THANK YOU FOR SUBSCRIBING
I began my career almost 20 years ago at GE. GE has long been known for building some of the best finance and executive talent in the world. Through intense academy training and various financial leadership programs, associates are taught to understand how to use KPIs, data, and analytics to make critical decisions to move the business forward. Successful associates become managers, rise the ranks quickly, and take on key executive positions at a young age. I was fortunate to be part of this group which helped me prepare for the opportunities and challenges for today’s CFO role. After almost a decade at GE, I joined HSBC Bank as the CFO of the US and Canadian Commercial Division. Leading finance for a $40B asset and deposit portfolio was incredible, however, like most large banks, HSBC carried a heavy regulatory agenda on the back of post-crisis Dodd Frank regulation. This was stifling innovation and creativity in the financial sector. With large bank budgets limited to remediate regulatory infrastructure and capital reserves, very little investment was made in evolving digital consumer needs. Recognizing this one-way migration to digitization of consumer finance, I joined Fintech Start-up Avant. The company’s mission was to lower the cost and barriers of borrowing for consumers. As the company’s CFO, I oversaw its growth from 30 employees to over 1,000, helping raise over four billion in capital, which awarded the company the unique designation of a FinTech “Unicorn.” Seeking further opportunities to capitalize on the growth in FinTech and consumer innovation, I joined Guaranteed Rate in July of 2019, one of the largest and fastest growing mortgage originators in the country, dedicated to providing the best mortgage experience for its customers. The mortgage industry is by far the largest vertical in financial technology, and by making key investments in product and technology to further enhance the customer experience, Guaranteed Rate is quickly on its way to achieve the goal of becoming the number one mortgage provider in the country.
Banks Getting In On the Action
After several years of hibernation, banks are getting back to investing in technology to gain new efficiencies and improve their consumers’ experience. Robotic process automation, artificial intelligence, and blockchain are garnering heavy investment to help compete for customers as they demand better digital experiences. Many banks with legacy technology stacks are choosing to partner (vs. build) with existing FinTech’s in order to increase speed to market and lower costs. We at Guaranteed Rate will be continuing to invest in technology, partnerships, and resources to stay ahead of the banks and our non-bank counterparts. While the CFO role is critical to support product and technology enhancements from a budgeting and capital allocation perspective, it is equally import for CFOs to understand the competitive market landscape, identify any leapfrogging in technological advancements, and continue to evaluate M&A and partnership opportunities to help the business maintain its competitive advantage.
"Our role as CFOs is to not stifle ideas, but rather, identify and present the quantitative and qualitative trade-offs of any important decision or investment"
Financial Technology Themes in Lending
A myriad of new technologies have emerged in recent years that are accelerating growth in the FinTech Sector. Companies such as Plaid and Yodlee have built sophisticated application program interfaces (APIs) to automate income verification for lenders. Several firms have developed optical character recognition (OCR) tools to quickly transcribe tax forms, bank statements, and insurance documents so underwriters can quickly understand the health of a potential borrower or evaluate the quality and value of collateral. Despite the advent of new data and automated technologies, there are new risks that CFOs need to be aware of as risk managers and custodians of the enterprise. Digital fraud, including payment and wire fraud, is a significant concern among all financial institutions, banks and nonbanks alike. In addition, cyberattacks have been cited as one of the largest risks in FinTech given the potential for fraudsters to steal personal customer data and illegally distribute or expose it to the public. As the CFO role within FinTech evolves, understanding and controlling for these risks is a critical part of the role. Identifying risk mitigants and remedies for these types of risks are now part of the new job description.
Be Present and Part of the Executive Decision
My role as the CFO is to partner with our CEO and leadership team in driving thought leadership across the business, often leveraging data and analytics to help inform the path forward. So, often CFOs are relegated to the back office, in the rear-view mirror reporting on yesterday’s news when they need to be looking ahead in the passenger seat, or in many cases, driving the car. Communication, leadership, and cross functional collaboration to drive effective business development and risk management are equally important in the CFO seat. For me, and in particularly in a high growth lending business like Guaranteed Rate, capital adequacy and safety are significantly important to ensure the business can continue to grow, and as such, capital allocation and a constant evaluation of the return on equity on key investments is required. Market volatility could create significant changes in our business overnight, so understanding all the risks is an integral part of our day to day role. Our investors and external stakeholders demand timely reporting, accurate financial data and compliance with covenants, all of which are table stakes for a high growth FinTech business. Arguably the most important role of the CFO is to help create a collaborative balance between growth, profitability and risk management. Demonstrating discipline can often get in the way of innovation and high growth. Our role as CFOs is to not stifle ideas, but rather, identify and present the quantitative and qualitative trade-offs of any important decision or investment. This critical skill set can set organizations apart and can often be the difference from bust to ‘Unicorn.’