasing need to adopt, and work with, cutting-edge financial technology was central to the CFO story even before the pandemic, but 2020 catalysed the evolution. According to a joint survey conducted by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA), 58% of respondents felt that COVID-19 pandemic has altered the role of the CFO.

“The pandemic has shown that we need to be able to pivot at pace and adapt our businesses and processes in response to external factors,” said Dawood. “Operationally, being a technology-focused organisation has had its benefits. Our transition to remote working at the beginning of the COVID-19 outbreak was seamless, and we were able to quickly adjust and resume business as usual.”

Also commenting on the transition to remote working, Teo said: “Once Covid-19 hit, we had to start doing everything online. I had to quickly master how to conduct deals virtually – from negotiation to due diligence, and even preparing transaction documents. I don’t think it made our job more difficult; it was simply a different way of working.”

Yet, not all firms enjoyed a transition as smooth as Paysafe and Thunes. In a 2021 Global Financial Close Benchmark Report, conducted by financial close software company, Trintech, “46% of participating companies ranked remote work as a top challenge over the past year – especially for CFOs and their teams when it came to closing the company’s books at the end of each month.”

“From this terrible crisis that we are living through right now, with people suffering and businesses shutting down, one important thing we can learn is that we need to be prepared for all eventualities,” said Dinkelmann. “As a CFO, you need to have this in mind all the time, in terms of business models, channel strategies, capital structure, solvency and liquidity risks, funding sources, and so on. Even if your company is in its best shape, you need to consider whether it is prepared for something improbable, but highly impactful.”

Dinkelmann is right to highlight the negative effects the pandemic had on staff. Last year, the World Health Organisation valued the economic impact of the workforce’s declining mental health at $1 trillion per annum. Undoubtedly, that cost will have gone up as the pandemic progressed.

Given the clear link between the financial success of a business and the mental health of employees, Thunes implemented an initiative during lockdown it calls ‘Thunes Out’ – and encouraged staff to take a day off to do an interesting activity, such as photography. “We share all of the photos around the team, and the best image gets money donated to charity,” said Teo. “We are very mindful of mental health at Thunes – we don’t want people to burn out.”

The CFO that emerges from the pandemic is a more than a guardian of a company’s finances, she is a strategic business adviser, whose success is increasingly measured against people, profit and purpose. This ethical lens seems to be a differentiating factor for the CFO, in comparison to other executives.

Investing in the future

With the most economically uncertain and tumultuous phase of the pandemic abated, CFOs around the world are now working to position their firms for the ‘next normal’, and formulate what their ‘recovery mode’ should look like. Indeed, operational adjustments will need to be made to pick up productivity again; the investment portfolio will need to be re-visited; and group-level financial priorities will need to be re-assessed.

Looking to this uncertain, yet promising, future, Dinkelmann commented: “After all these years, I’m in the best moment of my career. I'm able to pull together my learnings, which have come from both successes and mistakes along the way. I will continue to work to understand the business from many different angles – not only as a CFO, but as an advisor, as an investment banker, and as an entrepreneur. I hope to leverage this unique experience to support EBANX with its continued growth, and potential future listing in the US.”

Continued growth was also the guiding theme of Teo’s outlook: “Thunes is currently in a hyper-growth phase,” he said. “We’ve doubled our headcount over the past 12 months alone, and a key priority for senior management is to hire the right talent. We’re looking for people with a passion for fintech and payments, as well as great team players. We’ve developed a fantastic team culture that we’d like to continue as we expand. And, as we scale, we need to ensure continued access to capital and the best organisational expertise.”

Dawood is equally hopeful about the future: “From a business perspective, we are focused on growth and executing against our strategy to become the world’s leading specialised payments provider. I tend to keep things simple for my personal and career goals: I want always to be learning and looking forward to what the day will bring…and I’m successful at least 8-9 out of 10 days!”