What a difference a year makes: At last year’s MIT Sloan CFO Summit, stubbornly high interest rates and liquidity fears sparked by the March 2023 Silicon Valley Bank failure cast a shadow over the economic outlook of many conference attendees.
This year, the finance leaders and speakers who attended the annual conference in suburban Boston last week seemed buoyed by recent rate cuts by the Federal Reserve and prospects of a more business-friendly environment being ushered in by President-elect Donald Trump’s administration.
“Obviously we’ve had a lot of change recently with the election that brings in some new nuances; tariffs could drive increased inflation and hurt rates and there’s uncertainty around a lot of tax policy,” Steve Pettigrew, global head of software investment banking at UBS, said during a panel focused on interest rates Thursday. However, Pettigrew also noted that it felt like there was an increased sense of optimism among some of the bank’s clients. “There seems to be a view that there’s going to be some increased business-friendliness coming out of this,” he said.
The change was also noted by some attendees. Cristian Capellino, a vice president of finance transformation at the Mexico City-based industrial products and infrastructure maker Orbia, said the robust sentiment he heard at the conference around better M&A and dealmaking prospects in 2025 was “striking,” even if it made sense given the anticipated further easing of rates by the Fed and a potentially more favorable regulatory environment under the new Trump administration.
At the same time, the weighty and difficult topics that CFOs have been grappling with for some time aren’t going away, judging by some of the discussions both on panels and on the conference sidelines. From the many ways technology and artificial intelligence are revamping finance teams to the culture wars that are knocking on their doors, it is clear that CFOs are still facing myriad new challenges. Here are a few of other takeaways from the day:
A smarter more granular budgeting era has dawned: As the budget season winds down, finance teams this year seem to be better adjusted to the new era of geopolitical uncertainty, higher interest rates and inflation after developing some new tools in recent years, Andy West, global co-leader of strategy and corporate finance practice at the consulting firm McKinsey & Company, told CFO Dive. Initially, when rates began to climb back around 2022, many finance professionals who had never managed budgets during high-rate periods were stunned. That shock has worn off as CFOs have learned to wield their power better, for example by using corporate holdbacks whereby they release some of the money for a given line item and only approve the rest if certain target milestones are hit, West said, speaking on the sidelines of the conference. Along with those new controls, West is hearing more CFOs this year are open to investing in projects and growth in 2025. “People are realizing that from a historical average standpoint, rates are not that high,” he said.
CFOs need both AI and people: While analyzing the return on investment and savings AI can yield, CFOs also must remember to continue to develop their staff, Noémie Heuland, CFO of the global risk assessment firm Moody’s, said during a panel. Finance chiefs need “courage” to capture the savings they realize through automation, she said. At the same time, they need to keep young workers engaged and develop their communications skills even when the younger professionals won’t have to do some of the lower level tasks that previous generations cut their teeth on. People will be needed, especially in challenging times, even as automation takes over some tasks, she said.“When you think about a plane, you still need people to have the ability to react and to navigate through turbulent times,” Heuland said.
CFOs still face environmental, social and governance [ESG] policy pressures: Saudi Aramco CFO Ziad Al-Murshed’s talk at the summit was abruptly cut short by climate protesters. In an emailed statement sent to CFO Dive, a group called Climate Defiance, which describes itself as a youth-led organization that uses civil resistance to demand an end to the fossil fuel era, took responsibility for the protest, saying it was designed “to bring accountability” to the state-owned oil giant contributions to global carbon emissions. In a statement last week, the conference organizers said it was “unfortunate that a small group of protesters chose to disrupt the event and prevent our final speaker from delivering his full remarks on a topic of interest to so many.” Aramco declined to comment on the incident.
