CFOs as Strategic Architects: Navigating Transformation in Financial Services

February 3, 2025 – Financial services organizations, generally, are facing a new competitive market, regulatory challenges and a constant struggle to manage cost and efficiency. This requires strategic leaders, both men and women, with a multidimensional skill-set and competencies that often go above and beyond any typical job description.
CFOs play a pivotal role in navigating this evolving sector, serving as strategic architects of financial stability and growth within organizations. Beyond their traditional responsibilities of overseeing budgets and ensuring regulatory compliance, today’s CFOs are increasingly tasked with driving innovation, leveraging data analytics for informed decision-making, and fostering cross-functional collaboration. Their ability to balance cost management with strategic investments positions them as critical enablers of organizational resilience and competitive advantage. As financial services organizations face mounting challenges, effective CFOs must combine technical expertise with visionary leadership, adaptability, and a deep understanding of market dynamics.
“The financial services sector is grappling with several transformative challenges,” said Michael Henry, managing partner with Massey Henry. “Among the most pressing is the increasing adoption of AI and automation, which is reshaping traditional roles and demanding a workforce skilled in advanced technologies. AI integration is particularly significant in areas like fraud prevention, customer experience, and operational efficiency, requiring organizations to reimagine their workforce strategies.”
“Another critical challenge is balancing hybrid work models,” Mr. Henry said. “While the shift has expanded the talent pool, it has also necessitated policies that ensure cultural cohesion and productivity across diverse work environments. Additionally, demographic shifts, including the impending retirement of senior leaders, amplify the urgency for succession planning and next-generation leadership development. Geopolitical and economic uncertainties also weigh heavily, impacting capital markets, regulatory landscapes, and overall business stability.”
Mr. Henry explained that these challenges make executive search much more complex and competitive in the sector. “The demand for leaders adept at navigating technological disruption and economic volatility has heightened,” he said. “Clients now seek executives who can drive digital transformation, implement AI strategies, and ensure cybersecurity resilience. Within boards, for example, there is an increased need for competencies related to effective capital allocation.”
The competitive hiring landscape has also pushed executive search firms to streamline their processes, according to Mr. Henry. “Lengthy hiring cycles often result in losing top candidates to faster-moving competitors, emphasizing the need for agility,” he pointed out. “Moreover, evolving candidate expectations—such as the desire for strategic impact, leadership autonomy, and flexibility— require tailored approaches in sourcing and engaging talent. Firms must align with these priorities while addressing broader challenges, such as succession planning in the face of a leadership exodus.”
Driving Growth
“For CFO and senior finance roles, the emphasis is on strategic acumen, adaptability, and leadership,” Mr. Henry said. “Candidates must demonstrate a proven ability to drive organizational growth through financial planning, risk management, and operational efficiency. With M&A activity and digital transformation reshaping the sector, CFOs must exhibit expertise in complex deal structuring, scaling operations, and leveraging emerging technologies. Strong interpersonal skills are equally important. The CFO’s role has evolved beyond numbers; they now act as strategic advisors to CEOs and boards. This requires exceptional communication abilities, stakeholder engagement, and a collaborative approach to leadership. A track record in navigating high-stakes challenges, such as financial turnarounds, further distinguishes top candidates.”
Mr. Henry also noted that evaluating candidates for these critical challenges involves a combination of behavioral assessments, track record analysis, and scenario-based questioning. “For M&A, we may assess a candidate’s experience in due diligence, integration planning, and managing post-merger cultural alignment,” Mr. Henry said. “These factors ensure not only financial success but also long-term organizational stability. When assessing scalability, we look at their ability to design and implement systems, processes, and teams that support exponential growth. This includes leveraging technology and fostering a culture of innovation.”
For financial turnarounds, candidates are evaluated on their problem-solving skills, ability to manage under pressure, and stakeholder communication, Mr. Henry explained. “Tools like psychometric assessments, including Hogan, help uncover personality traits and tendencies that predict success in these high- stakes situations,” he said. “Ultimately, the goal is to ensure that the candidate is both technically competent and culturally aligned with the organization.”
“One of the most significant challenges (and opportunities) is defining strategy, investment, and implementation around emerging AI technologies,” said Michael Sarnoff, managing director and practice leader, financial services, at DSG Global. “Key considerations include how AI can enhance client and customer experiences, how it can augment internal processes, and a thorough evaluation of short- and long-term cost-benefit implications. This also has major repercussions for current and future talent acquisition. The continued uncertainty around interest rates, coupled with potential shifts in the new administration’s policies on tariffs, may have a chilling effect on growth and hiring within the sector.”
Mr. Sarnoff also noted that the rise of AI has driven increased demand for specialized engineering and technology professionals. “However, it has also highlighted the need for business leaders who can think critically about AI use cases and foster an innovation mindset,” he said. “As a result, organizations are seeking leaders who may need to be developed internally or sourced from outside the financial services industry.
When asked what qualities or skills Mr. Sarnoff prioritizes when identifying top candidates for CFO and senior finance executive roles, he said that today’s CFOs must go beyond tactical execution and serve as strategic partners to the board and CEO. “They need to deeply understand the business and help shape its future direction,” he said. “Effective finance leaders must also leverage technology and refine processes to drive efficiency and elevate the finance organization. A modern CFO must be an empathetic leader with strong emotional intelligence and a dynamic approach to managing and inspiring people.
In an increasingly complex environment, DSG Global places significant emphasis on a candidate’s track record. Have they successfully led and executed against the specific challenge in question—whether it’s M&A, scaling during a high-growth phase, or managing a complex restructuring? “It’s also essential to align the candidate’s experience with the organization’s immediate needs,” Mr. Sarnoff said. “For example, some candidates excel at driving growth, while others are better suited to turnaround situations. Typically, an individual will not be equally adept at both. Ensuring the right match for the organization’s current stage in its lifecycle is critical.”
Dana Feller, founder of Hudson Gate Partners, has mostly clients in small-to-medium size alternatives funds. “The role of CFO at these funds really requires an executive who has the ability to see both the big macro picture of the business and also the micro details,” she said. “We are always looking for candidates who are excited to roll up their sleeves and get their hands dirty on the micro side of the business. CFO candidates who have the experience to improve upon processes and make them more efficient are highly valued in the market. Top candidates must also have a high EQ and high IQ, and have the proven ability able to manage both up and down. Stellar CFO candidates will think outside the box and have a broad range of expertise beyond finance (operations, administration, compliance, tax, etc.).”
“Finally, in order to make a successful placement, the culture and needs of the firm must be a match with the CFO candidate,” Ms. Feller said. “The head of Hudson Gate’s Finance Recruiting Practice, Dawn Magnotta, has deep career experience in both accounting and bond sales at Merrill Lynch and Lehman Brothers. Dawn and her team have a very strong understanding of a CFO’s duties and responsibilities, and they expend a great amount of effort finding our clients the best of the best CFOs.”
Significant Challenges
“The financial services industry, especially for small to mid-sized PE- backed firms, is grappling with several significant challenges,” said Elisa Sheftic, president and managing partner of Right Executive Search (RES). “Rising interest rates, inflation, and market instability are putting immense pressure on profits, revenue, and funding availability. Additionally, complex regulations require smaller businesses to allocate more resources to compliance, often at the expense of growth and innovation. This is especially unfortunate given the rapid advancements in financial technology, where investing in digital transformation is critical to staying competitive.”
These challenges have fundamentally changed the approach to executive search in financial services, which is the firm’s area of expertise at RES, according to Ms. Sheftic. “Building a strong candidate network through deep industry connections has always been a priority for us, and it is now more crucial than ever,” she said. “With the growing demand for leaders who combine technical expertise with strategic thinking and adaptability, recruiters must assess soft skills and cultural fit alongside technical qualifications. For instance, PE-backed firms often require leaders who can pivot and thrive in fast-paced, resource-constrained environments. Identifying such candidates requires time, effort, and a commitment to networking even more than ever before.”
“For C-suite and senior finance roles, we prioritize strategic leadership, operational expertise, and a proven track record in PE-backed environments,” said Ms. Sheftic. “Candidates must demonstrate experience in M&A, including deal structuring and integration, as well as scaling businesses and optimizing processes. Strong communication skills are also essential, as finance leaders need to effectively engage with investors, boards, and internal teams. Resourcefulness and the ability to adapt in dynamic environments are critical traits. Finally, cultural fit is a top priority; ideal candidates exhibit a leadership style that fosters trust, collaboration, and alignment with the company’s core values.”
Ms. Sheftic explained that RES employs a comprehensive, multi-faceted evaluation process tailored to the demands of each role. “This process aims to provide an accurate “whole person” perspective on each candidate,” she said. “Behavioral interviews allow us to understand how candidates have tackled similar challenges in the past, focusing on measurable outcomes such as revenue growth, cost reduction, or successful integrations. We also use case studies and role-playing scenarios to assess problem-solving skills, decision-making, resourcefulness, and performance under pressure. References from former colleagues and managers offer additional insights into their leadership style, adaptability, and overall impact. Lastly, we evaluate cultural alignment to ensure the candidate’s values and approach are in sync with the hiring organization’s needs. Collecting multiple data points throughout the recruitment process is key to ensuring a thorough and accurate assessment.”
The financial services sector faces several pressing challenges, according to Andy Miller, CEO of BrainWorks. “Navigating interest rate fluctuations is a major concern, as changes in rates—whether up or down—have ripple effects that negatively impact various sectors,” he said. “Retaining top talent has become increasingly difficult, with aggressive bonus offerings creating significant pressure on hiring leaders and compensation committees. Macroeconomic pressures, including national debt, are affecting economies globally, leaving many countries unprepared for long- term consequences. Finally, cryptocurrency adoption remains a pivotal question: will the US take the lead in shaping the future of cryptocurrency regulation or distribution?”
Mr. Miller explained that the current environment has made executive search more competitive than ever. “Investment bankers are being heavily recruited into private equity, while private equity firms dominate mid-market recruitment, intensifying the competition for top talent,” he explained. “Elevated compensation packages, including equity incentives, are causing strain on companies’ EBITDA, adding financial stress to hiring organizations. This has shifted priorities, with organizations increasingly focused on leaders who can balance ambitious growth objectives with strategic cost management.”
When identifying CFOs and senior financial executives, BrainWorks looks for key qualities. “First and foremost is the ability to translate complex financial data into actionable insights and effectively communicate with all stakeholders, from staff to board members, to drive confident decision-making,” Mr. Miller said. “Leadership charisma is essential—a candidate needs to command the room in settings ranging from staff reviews to town halls and board meetings. Financial acumen is critical, especially in navigating leveraged environments, optimizing working capital, strengthening balance sheets, and maximizing margins. Lastly, we place a strong emphasis on retention—a proven ability to build and sustain high-performing teams is non-negotiable.”
Finding Finance Experts
BrainWorks’ evaluation process is centered on quantifiable outcomes and detailed examples. For M&A, the firm asks candidates to share specific examples, including the number, size, and scope of transactions they’ve managed, as well as their role in each stage— pre-deal, during the transaction, and post-close—and the measurable value they added. “For scaling operations, we dig into their metrics such as headcount growth, revenue increases, and the development of divisions or business segments,” Mr. Miller said. “When it comes to financial turnarounds, we focus on understanding the stories behind their successes, such as the strategies they used, their personal contributions, and the outcomes. Above all, we confirm the ROI and tangible value they delivered in every scenario.”
A View from Overseas
“During periods of economic stagnation, the financial services market undergoes complex changes,” said Lorri Lowe, managing partner U.K., with Friisberg & Partners International. “The first half of 2024 posed particular challenges for the financial services sector, not only in Europe but globally, due to concerns about geopolitical instability and high interest rates.
As a result, there was a noticeable shift towards shorter-term fixed-income products and structured financial solutions, reflecting the new economic realities.”
“In 2024, the European financial services sector faced a complex mix of opportunities and challenges influenced by regulatory, technological, and macroeconomic factors,” said Elena Maysyura, senior partner, Ukraine, with Friisberg & Partners. “Despite these economic headwinds, mergers and acquisitions activity remained robust in subsectors such as asset and wealth management, private equity, and insurance brokerage. Companies pursued acquisitions to scale up, enhance their digital capabilities, and diversify their portfolios, particularly in alternative assets and sustainability-focused investments.”
“When identifying top candidates for CFO and senior finance roles, we focused on a blend of strategic, technical, and interpersonal skills tailored to the organization’s specific needs,” Ms. Maysyura said. The most important skill we identified was Visionary Leadership. Effective CFOs serve as strategic partners to the CEO and the board, helping to shape long-term business strategies and aligning financial goals with the company’s mission. In organizations undergoing change, CFOs also need to lead operational and financial transformations, which include cost optimization, restructuring, and the implementation of innovative technologies.”
Industry expertise can be another crucial factor, according to Ms. Lowe. “A strong understanding of sector dynamics, the competitive landscape, and regulatory requirements enhances a candidate’s ability to anticipate trends and guide decision-making,” she said. “Experience in M&A and fundraising is often desirable, especially for growth-oriented organizations where such expertise is critical to securing financing and facilitating successful transactions.”
Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor – Hunt Scanlon Media