Facing Fintech Disruption Starts With An Agile Finance Department

Fintech companies, along with countless traditional businesses, face continual technological challenges from the deployment of new payment platforms, payment processing systems, and innovative financial approaches.

Payment platforms and payment gateways such as Square, PayPal, Venmo, and Zelle have transformed the way consumers spend money and pay for goods and services. Fintech will continue to disrupt traditional financial services, and companies must adjust strategies, processes, and methodologies to remain relevant and at the forefront of these changes.

Financial leaders also must adapt to this changing landscape. Organizational agility can help chief financial officers successfully navigate current digital transformations and those yet to be revealed. A complete agile transformation requires buy-in throughout an organization’s C-suite, but agility also can start small, such as in a company’s finance department since finance touches every department and organizational unit throughout a business.

The Benefits Of Implementing Agility In Finance

Agile has moved beyond its humble roots in software development and branched into many aspects of business, including finance. Many financial leaders remain tied to reactive approaches to business and market pressures rather than implementing forward-thinking proactive approaches to new initiatives and strategies. Agile can help these financial leaders — especially those at fintech startups like my company — move nimbly and stay in front of ever-shifting organizational goals and initiatives.

Agility in finance is a radical shift from traditional waterfall methods. Agile disrupts standard project budgeting processes of allocating funds upfront and then spending to that budget over the course of the year using success criteria such as money spent, requirements met and initiatives completed on time. CFOs and their people can get stuck managing projects to these outcome-driven metrics by focusing solely on what’s visible and what’s known to ensure their departments hit these targets.

Agility flips this script through continuous accountability. An agile approach in finance requires financial leaders to let just a small part of a project budget, and within a month’s time, teams and groups within the organization must defend the merits of the spend in a monthly check-in before additional funds are released. This forces greater accountability as well as accelerates the learning cycle rather than having teams simply work through a standard 12-month budgetary process where they focus exclusively upon execution.

This approach creates highly empowered teams that can help financial leaders better react to changes by providing a framework to create, capture and evaluate ideas throughout the year. The thrust of finance’s role shifts from minutely managing budgets and accounting for every dollar spent to ensuring consistent and transparent flow of information to teams and front-line employees so they have full visibility of corporate projects and initiatives. This approach helps to eliminate waste, improve outcomes, and create improved accountability and transparency throughout organizations.

Agility Leads To Greater Innovation And Empowerment

Financial leaders view every dollar as an investment — but sometimes, counting every penny doesn’t lead to the best outcomes. The waterfall method in finance requires financial leaders to define objectives upfront and manage budgets to these preconceived assumptions. That’s a weak approach — especially in the face of constant fintech disruption. Agility requires financial leaders and their teams to quickly learn and validate assumptions so teams can better execute. The entire financial framework under which budgets are managed changes from a perfectionist command-and-control culture to an innovative learning culture driven by highly empowered teams.

Changing the financial framework under which organizations operate is a big ask. Finance controls an organization’s purse strings, and the impacts of key financial decisions reverberate throughout all aspects of a business’s operations. Agility can help financial leaders streamline operations, effectively guide their organizations, make more informed decisions and ultimately grow their businesses alongside continued fintech disruption.