1033. Insights: How modern finance teams can win the next 10 years

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0:42Hello and welcome to Fintech Insider Insights from 11FS. I'm your host, Benjamin Ensor. Like many things, business finance never stands still. It's continually evolving. Over the past decade, expectations on finance teams have steadily increased, and the tools and processes supporting them have had to change too. In this episode, in partnership with Plio, we'll explore some of the challenges that have emerged as finances evolved, including what's really keeping CFOs up at night, and look at practical ways that businesses can prepare for what comes next. As ever, I'm joined by a great panel of guests to help unpack all of this.

1:20First of all, we have a very welcome return to the podcast for Yepe Rindam, co-founder and chief executive officer of Plio. It's really great to have you with us. For listeners who may be not aware, can you tell us a little bit more about PLEO and why you started the company? Absolutely, and great to be back at the show. So, actually, before starting PLEO, I was a CFO myself just for a little while. And we started PLEO out of pain because I felt it to be incredibly cumbersome to run a finance function of a growing company. when it came to enabling the workforce to buy whatever they needed to be productive in their work.

2:06For the finance function, what that looked like was just figuring out how to set them up with a way to purchase stuff. I was sharing my company card around the office back then. We had no insights into what people were buying. The data came in with a very substantial delay in form of manual receipts when that even happened. 14, 30, 45 days later. It couldn't be reconciled with our budgets. It was super manual to entry these things into our accounting system and so forth. And then as an employee, it was the same sort of frustration because often you would have to pay out of pocket. I think we all can recognize the task of keeping on to a receipt and building an expense report.

2:58Ten years in, I have never heard a person enjoying that. So there was a lot of frustration on the employee side as well. So all in all, I started out of frustration with the question, what if you created one product that solved for that? What if you had a product where finance folks easily could enable the workforce, see what was going on in real time, controlling all of the purchases, getting the data in with a high degree of automation or a way to follow up on missing data fully connected into your accounting processes. And what if employees were enabled with a company card or a way to pay an invoice?

3:43What if they didn't have to think about the receipts, if they didn't have to think about the concept of an expense report? So all in all, that's the founding story of Pleo. That's a lot of history in a minute or two. Fantastic. Thank you. Well, like many a great company, it has a fantastic founding story and found it out of pain and a search for a better way forward. So we also have another fintech insider return for Soren West-Longning, who is Chief Financial Officer at Plio. Welcome back to the show, Soren. Can you tell our listeners a little bit about your role at Plio? What does a CFO in a company for CFOs do?

4:21Yeah, absolutely. And thank you for inviting me. Yeah, so I've been with Plejo a little more than one and a half years as CFO and have spent the last 10 years as CFO of both very large listed companies and also smaller, fast scaling companies. So I tried quite a few things during that period. I've also held positions outside of the finance area as a regional manager, etc. so I also know that sometimes some of the pain that Jeppe is alluding to from the business side of things. But inside Cleo, I'm responsible today for finance, I'm responsible for our legal function, our compliance, risk management and fincrime, and I'm responsible for procurement and strategy and industrial relations basically.

5:12So a pretty broad set of disciplines that I'm resuming the responsibility for. And if you should move away from the functional side of it and maybe cater more to what's sort of like the focus of the role, I would say it's very much about driving performance. It's about driving efficiency. It's about ensuring compliance. and then lifting the general maturity of the company, of Plio. You know, it is a 10-year-old company, so there's still work to be done in that area. Interesting work. Well, welcome back. And we also have a very warm welcome back to Megan Cooper, Chief Executive Officer at KWOOD.

5:58It's always great to have you on the podcast, Megan. Can you remind our listeners a little bit about who you are and what KWOOD does, please? Yeah, absolutely. So my background has been all FinTech. So I'm an American by trade. I came from San Francisco about a decade ago to help start Starling Bank and then was at Barclays as the chief product officer there, leading on digital and consumer. And now I'm the founder and CEO of Kaywood, which is a AI-driven wealth management platform. So using agentic AI to rethink financial decision-making. Amazing. Fantastic. Well, welcome to all three of you and thank you so much for joining.

6:35So in the first half of this podcast, we're going to use some of the research and insights from the team at PLEO, in fact, to look into how business finance and spend management has changed over the past 10 years or so. And I think let's start with one of the most striking findings, which was that PLEO's research found that in 2023, 98 % of respondents said that the role of the CFO had changed. Soren, can you tell our listeners a little bit about, well, how has the role of the CFO changed? Surely the CFO was always in charge of finance and they're still in charge of finance. What's changed? What are some of the big things that you've seen change over the years?

7:16Yeah, so both what I've experienced myself, but also what I hear from CFO colleagues centers very much around first, you know, the level of uncertainty and also the frequency, change frequency has gone up. What has happened over the last five, six years with COVID, inflation highs, geopolitical uncertainty, duty in the world, whatever, has really been significant. And then I would say as a second point, I think the breadth of the role and the demands have also gone up. There's a lot higher expectation in terms of the breadth of your involvement and also, you can say, your business involvement over the more traditional finance disciplines.

8:06And then finally, I would say technology is also an item. technology is really developing at a more rapid pace, not least with AI really playing a more prominent role over the last couple of years. So, yeah, that's what I see and also what I hear many of my colleagues talk to. And you can say, there is really a need and a want from CFO to engage in all of these breadth of different topics, you know, spending more time with the business, bringing really strong data foundation into business strategy shaping, do more scenario planning, supporting investment decisions and what have you. But the reality is that many of my colleagues, they do spend quite a lot of time also on the more rudimentary task.

9:02Chasing receipts, as Jeppe was saying, consolidating data to create overviews and just doing the cash, statutory reporting, all these kinds of requirements. So I think that journey, the breadth versus what reality also is, really speaks to the importance of unlocking more time for all those new demands. Yep, I'm really interested to hear your views as well on sort of what's driving that shift. As I'm listening to Sorin, I'm thinking, you know, which is worse, the sort of the pace of technological change and the way that's changing markets or the sort of geopolitics or tariffs and Brexit and all that kind of stuff.

9:47I suppose it depends what company you're in and what sector you're in. But there's a lot of uncertainty now, right? There's certainly a lot of uncertainty. And I think for us, what we've seen is the finance leaders, they're really capable and they should really sit in what we refer to as the strategic cockpit of the business. You know, helping the leadership team look forward, steer the business and enable the business to have business impact. And I think a lot of finance leaders also feel that that's what they're accountable for. Now, the reality has been, and to some extent still is, as CERN is also alluding to, that they're still applying a lot of attention on historical matters, on manual tasks that should be automated.

10:39And you could say that's essentially that's our mission with Cleo is to say, hey, we want to bring the finance leader from all of that into the cockpit so they can help enable the business. Now, what happens in the cockpit right now, and what you're steering towards, is, of course, it's an environment where business has been under more pressure. The economics and the climate has been more difficult the last three, four years than previously. So, matters like cost, profitable growth, these types of things are more important. The technology agenda. We see actually finance play a massive role in enabling data centricity, tooling, and AI.

11:26Both, you could say, proving the business cases, assigning the budgets, but certainly also, in many cases, it's in the scope of the CFO to be head of procurement and legal and so on. So what are the legal frameworks around enabling such technologies in the business? I think finance plays a really big role. And we also see the finance profiles are becoming more tech savvy somehow. We see CFOs that are actually a lot more curious and capable of technologies, of assessing the right tools, understanding the importance of connectivity between the tools, depth of integrations, and these types of things.

12:12so I guess the keyword is turning finance into a real strategic force that ensures business impact thank you I suppose as everyone becomes more familiar with technology as everyone uses technology more and more in their lives you'd expect finance professionals just like everyone else to be increasingly adept with technology and of course you get younger generations coming in with even more enthusiasm Megan as you listen to this as a sort of chief executive, building a startup, still in relatively early stages. How sort of central is finance to some of the decision-making that you're doing today?

12:51And actually, we don't really know very much about your setup. Do you have a finance director? Do you have a CFO? I imagine you don't have a CFO yet. How much of the finance role are you currently doing as a chief executive? And how much are you relying on your finance team to do for you or with you? Yeah, absolutely. Yeah, we don't have a CFO yet, though I will say it's becoming increasingly common for early stage startups to have fractional CFOs. So that will probably be a direction we move first. But I think, I mean, as a founder, you're already owning decisions that the CFO will later formalize.

13:24So it seems, you know, like runway versus growth, you're hiring versus burn, build versus buy. Having to really dig into the unit economics, that's part of the fundraising process that you go through, You're really looking at your annual revenue, looking at things like LTV to CAC ratio, and being able to be really crystal clear on the bottom line that your business is driving. And so I think the kind of muscle that early CFOs, of course, have to build is around that finance function and understanding that it's not just about numbers, but also about the trade-offs that you have to make as part of that.

13:59I think I am lucky, though, in that I come from working in finance. So even though I'm working in a technology startup, it is a financial technology startup, and I've spent my career in banking. And so one of our advisors is a CFO, just coincidentally. And so surrounding yourself with smart and talented people early on is always, you know, very helpful, of course. So you have an advantage that many, many startup founders don't have, indeed. um so so we've talked about the sort of the the greater volatility in business cycles certainly over the past few years certainly post-pandemic or um so certainly for the last five six years um soren we talked a little bit about sort of we touched on technology i mean our finance team's actually any better equipped um to deal with some of that volatility or is it just that actually once you've lived through things like the russian invasion of ukraine and so on you kind of just get used to planning for the unexpected and kind of trying to plan for the worst and hope for the best.

14:58And are there tools that are helping people or people just learning how to deal with it? I think that's a good question. I think you better learn to deal with it, you can say, otherwise you gradually become more and more irrelevant, you can say, right? But I think is a really good question because you have, on one hand, you have better tools available today, also an AI-enabled tool and better opportunities to leverage that. On the other hand, I mean, on the balance, demands have gone up, as we discussed, uncertainty, volatility has gone on. And I would say on the balance between that, I think demands have actually gone up faster than, you can say the capabilities and tools have gone up if I was to make a call on that balance.

15:52So I think net-net there are more pressure on Finance Leader. You know, you have the feeling that more things keep getting added, but few things are taken off the plate. And I think that's also what we see in our surveys. I mean, in the survey that we did back in 2023, nearly half of the finance leaders felt they had a clear view of things. But already in 2024, that dropped to just around 29%. So a quite significant drop in that feeling. And I do believe that that comes from that pressure of, you know, faster cycle, higher expectations, and the finance team still learning how to really leverage the new tools and AI in particular to help them stay ahead of the curve, basically.

16:43So on balance, I think the finance teams, they feel a little more pressure now. Megan, you must be finding yourself faced with decisions where you have imperfect information, just like many chief financial officers and so on, where you might have a guess about how much demand you have. You might have a guess about how many employees you're going to need or capacity you're going to need. But you must have to make quite a few decisions with imperfect information. Do you have a sort of way of doing that? You know, how do you think about it when, you know, you have to take a decision and you don't know?

17:18You can sit there with analysis paralysis or you can take a decision. How do you sort of deal with that? Yeah, I'll say I think coming from a background working in tech and product, you just sort of accept uncertainty as a permanent. and waiting for too much data and too much clarity can sometimes be a bit handicapping. So I think coming from that background with, you know, just accepting uncertainty as a permanent and how to work within that environment is useful for times when there's a lot of volatility in the market. As a founder, though, my perspective is that you use finance to bound risk rather than to eliminate it completely.

17:54And that's the kind of best that you can do. I do think that there's, you know, the point that you make that, you know, you don't want to wait for certainty because then you get into a decision freeze. But also, to the point that Surin was making, there's increasing tools specifically around AI that can really help us to make strategic decisions. So a lot of what my company does is so we're building this sort of like a CFO via API, but for finance. But one of the areas that we look at is things like daily liquidity and compliance for like a bank's finance function. So that's something where we can take data from all these different data sets and be able to put it into the reporting requirement.

18:30And that's quite nice because it's clean data. It's something that's quite manual. You can very quickly take something and delegate it to an AI agent and drive a lot of value. But I think the thing that's really just now starting to build that's quite interesting is longer term financial strategic decision making that AI can help to opine on. So, for example, if we rewind back a few years to the SVB collapse, part of it was they had too many holds to maturity bonds. It made sense in the current economic climate and with the current interest rates when they took those out. However, when the market changed and interest rates dropped, all of a sudden that created pressure on the bank.

19:05Then you had people, you know, obviously like leaving the bank and then all of a sudden with the run on the bank, it all just collapsed. Right. But that I remember at the time thinking it was quite fascinating because in the UK and London among, you know, bank indies is not a common topic of conversation. but we would frequently reflect on the flat that were in the late phase of an expanding credit cycle, and we expected it to contract back. There are certain things about the economy that's quite cyclical, that just tends to follow patterns, and that happened to be one of them that was reasonably well-identified.

19:35And so I just thought it was interesting that had that been programmed in algorithmically for that particular team to be able to kind of see what pressure SVB would have been under with that contraction, perhaps they could have, you know, reshifted things a bit earlier to keep things a bit steady for longer. And so that's where I think AI is brilliant. It's really good at pattern detection and prediction. And so for something like that being infused to a CFO suite, to be able to look at market styles and economic trends, looking at things like inflation and unemployment, how these different data points correlate together, you can see where you might be in the volatile market right now, but kind of where the trend will be over the next two to three year period.

20:12And that can help inform decision making. So, I mean, I think, yeah, it's only going to be getting easier over time as we have better tools to help us make some of those forecasting decisions. Thank you. Megan just used the term decision freeze, and you have that term in the report. Can you just very quickly just say, what is decision freeze? To somebody who's not heard that term before, what is a decision freeze? Yeah, so I think what I sense and what we also seen in our report is that the amount of data that can be generated, the amount of perspectives that you can apply in the data is really gone up quite significantly with new technology.

20:56And that's one of the things that is leading to a certain, you can call it analysis paralysis. You know, there's simply just so much data available, and often it requires quite a lot of work to bring it together across many different data sources, right? So I think that's where we see finance leaders often struggle. And this is where, you know, some of the tools that Megan is referring to, something that can really bring data together across many different sources and really bring insights through that can be super, super valuable and help overcome some of the, you can say, the feeling of being overwhelmed in the finance arena.

21:37Yeah, because I love that example you just gave, Megan, of how AI might have been used to help Silicon Valley Bank avoid some of the problems, you know, had they been using AI to sort of anticipate things they might have been able to act. Are you seeing other companies or finance directors and CFOs starting to deploy AI in various different ways, potentially trying to anticipate things or to help them with decision-making or even just automating some of those routine tasks that you were talking about at the beginning of just chasing up invoices or managing expenses. Are you starting to see AI being used more widely to just help CFOs just be more effective?

22:19100%. Now, I would say, though, that obviously the CFOs we speak with, they often have an agenda already just by speaking with us. they want to be automating things they want to use technology to save time they want to use data to steer them going forward so maybe there's a little bit of a bias towards the more advanced CFOs but certainly yes and we see it across finance but really across the entirety of the business internally in Playu as well So CERN and I, we were with our senior leaders this week, and we were discussing a quite, I would say, quite complex area around customer success, churn, but related to our efforts in customer support.

23:14And instead of having a data scientist and several analysts try to derive conclusions here, we had accumulated all of our data from our 45 ,000 customers and all of our support tickets into one data lake, an agent on top. And it was absolutely incredible, the insights you could get out of that agent in terms of combining findings from support tickets to churn behavior to what are the most relevant investments we should make in product to have the most impact on our customers and reduce tickets and so on. Huge productivity gain and making us so much sharper but then we would have been before. Yes, that's so, so interesting.

24:02So we just talked about AI. Maybe we should just sort of flip across to the other side. Soren, I think one of the things that sort of comes through a bit in the research you've done is the sort of pressure on the individual. And, you know, people talking about sort of dealing with a lot of stress, sleepless nights, and so on. And obviously that takes a toll. Or is that maybe changing who wants to be in finance? Is it encouraging finance directors to move into wanting to be chief executives instead? You know, sit in Megan's chair. What's the sort of human impact of this kind of stress? Yeah, I think you're onto something.

24:42At least I've noticed over the last, you know, five, 10 years, I've seen more people with sort of like more of a consultant data mindset, business strategy mindset, moving into finance to actually become CFO. Also in line with the trend of, you know, the demand and the breadth of involvement increasing. So I think that's definitely something that I've seen and noticed. And if I look to sort of like what are the profiles that I think will increase over time within finance, I think it comes very much down to, you know, three types of things that would be in higher and higher demand. One is, you know, really data specialist, someone who can help unfold all the knowledge that most companies have somewhere, but needs to be turned out from various systems and into concrete actions, as also the example Jeppe was talking about.

25:41I think it's someone who are really being able to combine finance knowledge, but really work with the business to help unfold decision making and support them on a daily basis. So this is what you call the real having this partnership mentality and business acumen. And then, of course, there will still be need for these really deep specialist competence, like within specialized tax or treasury or what you can imagine. But I think there will be a trend towards more of those, you know, tree profiles, as opposed to, you can say, maybe a more traditional finance background. And I think, you know, the ones that will more and more find their way into the CFOs side will be the ones who can combine things across these three things, in particular the one on the business inside and data part.

26:38Really, really interesting. Okay, well, on that note, let's take a quick pause here and we will be back after the break. Hey, folks, David Breer here, CEO of 11FS. Here's something you might not know about me. I get a lot of people trying to impersonate me online, Fake profiles, scam emails, the lot. And a big part of that comes from data brokers, hundreds of them quietly collecting and selling your personal information. Your phone number, email, home address, job title, all out there and all fueling identity theft, scam calls and spam. If you've ever searched your own name online, hands up, who hasn't?

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28:03Welcome back. In the second half, we're looking ahead to what the next 10 years could look like for finance teams. So, Jepé, let's bring you in. If you're a finance professional listening to this, what should you be doing to try and sort of combat this decision overload, the rising pressure, the sort of uncertainty? What are some of the things that you think finance leaders really need to focus on over the next few years? Well, first of all, I would say if you haven't done it yet, you need a really strong foundation so that you actually have the capacity to absorb the change and steer the business.