By Tom Forrest, Managing Director, Sheffield Haworth and Tom Arnall, Director – Retail, Consumer, Financial Services & Fintech, Sheffield Haworth
The world of retail financial services is changing constantly. Thanks to the ever-evolving regulatory environment, digital banking becoming native, and the rise of challenger banks and disruptors in the credit and payment space, the range of skills needed in the C-suite are broader than ever. Not to mention the need to focus on commercial goals in the wake of the pandemic.
Several retail financial services firms have responded by appointing Chief Commercial Officers (CCO). Although still a relative novelty in consumer retail banking, the CCO role looks set to become much more common in the months ahead.
But is this really a new role and is it really necessary for firms to hire one? Or is it just a new name for a skillset that’s always been around the exec table? If this is new, what should firms look for in a Chief Commercial Officer?
On the surface, the Chief Commercial Officer is a multi-faceted role that combines knowledge of digital, technology, product, sales, customer experience, risk, and finance. In practice, what a CCO does can vary from organisation to organisation.
The case against taking the CCO seriously
For some in the market, the CCO is just another example of “bullshit bingo”. In the same way that a Chief Revenue Officer is responsible for sales, or a Chief Growth Officer is responsible for marketing, it sometimes appears as though the CCO is nothing more than a new name for a position that combines existing responsibilities.
For others, the CCO is an example of importing an idea from the fintech world that lacks substance. One CEO pointed out that it’s not unusual in fintech for CCOs to have less than 10 years’ experience out of university. According to this argument, the CCO may be running before they can walk.
The case for why the CCO is necessary
On the other hand, some in the market say the emergence of the CCO is driven by the need for organisations to renew their focus on how they will hit their financial goals. As financial services are increasingly digital product-led, the ability of the CCO to understand and adopt Agile ways of working across an organisation will become ever more important.
According to this argument, the CCO could emerge as the single most important C-suite executive after the CEO. The CCO takes the pressure off the CEO by thinking creatively about the commercial relevance of all aspects of the business. This is a breadth of coverage that no other accountable executive would have.
There are two reasons to support this point of view. One is that the CCO is important because the role combines so many business functions and views them through the lens of the customer.
CCOs must be connected to the market and the customer in a way that no other executive is, viewing everything the business does from that customer perspective. This is vital in an increasingly digital world for organisations that wish to grow their customer base and customer lifetime value.
The second reason is that, by combining oversight of customer experience, operations, sales, product, policy, risk, governance, and technology, the CCO works to break down siloes across the organisation, leading to more operational efficiencies and leveraging synergies across the business.
Put another way, this kind of role may have existed in organisations previously, but it was typically split across different functions and areas, which limited their commercial effectiveness.
CCOs could make the difference between future success or failure
From our perspective at Sheffield Haworth, we are indeed seeing the rise of a new ‘rockstar’ executive role. Firms that get the right person as CCO are the ones that will be best able to go from having great ideas, successful customer acquisition, and impressive – but potentially unfounded – valuations, to becoming truly sustainable and profitable firms over the long term.
What NOT to look for in a retail financial services CCO
It is easy, but possibly misleading, to look at the technology, customer, and product aspects of a CCO’s responsibilities and lean heavily on these when hiring for the role.
However, while we don’t want to name names, recent events have shown certain challenger banks and credit or payment fintechs running into trouble. They have achieved stellar customer acquisition numbers and stellar valuations to match. Yet they now seem to be struggling to turn this early success into sustainable profit.
What’s more, owing to the complex nature of financial services regulation, some fintechs are also struggling to meet their legal obligations when it comes to Anti-Money Laundering, Know Your Customer, and Treating Customers Fairly.
What to look for in a retail financial services CCO
In the end, what an organisation needs in its CCO will likely vary according to the nature of the business. An incumbent financial services firm will likely benefit from an injection of commercial nous, product knowledge and technology experience to boost the C-suite’s existing knowledge of traditional finance and complex financial regulation.
A high-growth fintech leadership team by contrast, will more likely benefit from a boost in the areas of regulation and traditional finance. A fintech won’t be able to evolve into a sustainable, profitable business without the skills to leverage higher margin products while also satisfying the regulator.
Remember, however, that in order for the CCO to break down siloes and be truly successful, they really need to combine all of these traits. From what we’re seeing in the market, it’s that rare combination of technological and commercial instincts with solid financial and regulatory experience that will become increasingly vital for success.
If it’s true that the CCO is going to become the most important executive role after the CEO, then it’s worth spending longer to look for the right talent to fill that role. The fact that it’s difficult to find people with the exact blend of skills needed seems to us like proof that the CCO role – when considered in the right light – is indeed a new role, and one that the successful financial services firms of the future need to get right now if they want to build the foundations for that success.