CFO Focus: Strategic Chief Financial Officers Lift the C-Suite to New Levels

If you have a longer-term financial roadmap, you’re one of a growing group of institutions that has discovered the strategic benefits of this vitally important tool. If you don’t have one, it’s a good time to consider creating one.

Financial Roadmaps = Strategic Financial Plans

Much like technology roadmaps, financial roadmaps—also called strategic financial plans—help connect strategy with future outcomes. The costs and benefits of strategic initiatives extend beyond what is captured in a one-year budget. Therefore, a high-level longer-term view that includes the strategy and shows potential year-by-year earnings and net worth provides a necessary preview of the institution’s financial direction.

Most institutions would not operate without a multi-year strategy, which is why building a view of the longer-term potential financial performance of the strategy is so critical to enhancing the entire C-suite’s understanding of the strategic direction.

4 Keys to Financial Roadmap Success

1. The strategic CFO drives the creation of the roadmap and facilitates conversations with the C-suite as a team. This is not an activity where the CFO produces the roadmap on their own and presents it. Collaboration and conversation are foundational to the roadmap.
2. This is not a budget. It’s about possibilities and alternative outcomes. Strategic financial plans layer the big picture financial consequences and timing of the strategy over trends for the next three to five years. It is not intended to be precise; it is intended to be high-level and directional. Think of it as a strategic conversation you’re putting numbers to.
3. The financial roadmap goes beyond asset/liability management analysis, but ALM is a part of it. This is especially true now that the Federal Reserve is expected to increase rates starting in 2022 through 2024. It’s important to see how the financial structure your roadmap leads to will hold up if interest rates move more than expected.
4. Various views are important. Create what-ifs for variations in relevant assumptions. This is incredibly important so everyone, including non-financial team members, can see the impact of different paths. Some assumptions that are high on CFOs’ lists are interest rate changes, changes in loan and deposit growth, higher reliance on mortgage lending, shifts toward member CD growth, higher-than-expected costs for talent, housing market changes, reductions in non-interest income due to such factors as overdraft protection regulation, and continued supply chain problems, especially their effects on auto lending.

Combining the long-term impact from the strategic initiatives and select environmental changes may paint a picture that brings you peace or gives you pause. Either way, it’s a highly beneficial strategic view to have.

Engage, Learn and Grow as a Team

C-suite members typically find the thought process that the creation of the financial roadmap entails to be engaging and illuminating. The thought process is as important as the numbers it produces and can help your C-suite gain a deeper understanding as the longer-term financial possibilities begin to emerge. It often helps reveal a future that is as exciting as it is uncertain.

This is a good time to create a financial roadmap, given the changes and uncertainties that are on the horizon. Enhancing the C-suite’s understanding of where your organization’s profitability and net worth could land over a longer term provides a critical early view and precious time to adapt.

C. myers helps financial institution decision-makers uncover opportunities and continuously optimize their business models. Their depth and range of experience in linking strategy, talent, desired financial performance and successful execution enables them to work with their clients as strategic collaborators. They have the experience of working with over 600 financial institutions, including 200+ of those over $1 billion in assets. C. myers helps financial institutions think to differentiate and drive better decisions through strategic planning & business model optimization, strategic solutions and implementation, strategic leadership development, real-time ALM and financial forecasting, education, and thought leadership.