Interview with Markus Gisler - President CFO Forum and Head of the Institute IFZ

Deloitte: What role do you expect the finance function to play in companies in the future?

Markus Gisler: Its role in reporting past accounting periods will remain important, but its corporate management role will become more significant. Management teams, boards of directors, shareholders and external third parties want increasing amounts of information about the direction companies are taking and the risks and opportunities they face. And this corporate management role goes beyond operational decision-making.

Deloitte: Could you outline the areas in which the finance function will be involved?

Markus Gisler: The finance function will be involved in strategy development – even in companies where it currently has no such involvement. But strategic decision-making in the future will require more than just number crunching. The discussions I have with CFOs about sustainability reporting is a strong indicator that finance departments need to extend the scope of their role beyond financial data.

Deloitte: And how important is technology?

Markus Gisler: Finance departments have been using technology for many decades to support their work, and the finance function today is unimaginable without digitalisation – ERP systems, software, communications solutions, and more. I firmly believe that in the years to come, technology will continue to evolve and the work of finance departments will be shaped increasingly by technological innovation. I’m thinking here of robotic process automation (RPA), smart automation, hyperautomation, natural language processing and cloud computing, not forgetting artificial intelligence applications

Deloitte: What will these trends mean for social aspects, such as the corporate culture within finance departments?

Markus Gisler: Technology is just one of the challenges that the finance function now faces. Finance departments have no alternative but to adapt to a growing number of ‘soft’ issues, and provide answers to questions about how in an anchor role they should tackle change, how they can ensure stability while also remaining open to innovation, and how they can best balance the opposing demands of change and stability.

Deloitte: Staffing is, of course, absolutely crucial to the finance function. How is the next generation of experts and managers being trained and developed? What are their interests and values?

Markus Gisler: We need to consider initial training and continuing training/CPD separately. Continuing training and CPD measures can be adapted quickly and flexibly to address new skills that the economy requires. Universities of applied sciences, for example, are integrating new skills in their curricula and putting on new courses. Employees who continue developing and keep abreast of changing requirements are expanding their skill sets all the time, and staying up to date. And companies that invest in ongoing training for their staff gain a competitive advantage from doing so.

The initial academic training for the next generation of finance specialists – for example, on undergraduate and masters programmes – is more formal than continuing training or CPD. This makes academic programmes less responsive to changes in the professional environment, although they are gradually adapting. For example, academic courses are expanding the basic skill sets they teach – such as financial and operational accounting and risk management – and underpinning it with new skills, such as data handling skills and competencies in ERP systems. Increasingly, digital skills go hand in hand with sustainability skills, so the next generation of financial experts and managers is being equipped with tools to identify and tackle the challenges of sustainability that they and their companies will face in the coming years.

Deloitte: Research such as the CFO Survey often cites the skills shortage as one of the greatest risks that companies face. Are we training enough experts for the finance function in Swiss companies?

Markus Gisler: At the Institute of Financial Services Zug (IFZ), we train candidates who are interested in a role in finance and meet the entry requirements for this career path. Those who pass our examinations obtain a recognised qualification in finance. However, we are seeing fewer young people wanting to train for a traditional finance role. They have a wider range of courses to choose from, and demographic change plays a part. And the economic cycle also influences the numbers of people in training.

Companies, of course, would like as many trained and qualified experts as possible, as this enlarges the pool of potential applicants for vacancies and helps contain wage inflation. That’s why I would appeal to companies to promote continuing training and CPD for their staff. That will ensure they have more skilled staff to choose from and enhance their ability to attract talent in the jobs market.

Deloitte: There has been a shift in interest rates, and for Switzerland this comes with the long-term bonus of offering lower rates of interest than other countries. What will this mean for corporate finance in Switzerland? Are companies prepared for this shift from near-negative to positive interest rates?

Markus Gisler: Operational accounting uses interest rates as a tool for deciding which investments will be more profitable. However, over the years during which interest rates were close to zero, this information became largely irrelevant, and companies did not always pay sufficient attention to the return on investment. Lots of projects secured financing despite offering poor returns.

Things have now changed, and the increase in interest rates is highlighting sharper distinctions between companies, and revealing which companies are better prepared for the change. Projects that would just about have broken even in the past will now find that higher interest rates make it more difficult to justify investment and secure financing. Meanwhile, companies that have followed the traditional principles of finance and insisted on a high return on their investments will reap the rewards. And that’s how it should be. It’s good news both for individual companies and for the economy as a whole.