In an exclusive interview with BW CFO World, Mukti Hariharan, CFO, Lenskart, delves into the challenges and opportunities of pioneering financial innovation. From risk mitigation strategies to fostering a culture of change, Hariharan shares invaluable insights into navigating the evolving landscape of finance leadership
What are the biggest challenges and potential risks associated with financial innovation? How can leaders mitigate these risks while promoting progress?
Typically, any financial innovation requires working with systems that are used in day to day running and hence the implementations need to be right first time with limited margin of error. Due to high stakes, scalability and robustness of systems and innovations is an imperative. Keeping pace with the evolving regulatory environment and cybersecurity challenges is also critical for financial innovations. There could be unforeseen operational challenges that might lead to system outages and other execution risks. Anticipating and managing these risks while adopting financial innovations is an extremely important part of the jobs of finance leaders.
Collaboration, transparency and continuous monitoring are key to ensuring that financial innovation delivers meaningful benefits while minimising potential downsides.
What are the most significant trends you see shaping the future of financial innovation?
Digital transformation of financial systems and processes is a multiyear trend that is really shaping the evolution of new finance organisations. This would help elevate the role of finance functions across organisations and would improve the speed and accuracy of delivery of regular tasks. (Artificial Intelligence) AI and Machine Learning (ML) and their implications for financial systems is also a promising trend. There is significant development work that needs to be done for this trend to scale. This could potentially simplify recurring repeat activities and reconciliations and could bring a lot of speed to financial reporting and performance management.
What core principles should guide financial innovation to ensure it benefits society as a whole?
Democratisation of information, Simplification and ease of use, Data privacy and security and Sustainability should be the guiding principles of financial innovation. Financial innovation should be guided by core principles that prioritise the well-being of society as a whole, promote financial inclusion and contribute to sustainable economic growth.
How can leaders within the financial sector foster a culture of innovation and embrace these emerging trends?
Finance leaders have an important role to play in setting a compelling vision, defining right objectives, aligning adequate resources and carrying the organisation to embrace financial innovations judiciously. They also need to foster a culture of collaboration within cross functional teams to support the organisation’s digital agenda. They need to realise the need for driving simplification and efficiency in their organisation and the role technological innovations can play in meaningfully moving the needle.
Can you share an example of a time when you successfully led your team or organisation through a significant change or adaptation in response to market dynamics?
In the midst of the global pandemic, I was leading the treasury function of a reputed organisation that was navigating unprecedented market volatility. While we were blessed with a strong liquidity position, we recognised the urgent need to respond to rapidly changing dynamics in the broader retail-distributor ecosystem. As liquidity began to dry up within our ecosystem, I spearheaded proactive efforts to collaborate closely with our banking partners to implement a series of strategic measures. These initiatives included scaling up distributor financing, retailer finance and supplier finance programs, all aimed at effectively managing our liquidity needs while mitigating risk exposure for our organisation.
By leveraging these tailored financial solutions, we were able to foster resilience and stability within our ecosystem. Importantly, these initiatives were received positively by our partners, helping to strengthen relationships and build trust during a time of uncertainty, while contributing to top line growth.
Overall, this experience underscores the importance of agile leadership, strategic foresight and collaborative partnerships in successfully navigating through times of significant change and disruption.