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What Does a Finance Function Do in a FinTech?

finance operations fintech

The definition of Finance is meant by the process of providing funds for business activities, purchasing, or investing. The Finance function of a FinTech startup oversees the finance and accounting aspect of the business with the goal of ensuring business remains in strong financial health and to deliver all reports in an accurate and timely manner. The Finance function also encompasses financial planning, forecasting, cost-benefit analysis, and relationship management with investors to secure funding. A Finance function is needed by its company to:

  • Help establish the business by determining and planning what is needed to sustain the business financially
  • Help run the business to ensure it can continue operating, which includes catering to day-to-day operating costs
  • Help expand, modernize, diversify which the Finance function will be able to help to determine and acquire the funds when to do so

The Finance function exists to help the company understand its financial sources and funding needs of the company, this is critical for startups who are amid of raising and seeking funding actively. The Finance function will be able to help to choose the best source of financing that the business needs. For matured companies, Finance function will help to maintain the financial health of the company, by ensuring the efficient, effective and profitable utilization of funds.

Who Leads the Finance Function? 

The Finance function is typically led by Chief Financial Officer (CFO), the responsibilities can include supporting of technological transformation from a financial standpoint and helping to steer the strategic direction of the firm. The CFO is responsible for analysing and reviewing the company’s financial data, financial performance reports, preparing budgets and monitoring expenditure and costs. CFOs oversees anything-financial within the company as they help to support the COO on a strategic standpoint on certain matters like, cost-benefit analysis, securing funding and budget management.

What Does an Operation Function Do in a FinTech?

finance operations fintech

Business operations referred to collectively anything and everything that happens within the company that keeps it active and profitable. The Operation function of a FinTech startup generally works towards developing internal policies and processes to better streamline the work within the organization. The Operations function helps to analyze the company’s finances, spending and manage resources. It also monitors the performance and efficiency to pinpoint improvements and address any issues. An Operations function is needed by the company to:

  • Help monitor the company’s performance and efficiency
  • Assist in strategic planning and resource allocation
  • Coordinate activities across all departments of the company

Chief Financial Officer, or CFO is responsible for analyzing and reviewing the company’s financial data, financial performance reports, preparing budgets and monitoring expenditure and costs. CFOs oversees anything-financial within the company as they help to support the COO on a strategic standpoint on certain matters like, cost-benefit analysis, securing funding and budget management.

Who Leads the Operations Functions? 

The Operations function is typically led by Chief Operating Officer (COO), the responsibilities depend largely on the nature of the business with a focus on operationalizing strategy. The role is tasked to implement daily operations to align with the company’s strategy and goals.The COO is responsible for the day-to-day operations within the company. The COO is responsible for the day-to-day operations within the company, that can encompass activities relating to marketing, sales, staff management and more. Or even, take on a collaborative role with the CFO to improve and discuss the company’s financial situation. COO is expected to have a strong knowledge of many aspects of the business. Apart from good communication skills, COO should have experience in strategic planning, resource management, accounting and team leadership and a broad set of skills. COO’s role can occasionally overlap with a CEO’s as they are expected to complement the job scope of a CEO.

What Are The Key Differences Between CFO and COO?

finance operations fintech

A role of a COO is dependent on the CEO and company’s needs as the role is responsible for the daily operations of the company while the CFO limits its area of concern to primarily within the financial growth and progress of the company, keeping track on the financial strengths and weaknesses of the company as they look to increase the financial growth of the company. While the CFO’s role is unlikely to completely overlap a COO’s role, a COO’s role and responsibilities at times might require him/her to step within the financial boundaries of the company to execute his/her role properly as operations within the company include understanding and taking care the financial health of the company. A role of a COO is dependent on the CEO and company’s needs as the role is responsible for the daily operations of the company while the CFO limits its area of concern to primarily within the financial growth and progress of the company, keeping track on the financial strengths and weaknesses of the company as they look to increase the financial growth of the company. Finance function help to provide information necessary for the continued operations of a business, while the Operations function oversees the execution of day-to-day tasks. A CFO’s role main priority would be profitability that is dependent on a company’s finances while a COO prioritizes efficiency in their decision-making that is dependent on their company’s employees and general operations management. While the CFO’s role is unlikely to completely overlap a COO’s role, a COO’s role and responsibilities at times might require him/her to step within the financial boundaries of the company to execute his/her role properly as operations within the company include understanding and taking care the financial health of a company.

The Importance of Finance and Operations Functions in a FinTech

When speaking with most of our clients, we noticed that it is a common challenge to understand the different goals that each function is working towards. There is often a misconception that the Finance and Operations function do not overlap, this can often result in miscommunication and misalignment of goals when moving in a fast-paced industry. For a FinTech firm operating in a high-growth industry, having a strong Finance and Operations function should be a necessity rather than a luxury for the company. While every FinTech firm might have their own definition of growth and success, the core of every goal is a technology-enabled finance function. These functions will be able to help the company to seamlessly manage cross-border activity and incorporate new products from a business standpoint. A FinTech firm evolves and grow over time, the functions are expected grow and evolve with it as well. For example in cases of:

  • Scaling into a new operating country with new accounting rules and currencies for Finance function to adhere to
  • Securing a partnership or client that require financial information as part of their third-party risk management activity
  • Investors seeks extensive information before funding
  • Regulating the increasing expectations from regulators, investors, and auditors as your firm scales
  • Preparing for an IPO that would require comprehensive, timely financial information with robust financial controls

The Finance function is relatively straightforward as they can be broken down into the common, traditional aspects of accounting, finance, and treasury functions. The job scope within different FinTech subsectors will remain similar. For example, accounting in a trading firm or payments firm is still primarily doing the same things such as preparing daily, monthly, and yearly statements etc. As compared to the Operations function, it can get more confusing within FinTech firms as the job functions varies within different subsectors. For example, in asset management or trading firms, the Operations function will be required to have experience in KYC/AML while the job scope for an Operations function in a payments firm will not require that and will be quite different.

“The Finance and Operations departments play a crucial role in the success of a business. The Finance department provides the relevant information required for the continuous operations of a business such as making sure that the cash flow is steady and that funds are secure and invested for long-term gains. On the other hand, the Operations department manages the execution of daily tasks as well as acts as the core of an organisation, overseeing various functions of a business.”

Matthias Sim, FinOps Recruitment Associate for Storm2 Singapore

Strong Finance and Operations functions would mean having an ideal C-Suite matrix and team structure to pave a successful roadmap to your success. At Storm2, we know it is important to find the right Finance/Operations hire that complement with your company. Our FinOps specialists can advise further on how you can make the right hire and to provide you with the right talent pool that will lead your company to success. Get in touch to speak with our recruitment specialist now!