Digital Disruptors Need CFOs Who Can Build Teams and Infrastructure

The reinsurance business isn’t what it used to be. The space has traditionally been dominated by huge incumbents with names familiar to anybody who’s ever picked up a copy of the Financial Times or Wall Street Journal.

But even reinsurance hasn’t been able to isolate itself from the digital trends transforming the world economy, and online marketplaces have democratized the model by making it more accessible to a wider variety of institutional investors looking to diversify their portfolios.

When Gaurav Wadhwa joined Vesttoo as chief financial officer this year, the four-year-old FinTech gave him clear marching orders.

First, put in place the right infrastructure to ensure the company can stand the test of time, one that scales as the company grows. Second, get the team in order, learn the business and understand the key strategic priorities for the overall business so that the finance team can help achieve those objectives.

“The challenge is how do we build a company that is sustainable,” he said, “built to last and essentially what that requires is infrastructure.”

Getting the Infrastructure Right

To that end, Vesttoo is putting in place a robust data strategy that will be able to connect directly with its customer relationship management (CRM) system to capture transaction data. That will be used to provide analytics to senior leadership to facilitate better decisions about how to maximize and optimize growth by establishing the best resource and capital investment priorities.

In addition, he is leading efforts to put in place a new enterprise resource planning system and a new ledger system.

“As a young company, we had outsourced a number of these noncore functions, but we are now bringing them in-house so that as we grow, we have control over our own destiny.

“We are adding much more sophisticated equity investors. We want to make sure that they understand our growth, our financials, our story as well as we understand it. So, we need much better control over our own data, our own financials, and this infrastructure is critical,” Wadhwa said.

Coaching the Team

He was fortunate to find a finance team that was already in place that understood the business itself well. Now, he is building the right capabilities within the team.

“My goal is that the team has a mindset that we are not just reporting numbers, but we are helping the company achieve its objectives. And that mindset I think is something that is learned; it’s cultivated; it’s built. So, I’m spending a lot of time with the team cultivating that culture so that we can help the company make the best decisions possible.”

The Marketplace

The engine of Vesttoo’s business is a B2B marketplace for reinsurance. It’s a platform where insurance companies that need capital can place their reinsurance transactions. Investors are able to access these investment opportunities and buy into these non-correlated asset classes.

That isn’t all it does. It also has an artificial intelligence (AI)-based risk modeling engine that models the historical data of the underlying insurance portfolios, providing risk transparency and portfolio monitoring, allowing the institutional investors to be able to understand this risk better and track the development of their investments.

Modeling risk is crucial for these sorts of investments, Wadhwa says, a lesson he learned during the global financial crisis.

“That’s why I think investors are much smarter. They really want to understand the risk and the investments that they’re making. That is part of the key value proposition that we bring to the table is that we help bring that sophistication. We can do the modeling in our AI engine. It gets smarter the more deals it prices.”

The platform is getting substantial uptake, he says:

“We’ve modeled about $3.7 billion of risk with more than $1.2 billion in reinsurance transactions placed with investors — 60-70 deals have already been placed.”

The CFO’s Strategic Role

Wadhwa agrees with his colleagues who have been interviewed by PYMNTS about the strategic role of the digital-first CFO.

“CFOs today are looked upon as not just reporting numbers, but as a very strategic function, a large part of helping companies make better decisions, which requires access to data, very strong analytical abilities, tools and mindset. CFOs need to help companies be sustainable, pivot so that it’s not just a short-term decision-making process and ensure that you’re making decisions for the long run.”

See also: Digital-First CFOs Turn Everyday Data Into ‘Change-the-Business’ Insights