CFOs: STRATEGY
Future-proofing and change: A CFO perspective Digitisation at L&G is impacting every department, but in finance it coincides with changes wrought by regulatory reform that demand a fundamental rethink of critical processes. Carl Moxley, Chief Financial Officer for L&G’s Retirement Institutional division, shares his experience Touching any part of a legacy system has its risks, and nowhere is an organisation rightly more nervous of those than in the finance department. No one wants a gung-ho CFO, but neither can an organisation’s most critical functions be protected from fundamental reform forever. That’s where insurance as an industry finds itself. In 2018, the then head of platform and change at one of its biggest operators, Legal & General, admitted the company had been working with the same internal system since 1991 and would be ‘changing every tool’, as it executed its transformation strategy. That means Carl Moxley, in his role as CFO for L&G’s Retirement Institutional division, has become increasingly involved with how digital processes are implemented, and the impact those changes in his department will have on the wider organisation. Moxley’s journey at L&G may be a specific one, but it will undoubtedly speak to a number of CFOs who are also looking at the risks and benefits of change. Like many working at insurers operating in the EU, much of Moxley’s time has and is being spent overseeing the company’s response to a raft of regulations with potentially huge operational impact on
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his department, including Solvency II and IFRS 17 reform. But while the consequence of embedding these new requirements has been to tie CFOs to their desks for months, even years, on end, Moxley believes the technology solutions they finally settle on to implement them could release chiefs and their teams to grow into a more strategic asset for the firm.
NECESSITY FORCING CHANGE Solvency II and IFRS 17 require a deep level of calculation and analysis, ‘that’s making us really think about our end-to-end processes and how we can make them better’, says Moxley. “With IFRS set to be implemented in 2023, that is another change in the amount of information, detail and data that’s required, in terms of our accounting. There’s an increasing focus [by regulators] on operational resilience, as well. While, in the past, the banking and insurance industries in particular have seen a lot of focus on their balance sheet resilience, capital and liquidity, that’s now moving to the operational side. “We’ve a kind of shortening window of time to be able to do our reporting, that’s something the whole industry faces, and when we have growing business, increasing
the need for data manipulation, it becomes really important to think about how we view automation, digital capability and predictive analytics. There are clearly legacy systems that were fit for purpose in the past, that now need to be rethought.” Previous piecemeal approaches to reform were understandable, but have not done the industry any favours, admits Moxley. “When you need to get something in place, in the short term, you tend to do stopgap-type analysis, and layer on additional levels of complexity, because the business case for wholesale changes isn’t necessarily needed – it’s just a small iterative process,” he says. “But the more you layer onto the systems, the more difficult it is to then fundamentally change, especially while you still need to keep the wheels running. All these aspects have been barriers [to transformation]. That’s certainly what I’ve found. It’s the large-scale thinking around these new regimes that make you start to consider your whole process. The journey we’re on in my function is to get to the end state of a more automated, digital process.” Will that significantly change how the CFO perceives his role, and how others in the boardroom see it? “The CFO is responsible for the balance
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