Finance leaders are aware of the tremendous impact of technological advancements and of the need to improve their business strategies to keep their competitive advantage. In our conversation with Niels Boudeling, CFO at Rabobank Asia, we explored the changing landscape of the finance industry and the impact of digitisation to the roles of CFOs. We also talked about his career journey as well as his pieces of advice for people who aspire to become successful CFOs in the future.
Presently, you are the Chief Financial Officer at Rabobank Asia. Before joining Rabobank Asia, what are the roles you fulfilled in the early stages of your career?
I started my career as an auditor in Rotterdam, The Netherlands and since then I have always worked in financial roles. Compared to current careers in Finance, I know that my career is more traditional with an increasing level of responsibility over time, leading to a variety of management, senior finance and CFO roles in The Netherlands, Switzerland, Germany, U.K. and now in Hong Kong.
In today’s business climate, the role of CFO is fundamentally changing. At Rabobank Asia, what are the duties/responsibilities you primarily deal with? How has your role changed over the years?
Indeed, today’s business climate is much more challenging than when I started in Hong Kong in 2014. I believe I just experienced the tail end of the golden years for banks in Hong Kong. We are now dealing with a changing competitive environment. This change has also affected my role as CFO. For example, the discussions about business performance have become more intense, managing expectations versus reality. Due to the more challenging competitive landscape, my role in initiating strategic decision-making has become more important. What type of bank do we want to be? How are we going to make a difference for our Clients? Cost awareness and cost reduction have become even more important than before. At the same time, my task to promote long-term value creation, by stimulating the business to find new opportunities to grow the top line, has not changed.
Could you tell us the present demands of the finance functions that you prioritise and your approach to be effective in it?
I currently prioritise the creation of a truly efficient data flow in our Hong Kong hub. Eventually, this development will be introduced to all of our locations in Asia. It starts upstream (at the input stage) with a strong emphasis on data quality. Rather than manual adjustments during the reporting process we focus on first-time-right data input. This requires acceptance by colleagues in commercial, operational and risk departments of their role in getting data right and their understanding of the consequences of data errors. An interesting transition!
Straight-through-processing of data, from front office to mid office to back office systems, and ultimately, into a Single Point of Truth (SPOT) is the second important development I am spending a lot of time on. The SPOT contains hundreds of data fields, or attributes as we call them, and contains risk data, customer data and, of course, financial data.
At the downstream end of the data flow, a large variety of reports is currently being automated. We do this by using advanced mapping tables which connect the SPOT with the reporting applications.
The combination of these three steps should enable my team to free up time from low value add activities, like error correction, and use this time for high value add activities such as scenario planning, forecasting and the identification of business opportunities. A clear example that technology is making our jobs in Finance much more exciting!
What are the internal and external challenges you closely monitor to assure the attainment of your financial objectives?
CFOs are nowadays facing a high number of challenges and must have the courage to take unpopular standpoints. Internal conflicts that come to mind are decisions about outsourcing versus automation of activities. Or, should the firm engage in new activities or new products? The right position in every decision within the triangle of risk, returnand efficiency should be meaningfully discussed by the decision-makers. In my view, the CFO has an important role in that discussion.
External challenges lie in the ever-evolving regulatory landscape. With solvency and liquidity requirements increasing, the costs associated with carrying liquid assets are increasing too. This needs fine tuning through the use of optimisation models and continuous maintenance. New regulation on access to current accounts and payments (PSD2) may bring new competitors. And new accounting standards, such as IFRS 9, affect the bottom line.
These new regulations put pressure on our returns and operating model. They also make data availability more important: regulators are considering to get constant access to near real-time data, signalling a shift in monitoring from a more traditional principle-based approach to a rule-based approach.
To address the implications of the convergence of technology and finance, what are the strategic policies, procedures or standard that you think should be put in place?
Finance and technology go hand-in-hand and with the increased interest in good data, the reliance by the finance function on the IT team is more noticeable than ever before. Finance needs the support from IT to ensure that all required data fields are captured in systems and that these systems are set-up in such a way that they enable data quality controls throughout the data flow. Therefore, Finance and IT cannot operate in silos any longer. I see that finance and IT professionals work more and more often in cross functional teams (XFTs). A big advantage of this is that it broadens everybody’s skillset and it stimulates finance professionals to embrace new technologies. This is a prerequisite for optimising our business value and process efficiency. It’s not a stretch to understand the logic of common objectives and KPIs for CFOs and CTOs.
Today’s business environment is indeed increasingly becoming complex due to technological innovations. To add, CFOs are challenged by economic uncertainties and issues on cyberspace, with all these in mind, what is your view on the future of the finance industry?
It is difficult to talk about the future of the finance industry without distinguishing time frames. In the short term, the abundance of liquidity, low interest rates, low commodity prices and increased global competition require banks to continue soul searching: what are we going to do where? Tough choices have already been made, are currently being made and will continue to be made in this time frame. Which attributes constitute a competitive advantage that allows banks to escape the arena of commoditised products where margin pressure requires large volumes to compensate set-up costs?
In the medium term, most commoditised products, like payments, transfers and simple loans will be processed by companies outside the traditional banking industry, some of them Fintech companies, but perhaps the more important competitors for retail banks will be large online retailers which will integrate banking services in their retail value chain.
In the long term the distinguishing factor for banks will be the quality of their advice and the ease of doing business with them (location, network, channel integration). Most products and services will be automated or operated outside the traditional finance industry. In my view banks will become smaller in terms of balance sheet and number of employees, more specialised and more event driven.
Evidently, the industry today is surrounded with risks and a plethora of opportunities, what do you think are the things that present and future CFOs need to explore?
Present and future CFOs have more data available to them than previously. Not only data collected within their own businesses, but also data from competitors, potential clients or best practices from completely different industries. There is a wealth of data to explore. The combination of advanced data analytics and machine learning (A.I.) could give insight in business opportunities. Machine learning could help CFOs to only analyse data pairs for which the correlation actually makes sense. Because at the same time there is a risk that CFOs drown in this sea of data.
For those aspiring to become CFOs, what are the fundamentals associated with such role as well as pieces of advice and realisations that you can share with them?
Aspiring CFOs should have the independence and courage to say no to a business proposition but at the same time aspiring CFOs should have a certain level of entrepreneurship in their DNA that encourages them to take calculated risks and be a critical best friend for their business stakeholders. Aspiring CFOs should also understand that their role will become much more human resources oriented as they will manage a more diverse finance team in the future. The CFO will most likely not be the best accountant and a CPA qualification alone is no guarantee to become CFO. This means that there will be more competition from disciplines outside the Finance domain for the CFO role. In terms of skills, aspiring CFOs should hone their influencing skills. If no action is taken on an otherwise good financial analysis, the finance function has still not accomplished its mission.
There can be a lot of pressure when leading your company towards the attainment of your financial objectives, how do you make sure that you maintain a healthy lifestyle, both in your professional and personal life? What’s your daily grind?
I notice that going to the gym in the morning makes a positive difference for me during the day. I feel more energised and return home with energy left. It only takes me one hour, so I try to do this on Monday, Wednesday and Friday. During the weekend we often explore Hong Kong’s great hiking routes.
Sports help to be fit and at the same time it is important to sharpen the mind to be future-proof. Frequently ask yourself the question: “What have I learned today?”
We all have our own motivations, who/what is the particular person, thing or words of wisdom that keep you going?
What keeps me going is teamwork. I get a lot of energy from a strong team spirit. If there is so much trust within the team that disappointments are overcome without playing the blame game and successes are shared, I am at my best. Therefore team building and team member selection are important for me.
In reference to your career journey, what’s the secret to one’s success in this industry?
There is no golden bullet for success in this industry and eventually you need some luck to be at the right time at the right place with the right background and skills. Nevertheless, I believe that there are several factors that will most likely contribute. First of all I believe it is useful to have experience in different industries, like manufacturing, retail and auditing. It’s interesting to see how the best practices from one industry are very useable in another industry.
Secondly, I would recommend to everybody who has the ambition to become a CFO in a MNC to experience living abroad for a while. It’s a great exercise in flexibility and a good test for your assumptions and prejudices.
Thirdly, I believe that future CFOs will have experience outside the finance domain. Operations, Risk Management or Treasury are interesting areas for any future CFO. I also believe that a good business school will broaden your view and enable you to engage in meaningful discussions about business and strategy.
Finally, what I would recommend to any aspiring CFO is to never stop learning, to have an open mind and the courage to ask the “WHY?” question frequently. Why are we doing this?
Thank you very much Niels for sharing with us your invaluable insights.
About the Interviewee
Niels Boudeling is CFO Asia for Rabobank, a large cooperative bank with its roots in The Netherlands. Responsible for finance, control and taxation in Hong Kong, Singapore, Mumbai, Shanghai and Jakarta Niels is constantly searching for the right balance between commercial opportunities, risks and efficiency.
Before joining Rabobank, Niels worked at Cartier, MontBlanc, FootLocker and Paxar in the UK, Switzerland and Germany in variety of CFO and Senior Finance Managers roles. He started his career in 1981 as an Auditor for KPMG in the Netherlands.
Niels holds a Master of Science in Accountancy from Nyenrode University, an executive Master in Finance and Control from Maastricht University, an MBA from RSM/Erasmus University and is a Registered Controller.