Driving digital transformation in finance – and beyond
Digital transformation coupled with a fierce war for talent are two macro-trends reshaping finance. This makes the discussion with Jennifer LaClair, CFO of Ally Financial, a leader in the digitization industry, particularly relevant at this time. I asked LaClair how Ally applied its digitally-driven consumer practices to its internal finance operations. Additionally, LaClair explained the efforts of Ally’s finance function to maintain the engagement of high-value professionals with the company. His remarks offer important lessons for any financial professional navigating a changing financial landscape.
Jeff Thompson: Ally Financial has been a leader in digitizing consumer experiences and back-end functions. How did Ally, an institution more than a century old and far from being “digital natively”, manage such a digital transition in the modern era? What role has the finance function played in this digital transformation?
Jennifer LaClair: Ally was launched as a fully digital bank in 2009 and has gradually grown into the largest direct bank and one of the top 20 financial services companies in the United States. Digital is in our DNA; we apply this inherent advantage to the entire franchise, including our core automotive and insurance businesses. We always seek to challenge the status quo, asking what and How? ‘Or’ What we can bring differentiated products and experiences to customers.
This quarter, our Auto segment achieved the highest percentage of digitally approved apps, helping to accelerate decision-making and improve the dealer and consumer experience. The challenges faced in 2020 have given us several opportunities to deliver on our brand promise to ‘do it right’, including launching one of the largest, most comprehensive and digital consumer auto-opt-out programs. of the sector. With just a few clicks, customers could opt-in and manage payments seamlessly.
The CFO function plays a vital role in driving Ally’s digital transformation. We work closely with IT, strategy and business leaders to assess business opportunities and ensure the most efficient allocation of investment and capital. The finance team continually redesigned processes to focus on transformation, rather than repeating traditional processes that slow execution. For example, we’ve significantly streamlined the annual budgeting process, historically involving over 400 transfers and requiring 15,000 hours, to allow teams to think bigger and think outside the box.
The CFO function has also adopted its own digital transformation. By reshaping our support functions with the same digital approach that defines our direct-to-customer activities, we can fully leverage the potential of our teams to support Ally’s growth. The pandemic has also underscored the importance of real-time data and analytical speed and agility. In 2020, we partnered with IT to launch an in-depth multi-year financial transformation program to modernize our processes, redesign our technology, and improve the skills of our people through a digital CFO academy.
Thomas: During Covid, many companies had to quickly ramp up their technology investments to give employees the technology tools they needed to perform critical functions. How far off the technology continuum was Ally when Covid hit and has this made it easier for finance to perform functions like remote financial close? As a CFO, what role does technology empowerment play in managing risk for finance, as well as for your entire organization? How has technology improved the ability of finance to be productive?
LaClair: In March 2020, Ally moved nearly 10,000 teammates remotely in a matter of days. We are proud of the way our teams have worked together to obtain the tools necessary to operate efficiently. As we all faced the ambiguity of a global health crisis, our teams demonstrated incredible resilience – and I think that reflects the preparedness and mindset we have as a company that values innovation and technology. Specifically, our CFO team experienced no drops in productivity, including no issues when performing a fully remote financial close for the first time, alongside implementing the expected credit losses. current (CECL), one of the most significant accounting changes in decades.
In addition, the CFO function has leveraged creative and innovative digital communications to enhance connectivity and engagement, launching a variety of opportunities to ease tensions and increase dialogue among teammates, leaders and other areas of the business. the company. We have created over 150 Zoom exhibition opportunities for our teammates in 2020, and we have had an overwhelmingly positive response to our monthly town halls and 14 “Unplug” events, leading to increasingly higher engagement scores that have exceeded pre-Covid levels.
On the business side, my team worked closely with IT to identify areas for additional investment to strengthen risk management, including adding security and cybersecurity resources. We’ve collaborated across functions to understand the risks of working from home within Ally and our third parties, and implemented new real-time monitoring tools.
I expect that we will continue to learn, improve and evolve as we emerge from the pandemic. For example, as we return to the office, we initiate focus groups to make sure we “get the good news” from our remote experiences. Advancing data and technology will remain critical as we execute our next generation financial transformation, which I am confident will enable us to attract and retain top talent, support agile decision making, improve data integrity and improve financial transparency and execution.
Thomas: As more finance and accounting tasks are automated, finance and accounting professionals have been challenged to hone their skills in areas such as data analysis or predictive modeling. As CFO, how do you manage changes in working methods, especially when they involve job losses or transactional activity losses? How do you encourage your team members to take on tasks they weren’t necessarily trained or equipped for?
LaClair: I take pride in my team’s ability to adapt and succeed, especially through many years of unprecedented change. Since our IPO in 2014, Ally has continued to transform its business and balance sheet in a dynamic macroeconomic environment and intense competitive pressures. We have always managed these changes through our culture, talent leadership and technological innovation.
Our underlying drive across the business to be (even) better is a simple reminder to our teammates to build on past accomplishments as we move towards a better future. One way to do this is to learn from our colleagues. We strive to help connect the dots, placing talent at the center of our approach and creating opportunities for our team that allow them to grow, celebrate wins and embrace a mindset for improvement. keep on going.
For example, we have an “I’m an Ally” at the company level, start CFO staff meetings with 15 minute diverse talent features, and have established ongoing talent planning routines, keeping talent leadership at the forefront. This allows us to recognize excellence, broaden the employee experience and foster positive change. In large part as a result of these efforts, attrition levels within the CFO group are minimal, a key advantage in a very tight labor market. Recent trends indicate that nearly a third of our finance team is promoted to new positions each year.
We also continued to innovate as a function. For example, we’ve grown from a purely quantitative modeling team to a multidimensional team of econometric quants, software engineers, and data scientists, who are transforming the way we design and execute complex credit risk modeling. We recently migrated 15 years of data to a cloud-based platform, reducing runtime from days to hours. This talent and technology-driven approach has allowed us to better understand business risks, create stronger and more efficient processes, and reallocate time spent from manual efforts to more value-added information in real time.
By setting clear expectations, providing strong leadership in talent, and constantly evolving through technology, we not only strengthen our role as CFOs, but we enable the company to accelerate its growth.
This article has been edited and condensed.