Good morning,
Future finance professionals will always need fundamental skills in accounting, financial markets, valuation, and control, “but more so, it will require that you really know technology,” Prudential Financial EVP and CFO Ken Tanji told me. “Technology is a game-changer in almost every aspect of the world,” Tanji says.
One of the world’s largest insurance companies (boasting more than a century in business) has been undergoing an enterprise-wide transformation since June 2019. “We work hard to keep our people up to speed with technology skills, not just from a finance perspective, but from a business and a customer service standpoint,” he says.
Since Prudential has reached a three-year mark, I checked in with Tanji to find out how the tech focus has impacted customer experience, the progress on a cost-savings initiative, and if tech is empowering finance employees.
When it comes to Prudential’s customers, “we did a lot of automating of our underwriting process of life insurance policies and shortened the time it took from the application of a process to when a policy was issued,” Tanji explains. The use of A.I. and cloud technologies have enhanced the automated claims process, he says.
For finance employees, for example, financial forecasting and analytics have had a tech upgrade, along with scenario planning—an area that’s getting a workout during these unpredictable times. “We thought we could improve the employee experience by making it easier and simpler, more automated, more digital,” Tanji says. “And that would achieve more efficiency. And we also targeted efficiencies to provide a lower cost.”
The transformation plan includes the goal of cutting costs. It began with a $500 million objective, but then in late 2020, when the plan gained traction and progress, the goal was expanded to cut $750 million in total expenses by the end of 2023, Tanji says. Prudential has reached $680 million in run-rate cost savings as of Q1 2022.
With close to 41,000 employees in total, Prudential has 900 individuals on its finance team in the United States. I asked Tanji if he has a designated cohort in finance to collaborate with other departments on cost efficiencies.
“We have what we call a cost optimization and performance management team, and we align them with our business groups,” he says. An example? “One of the key areas of potential savings would be procurement,” Tanji explains. “We buy all kinds of services and supplies from vendors. We can consolidate that with certain providers to gain volume discounts and partner with certain vendors to achieve better outcomes.”
The team also acts as strategic advisors, Tanji says, by asking such questions as: “How do we identify opportunities? How do we analyze what the payoffs might be? What are the risks or challenges? Then put that in a business case and get it approved.”
I asked Tanji about the lessons learned so far in the transformation process. “Communication is really critical,” he says. “So, to make sure the message to customers, employees and other stakeholders is very clear.” Another major finding is how automation and streamlining manual processes help finance employees to focus on “more fulfilling tasks” like collaboration, problem-solving and using their creativity, he says.
“But we also look to develop people by giving them access to all kinds of learning and development programs and a variety of experiences,” Tanji says. “My own career is reflective of that. I’ve worked in group insurance, securities, annuities, asset management, treasury, and international business.”
Tanji began at Prudential more than 30 years ago, working in several financial leadership positions, and was appointed EVP and CFO in 2018. “You don’t have to go somewhere else and leave Prudential to get a new and broadening experience,” he says.
See you tomorrow.
Sheryl Estrada
sheryl.estrada@fortune.com
Big deal
New research from the XM Institute at Qualtrics (Nasdaq: XM) found that between 2019 and 2022, companies with the best customer experience ratings outperformed their industry peers’ stock performance. Using data from the Qualtrics XM Institute Q2 2019 Consumer Benchmark Survey, representative of about 10,000 U.S. consumers, analysts identified 40 publicly traded companies—20 with the highest and 20 with the lowest customer experience. They then tracked these companies’ quarterly stock performance and adjusted for industry-wide changes. The analysts compared it against a representative industry index for each company using the most appropriate S&P 500 or S&P 1500 industry index before, during and after the recession caused by early COVID fears. A key study finding is "XM Leaders," companies with highly-rated customer experiences, saw their stock performance increase 45% between 2019 and 2022. Meanwhile, "XM Laggards," companies with low customer experience ratings, saw their stock returns decline by 21% in the same period.
Going deeper
Hong Kong is one of the most isolated places on earth. How did Cathay Pacific, its flagship carrier, become the world’s top airline stock?, a new Fortune report, delves into how shares in Cathay Pacific are up 26% over the past year, outperforming U.S. and European airlines.
Leaderboard
Michael Barkin EVP and CFO at Vail Resorts, Inc. (NYSE: MTN) announced that he will be stepping down after nearly a decade in role to take time to pursue personal opportunities. Barkin's resignation will be effective December 31, or such other date as mutually agreed upon based on the timing of appointing a successor and a transition, according to the company. Barkin joined Vail Resorts in July 2012 as vice president of strategy and development and was named chief financial officer in March 2013.
Micah Zajic was promoted to CFO at SQZ Biotechnologies (NYSE: SQZ), effective immediately. Zajic has served as the company’s chief business officer since October 2020 and brings nearly 20 years of biotechnology and capital markets experience to the role. Prior to joining SQZ, he led corporate development activities at MeiraGTx Holdings. Zajic also served in a similar capacity at Alexion Pharmaceuticals. Before that, he spent over a decade in Morgan Stanley’s Global Capital Markets and Investment Banking Divisions.
Overheard
“Leading this great company and our 100,000-strong employees since 2020, through unprecedented challenges for our industry, and society, has been an immense honor."
—Gap CEO Sonia Syngal said in a statement on Monday regarding the company's announcement that she will step down from her position and the company's board.
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