Inside Nasdaq CFO Sarah Youngwood’s AI playbook

Youngwood is embedding AI across finance—and ranking her team like martial artists.

Sarah Youngwood has a ranking system for artificial intelligence—and it has nothing to do with algorithms. Inside Nasdaq’s finance function, employees now earn belts for AI proficiency the way martial artists do: white belts for foundational knowledge, advancing through levels that require hands-on delivery and the ability to teach others. Youngwood has mandated that everyone on the finance team reach at least white belt. Her long-term goal is for 20% of the team to reach black belt status.

The belt system is one window into how Youngwood, EVP and CFO of Nasdaq, is approaching what she calls an embedded capability—not a standalone initiative. AI, in her view, should be reshaping everything: market infrastructure, internal finance operations, workforce culture.

“If we are Nasdaq, it is our role to lead the charge,” she told Fortune earlier this month from her 26th-floor corner office above Times Square. “To show what AI can do and how we can become an AI-first finance function.”

AI will be incredibly powerful for forecasting in finance, Youngwood said. By combining macro assumptions, pipeline data, and leadership actions, it enables better real-time decision-making—the core goal of any finance function, she explained. Its impact spans everything from cash allocation to invoice processing and beyond. Governance and human oversight are essential to the process, she said.

Youngwood joined Nasdaq as CFO in 2023 after spending more than two decades at JPMorgan Chase in roles including CFO of its consumer and community banking business, head of investor relations, and CFO of global technology. She also served as CFO of UBS Group. That background left her with a simple conviction about technology investment: prove the return. “Finance is in charge of a great deal of corporate data,” she said. “And AI is all about the data.”

The stakes are real. Nasdaq landed at No. 470 on the Fortune 500 this year, returning to the ranking five years after its 2021 debut. Today, the company centers its strategy on three pillars—architecting modern markets, powering the innovation economy, and building trust across the financial system—and Youngwood argues AI sits at the core of all three. Once known primarily as a stock exchange, Nasdaq has evolved into a large-scale software and technology provider for the financial industry, with roughly 10,000 employees worldwide and about half in product and technology.

“We are the trusted fabric of the financial system,” Youngwood said. Where we apply AI is in everything we do.”

Measuring what matters

Despite the rapid pace of AI adoption, Youngwood applies a familiar financial lens to technology investment: return on invested capital.

The measurement framework works in three stages. First, Nasdaq looks at employee engagement: are people completing AI training and actually using the tools? Next comes velocity: is AI improving throughput, accelerating workflows, or enabling faster development cycles? Only then does the company measure financial impact—what those gains translate to in revenue growth, cost efficiency, or productivity.

That discipline extends to how Nasdaq allocates capital across time horizons. The company categorizes investments into “horizon zero”—foundational needs like cybersecurity—followed by short-term return initiatives, medium-term bets, and longer-term R&D. Youngwood uses the same framework to evaluate AI spending, treating it not as a separate budget category but as a lens applied across the whole portfolio.

That foundation required years of groundwork. Over the past two years, Nasdaq has focused on standardizing data definitions, centralizing information, and building dashboards capable of supporting more advanced AI applications. “You need your data in tip-top shape,” Youngwood said. “Once you have that, you’re prepared for generative AI.”

Investments Nasdaq made a decade ago in cloud infrastructure and early AI capabilities now underpin its positioning in generative AI. “We couldn’t see the whole map at the time,” Youngwood noted. “But those small investments gave us the foundation to be very well positioned today.”

AI everywhere—inside and out

Youngwood uses AI across her function for everything from administrative tasks to forecasting and financial planning, with more advanced initiatives integrating AI into core systems and workflows. She has also made sure her top technology leaders sit at the same table as the finance team—a deliberate signal of how tightly finance and tech are now linked.

The same logic applies externally. “What we’re doing with AI is putting it everywhere—in every process for our clients and for ourselves,” Youngwood said. One example: Nasdaq Verafin’s Agentic AI Workforce platform, launched last year, is now used by 650 financial institutions. Youngwood points to ease of implementation as a key factor in its adoption.

The broader context makes the stakes clear. On June 12, SpaceX went public on Nasdaq, marking the largest IPO in history. The milestone arrived as debate grows over whether AI will disrupt traditional software business models. Nasdaq CEO Adena Friedman has argued the opposite—that AI will accelerate software innovation rather than replace it. Youngwood’s job is to make the financial case for that bet, determining how aggressively the company invests and shaping the investor narrative around the results.

As for her own “belt” journey, Youngwood gets no special treatment. She is going through the new process alongside her team and is on track to reach yellow belt next month, with plans to soon progress to green.

This story was originally featured on Fortune.com