In the asset management sector gaining even the smallest advantage is key to overall success.
When in 2013 Kobler arrived at Allianz Global Investors, one of the world’s largest fund managers by assets under management, he began the task of finessing the finance function in order to drive value across the firm.
His mandate was effectively two-fold. Firstly, it was to unify the finance team that was based across more than 15 locations in a business drawn together the year before from various asset managers under the Allianz umbrella. Secondly, it was to upgrade the finance operation so that through the right tools and people it could make AllianzGI as competitive as possible.
The Finance 2.0 initiative completed last year, designed with outsourcing giant Infosys, involved a finance transformation programme that reduced headcount by around a third and operating expenses in absolute terms by about 10% at a time when the group doubled operating profit. “We also brought the number of IT applications down from about 50 to 12 on a globally harmonised platform,” says Kobler.
Since then things have got tougher. In the last six months asset managers, indeed the financial services sector, has been under pressure from market volatility and changing investment patterns, says the Swiss national. “The organisation requires a strong finance function that it is able to support the business in taking the right decisions, says Kobler, who previously worked for Swiss private bank Julius Baer for 11 years.
Kobler sought to make finance forward looking so that it could support better the whole group. “Five years ago, finance was a data provider that was backward-looking, that is not good enough anymore,” he says. Five general ledgers were reduced to one covering 30 legal entities and about 1,000 cost centres to make communication of data easier.
He says analysis from data on its own is not good enough as business sometimes struggle with financial information, they’re not at the same level of financial literacy. “You need to be very clear on how you present analysis, then you make clear recommendations, it’s not just a 50-page document, otherwise its leading to nowhere. You’d rather go in with five pages and have clear recommendations, what you expect,” he says.
Kobler gives the example of the contribution margin analysis, AllianzGI’s finance team undertakes every year. “We’re asking, what is the profit contribution these different teams are providing and what is the benchmarking of the team compared to other regions, and compared to third party information?”
“Then you make a recommendation if one team is less productive than the others, is providing less profit. Is there a link because the team is less productive, not generating enough profit or is the team too expensive? So do you generate more revenues or reduce team size by 25%?”
Ultimately it comes down to the impact finance people can make if they provide clear recommendations. “You need to establish the trust of your business counterparts,” he insists.
To drive the transformation Kobler, who describes himself as a big fan of 6 Sigma, says its crucial to have an architecture “for where you want to go”, although he recognises that legacy systems and budget will be factored in.
He says he has learned from observing finance functions in other companies “that sometimes you start the wrong way as a finance professional because you are under pressure from the business,” he says.
He says that instead its important to explain to the business that although their needs are understood finance needs to be in control of the flow of information. “You can start with processes or you can start with the back end or data. We started in the back end, providing charts of all the costs globally aligned, of all legal entities and function reporting entities. It took us about three years to implement,” he says.
In some areas where finance is providing management information to the group, the process is still conducted manually on different systems, but a move to implement SAP Ariba procurement software, aided by RPA and AI should speed things up.
But ultimately it is the quality and the approach of members of the finance team, using the tools available, that will drive value, says Kobler. From the start there was a focus on using internal people rather than consultants. “We said let’s do it with the talent we have. It has given us a very strong culture and ownership from our existing staff because they built the infrastructure themselves,” he says.
The challenge was bringing staff out of local and regional silos to a point where they were trusting each other, says Kobler. “For example, when I joined there were two quite senior middle managers in the finance team, both with more than 20 years’ experience in finance at Allianz, who had never met each other face-to-face. We brought them together to work globally on projects,” he says.
A critical issue has been gathering finance professionals with good tech skills. “What we need now and what we are looking for in addition to finance skills are technology skills.
“The message to our people in-house is that just being an accountant in-house is not enough. They need to get trained on data handling, process improvement and robotics. Such knowledge is very scarce in the market, but we can find them, because we are in the privileged position as a financial services company to pay people good compensation,” he says.
The diverse approach
In order to think in new ways to drive value at AllianzGI, Kobler says an increasing emphasis on diverse teams is being promoted in finance. The exercise, to produce teams of culturally different finance professionals with focused and flexible approaches was aided by the introduction of coaching methods.
How middle managers interacted with senior management was analysed in a project undertaken by Google called Aristotle, in an exercise in 2012-13 analysing performances across the teams. “They checked diversity, culture and educational background to see why a team is performing well compared to another that is not performing so well,” says Kobler.
“A key factor is called ‘conscious culture’, when you can be yourself- not being afraid of making the point you want to make, to speak your mind, the way you address and think about things. That’s when you feel comfortable, when you have the trust, the values and respect of people.
“In the last year and a half, we’ve been doing a lot of stuff to improve the conscious culture in the finance team, where half the team is female. Engagement has increased dramatically. Working with conscious culture is helping us to attract good talent from outside,” he reveals.
Looking ahead, Kobler says he expects humans to play a big role in finance, despite predictions that in a decade most finance jobs will be undertaken by robots or machines. “I do not believe that 90% of what we do in finance can be done by machines.
“I think it’s a combination of human beings together with the tools in place which are going to help you. The most successful hedge funds for instance use machines in their quant methods, but it’s the right people together with the right infrastructure that delivers results,” he says.
AI and robotics will feature more heavily in enhancing both the efficiency and quality of projects within finance at AllianzGI, says Kobler. “That is our next journey,” he adds.
“I don’t want to rely on a yearly budget process only; I want to have rolling projections. Instead of individual assumptions that are produced today, the right technology could take information from all cost centres, analyse the seasonality of payments and transactions and produce better and faster projections. That’s where I want to go with the team,” he says.
Markus kobler is participating at this year’s CFO Agenda.
For Finance, 2019 marks the start of a new world where the proactive leaders will be at the helm, navigating their businesses safely through the changes. Join us at this year’s CFO Agenda on 7th May in London to network with 200+ CFOs, FDs, and Heads of Finance to drive growth and meet the future with confidence and certainty. To learn more and register, please, visit: https://www.thecfoagenda.com/