Bridging the CMO-CFO divide

With advances in AI, predictive analytics, distilled big data, customer analytics, web and social analytics, the CMO’s role has evolved and at times been misunderstood. Their outstanding achievements in this new digital, customer- centric, data driven, and ROI centric times has not been easy.

Not taking any sides – traditionally, the CMO has been the center point between the external agency of record and the business. To realize $$ for the intangible Don Draper- ish magic of TV, Print, Billboard advertising, with a splash of behavioral psychology thrown in ‘was/Is’ yet not really convincing to rest of the C-Suite.

Pepper in demographic shifts, the new customer experience desired by customers, the emerging touchpoints, the 8 second attention span (a goldfish has a 9 sec attention span) and hypnosis into the equation, it gets even tougher to determine’ Where is Waldo’, the holy grail in dollars, the infamous ROI.

Hard to attribute ROI in ‘dollars’ which the CFO does not frown upon, CMO/CFO relationship has seemingly been like ‘Apples and Plums’. ‘Apples and Oranges’ would simply be absolution.

The CMO accountable for building, maintaining the brand equity, marketing the organizational revenue generating segments, staying ahead of the curve with Customer experience, while balancing the introduction of new devices, channels, and the application of emerging marketing technology, it is a big plate……and extra laps around the track.
It is a persuasive argument for the C-Suite to consider ‘Marketing’ as a ‘revenue generating center’, not as a ‘cost center’, a burden.
Alignment and the prevailing climate between the CMO, and the CFO has to give way to solutions:

– Hammer out a sound unquestionable ROI attribution strategy, for intangibles and tangibles.
– A ROI attribution which audits the existing determinants and adopts CFO inspired tweaks. Having ‘Skin in the game’ makes the entire game plausible.
– A quarterly ROI health check which tracks monthly variances, with historic and cyclical attributes factored in.
– This proposed health check would lead to a robust Marketing plan for the next budget planning year.
– Finally, a forecast, where ROI and spend could be traced back to the budget

These efforts do require time and effort. From my cost accounting days, I know how crucial and illuminating this exercise can be.
From a business road mapping perspective, it brings agility and a shortened roadmap from the traditional 5 year plan.

The Fate and a Possible Future State of Fintech. A Mass Migration to greener pastures?

 

The recent news of the federal financial regulator granting ‘Fintech’ companies banking charters has made headlines. The topic remains fluid with speculative outcomes. A new regulation requires agencies to solicit for public comment and decision making is based on evidence. Needless to say, it is a lengthy process.

My optimism lies in the wake which ‘Fintech’ brings with it. It has morphed and matured and into a broad landscape and a massive ecosystem of its own.

‘Innovation from within’ in US regulated industries remains in rapid fire from networking & partnering to investing, inventing, incubating, acquiring, and building MVP’s.

‘Fintech’ companies are seeking independence, due to an oversupply in the US, while demand remains limited, due to regulation limitations on banking charters.

The graphic below sheds a global outlook:

a. Asia-Pacific (‘Fintech’ presents the most opportunity, less of a threat)

b. The United States (‘Fintech’ presents more of a threat, less of an opportunity)

Fintech bank charters related risks are a reality and a cautionary step by step approach by Federal & State regulators is real as well. Tolerance of risk and reward is just one of the factors shaping the future.

Choking the competition, never to see the light of day, has not worked, either.

The US shares a lot of firsts, one of them hybrid and electric cars and is recognized as an early contributory pioneer. However, it was an Asia Pacific country who mass produced it, in 1997.

In a global and shared economy, a containment outcome runs the risk of mass migration of US ‘Fintech’ startups to emerging economies, and/or the Asia-Pacific regions, where regulations are ‘Fintech’ friendly and State funding is readily available.

The Fintech innovation success stories from regulation friendly parts of Europe, and a few APAC countries have not gone unnoticed by the UK’s old guard.

The loosening of some UK financial regulation, has seen successful outcomes. This has possibly tipped the balance in the US.

Regulators to grant Bank charters to Fintech Firms

A top regulator, ‘Thomas Curry’ from the Office of the Comptroller of the Currency revealed -Fintech firms shall be treated as ‘special purpose national banks’.

The agency would for the first time start granting banking licenses to “Fintech” firms, giving them greater freedom to operate across the country without seeking state-by-state permission or joining brick-and-mortar banks to function.

This regulatory response is open to public comment through Jan. 15 and is expected to create tremors in the banking industry, followed by deliberations inside the OCC. Will this first U.S. federal regulator to allow non-bank Fintech firms to fly on its gradual own, who for now relies on a symbiosis with larger brick & mortar banks, including the state-by-state permissions and other capital requirements, and more.

This may be the first, of many more volleys of regulation challenges, bureaucratic debates, and stakeholder jousting. The eventual political opinion/actions shall determine, if US banking and Fintech firms are to be equals.

This move by regulators, since Dodd-Frank have been working hard at seeking an equilibrium between innovation, consumer choices, unmet consumer choices, while extending traditional protections to new and booming financial products which began to emerge, post 2008 Financial crisis.

The proposed move was cheered by the tech sector who had long been seeking independence, but frowned upon by financial institutions, some consumer groups and state regulators who see threats in reversing the traditional order.

A legislative/executive action may possibly determine, if US banking and Fintech firms are to be equals.