When it comes to digital, recognizing where not to invest is just as critical as identifying target areas for investment. Where regulation does not present a barrier to market entry for non-bank organizations, banks must have absolute clarity about their strategy to compete directly with the expertise of unregulated technology firms.
“We should consciously decide where not to invest ourselves but select partners in the value chain that are better and faster in these areas,” says Sabine Abfalter, CFO of Austria’s Raiffeisen Bank International. Rather than competing head-on with tech companies, she says, banks should prioritize those regulated areas where they have deep expertise and, therefore, possess a structural advantage. At the same time, the client interface is one critical area that banks will always need to prioritize and not pull back from.
CFOs must also recognize when an investment isn’t going to pay off as hoped and be ruthless about pulling the plug. Ideally, you should know what works before you build instead of pulling the plug afterward. “It’s important to use relevant data to test whether a certain investment is working before you scale,” adds Abfalter. “A company that embraces innovation needs short cycles of experimentation, a high volume of high-quality experiments, and efficient sharing of learning and insights. It is also paramount, and perhaps goes without saying, that those who drive innovation are those closest to the customer.”
Today's CFOs must retain financial discipline while ensuring it does not constrain innovation.
Traditionally, companies have seen their CFOs as financial gatekeepers, scrutinizing investments and rejecting those that do not meet strict ROI criteria. Today, they must retain financial discipline while ensuring it does not constrain innovation.
A key challenge is ensuring that this strategic vision translates into effective execution. “A major challenge for all leaders involved is ensuring alignment between strategic vision and operational execution,” explains Abfalter. “Teams on the ground must be clear on organizational priorities. In large, complex organizations, developments occur daily, making it challenging to keep everything within the broader strategic framework. Resolving this challenge requires a well-communicated vision that enables people across the organization to understand and consistently pursue strategic priorities. To do so, they need comprehensive context, relevant information, and a clear hierarchy of priorities.”
This approach allows the management team to step back from granular oversight, fostering greater autonomy. Instead, they empower teams to invest independently and make decisions at the lowest appropriate level, while remaining cognizant of the organization’s strategic objectives and maintaining financial discipline.
In today’s rapidly evolving digital landscape, rigid annual budgets may no longer be the best approach. Instead, banks should develop a more dynamic, flexible financial planning model that facilitates responsive agility. “This concept is much more about empowering those who are closest to the customer and taking decisions on the ground,” says Abfalter. “This allows finance to ask more searching questions.”
This shift requires a cultural transformation. While organizations still see budgeting as a control mechanism, moving toward a more empowering approach can enable faster, more effective decision-making and a sharper response to new opportunities and risks. Incentives must be carefully structured to reinforce this culture, ensuring they drive the right behaviors rather than inadvertently restricting or contradicting them.
Leaders, including CFOs, play a critical role in coaching teams, challenging assumptions, and resolving conflicts. Leadership in digital strategy is not just about financial stewardship. It requires orchestrating alignment across different parts and levels of the business, inspiring teams, and keeping the most worthwhile innovation efforts on course.
By adopting a more agile approach to budgeting and empowering on-the-ground decision-makers in areas where banks have a structural advantage, CFOs can help shape a resilient and forward-looking financial institution.
Going forward, success in the CFO role will depend on balancing financial prudence with strategic foresight, ensuring technology investments are both cost-effective and aligned with long-term competitive positioning. By adopting a more agile approach to budgeting and empowering on-the-ground decision-makers in areas where banks have a structural advantage, CFOs can help shape a resilient and forward-looking financial institution. The future of banking will be defined by those who can make digital transformation work as part of their core strategy, retaining a clear, strategic perspective of where they can add the most value.
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