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Digital Transformation in Banking

Jun 04, 2021
Banking touches every aspect of our lives - whether we're checking a balance, paying for an online purchase or applying for a loan, we expect the same seamless, secure and personalized experience, so it's no surprise to learn that providing a great

digital

experience It is a priority for people today. banks in terms of

digital

transformation

this is the tip of the iceberg, what we all see beneath the surface, seismic changes are taking place as banks strive to compete more effectively in the dynamic digital world to see this more detail. Falke is with me. Rica, Global Head of Banking at SAP Falc, You're talking to

banking

clients all the time, what would you say are the top strategic priorities for banks right now?
digital transformation in banking
Yeah, you know, I just got back from a meeting where I met with clients. all over the world and it is very clear that

banking

is in full

transformation

, there is a kind of digital tsunami and banks are facing digital transformation in all aspects, so when I talk to banks there are always four strategic priorities that emerge. Firstly, customer experience is something they have to improve, building on what they have done in the past, they have to be where the customer is and, in the digital age, this is on any device and at any time. The second part is operational efficiency, when you think about it.
digital transformation in banking

More Interesting Facts About,

digital transformation in banking...

In terms of the digital world, there will be a lot of new competitors, a lot of new competitors that are not necessarily just banks, they can also be non-banks and they come with a different legacy, much more agile cost structures, so operational efficiency comes first. the mind: the third thing is data. Intelligence-based banking will increasingly become a data-driven business and will not only manage data, but also a lot of internal data that will bring us back to customer experience and the fourth theme: we are still a fire-regulated industry, for which financial knowledge and risk control continue to be the main ones. of mind too, so these four topics are really on the agenda of every executive I talk to, how are different banks approaching digital transformation?
digital transformation in banking
I see banks making additional transformations primarily on the front-end to boost customer experience. I see banks driving digital transformation around their operations, for example their core banking platforms. I see banks driving digital transformation around the CFO's office and I see banks driving digital transformation around end-to-end data management. Can you share some examples with us? Firstly let me start with Lloydsbank, a client of ours who are rolling out a new digital platform for their large corporate clients to provide a new experience around cash management. They have implemented a solution that focuses heavily on customer experience and they do it with analytics. with self-services and obviously new innovative products they greatly improve the customer experience they increase their net new customer win rate this is exactly what the result should be when you think about the customer experience the second example is rabobank and rabobank is optimizing loans platform they want to have an end-to-end automated process for loans from origination service to accounting third example of discovery bank in South Africa and this is largely about data-driven intelligence their entire business model is based on data are the first behavioral bank globally and they look at your financial behavior and this financial behavior will also show up in the financial score you get and ultimately the dynamic rates you get from the bank, they combine it with a very sophisticated rewards model that includes entire ecosystems of companies. such as hotels, travel and other businesses that can contribute to a better customer experience, so this is a highly data-driven business model and it would not be possible without taking advantage of new in-memory technology and the last example I want . to bring to the table here when it comes to digital transformation think about the CFO's office think about companies that process a lot of data think about companies like paypal paypal operates in over 200 countries making online payments in over 25 currencies, they have 295 million active accounts and this year they do more than 10 billion payment transactions, so when you think about this global expansion you can also think about what it means from a transformation aspect and what challenges it entails, so four examples. where we help our customers and where we help banks become digital platforms that differentiate themselves through customer experience and data-driven intelligence.
digital transformation in banking
We are hearing a lot about artificial intelligence, machine learning and banking. What technologies do you think will play the biggest role moving forward? Go ahead, everyone wants to know from me which technology is the most important. I have to say it's the combination of the technology, there's no one silver bullet, if you like, it's always the combination of what you do with the technology and how you integrate it into the business process when we look at what the new system will look like. financial, there are three things we need to keep in mind, firstly, it will be a low-touch environment, which means it will be highly automated, so when you think about AI technologies, robotics, other technologies that really drive automation , machine learning also falls into that category, so this is an aspect of automating processes, eliminating manual efforts and innovating interventions as much as possible.
The second part has to do with customization. Customers expect personalized services when we talk about the experience economy, it's not good. just adapt to provide a product that fits everyone, it needs to be a personalized product, so personalization based on internal data is a big topic and the third piece is data-driven intelligence, so everything that What we will do in banking in the future depends largely on The data inside also looks very, very good when you look at the profiles that banks are hiring. Profile number one. Banks are looking for data scientists, so when you put it together, highly automated, personalized data, those are the key things that will drive the new financial system.
The experience and the technology that goes with it really includes everything that includes artificial intelligence, things like machine learning, blockchain, iot, big data, any type of predictive analytics, the key is always looking at what piece of technology makes the most sense in different business processes thank you. Falk Now, let's introduce Andy Mike, Mobile Banking Solutions Manager at SAP. Andy, do you have any examples of how these smart technologies have helped a traditional bank transform? Let me share with you a bank in the Netherlands, Rabobank, that is using smart technology in processing its loans. rabobank had a very inefficient manual process for their loan applications, once the loan was submitted it usually took weeks before it was processed, it was very frustrating for users, rabo sat down to process these loans directly and it really required systems uh sap to do this.
This happened using machine learning and artificial technology, they were able to automate 95 percent of loan processing, which meant that loans could usually be processed and approved at the time of submission. That's great, Andy, thanks. This is what Bart Vloot, head of IT administration at Rabobank, had to do. say about the project the end customer expects an instant loan sap back office in combination with our online front office system helps us provide we are currently using sap on the business side for retail home loans and for business loans we switch from a performance time of weeks to process a mortgage loan in a matter of hours clients benefit from a very fast service it is very reliable what they see when they connect the information is correct it is very reliable the lives of our employees changed a lot we come from legacy systems We serve employees mainly with manual processors and now with SAP we have a stp factory that serves the end customer directly, so it is more of a traditional reactive IT management to a proactive approach.
Of course, we are thinking about data analysis and also predictive analysis for customers, so it can help them pay their loan on time. SAP's cloud platform is very interesting for us to open up to external parties. We are working on our strategy to connect with third parties or other platforms and I think this offers very good opportunities from that perspective. We are also thinking about a test concept with Leonardo to further automate exception handling in operational processes. Leonardo could help us analyze why there are exceptions in the operational process, why certain loans are left out of the stp process and this algorithm can learn.
I think we are currently moving from focusing on delivering quality and controlling the current system from the first horizon to focusing more on the second and third horizon and also getting our business. Partners are more closely involved and connected with SAP. That's a great example of some of the benefits banks can reap by applying smart technologies to their operations. Andy Mike Cell is still with us. Do you have other examples you can share? We are sure that Atlantea is a 100-year-old bank in Honduras. They have a lot of old systems, a lot of data silos that don't talk to each other and don't share data across those silos.
SAP and Atlantena work together to create a comprehensive technological vision across all of these products. To bring greater productivity and greater data sharing to those applications as our customers are converting to a digital world, we have to be there to serve them anytime, anywhere Banco Atlanta is part of the largest financial group in Honduras as well. We have operations in other countries Bancatlantida is a leader in the way we treat our clients It is a leader in the services offered, therefore, we set the pace for the country itself. The challenges we face in a digital transformation are being able to support the entire ecosystem that the bank has to support. do it in a new way in a new business model that we call digital the question was who could walk with us and we sat down with SAP, we looked at what SAP was doing for the financial services industry and their vision, and they had the right vision , not only in the sense of talking digital, but by really investing in it, also partnering with sap is very similar to a marriage, it was a strategic decision to walk with a couple that had our same vision, so, in that sense, the marriage It changes the way you make decisions. and that's why ours has changed we use bts business transformation services we have done our process from start to finish fs per is a goldmine for bankers what it does is an ftp engine a funds transfer pricing engine and an allocation engine because it is not just about assigning costs, I can also assign income so that we have profitability per branch, per employee, per segment, per product, etc., so it is a very powerful tool and it is a nugget that Any banker would like to have another impact on our daily operations.
Once we have implemented success factors, we have done some pilots with some offices and they are delighted, they are delighted with the self-service and some of the options that they have, they really feel digital, our clients are starting to feel the benefits of our digital transformation . With SAP when it comes to omnichannel banking, you've also seen a transformation in our image that hasn't just been online or over the phone. The partnership with SAP has certainly changed the way we make many of our strategic decisions on a day-to-day basis. analysis and being able to delve into them through our warehouse and fsper, both in hana, this has really changed the way we run our business, so transformation is the new normal in banking, banks are taking different routes towards digital transformation and employing a range of innovative business models and intelligent technologies to drive success, let's now hear how SAP is helping its customers embrace industry disruption and seize new opportunities.
Nearly three in four financial institutions say improving the digital customer experience was their top strategic priority. in 2018, according to Qualtrics research that also shows that more than half of customers who leave their bank say no effort was made to retain them, it starts with key trends and challenges, for example, banks are starting to run more like technology companies that likebanks that are developing. a platform business model that allows multiple participants to interact with each other and create and exchange value, also using data as currency. Banks can make predictions about events in their customers' lives, as well as their financial needs and the digital customer experience and expectations of consumers around them.
In response, banks have evolved far beyond payments and balance transfers and are pursuing a bold vision of looking and operating more like technology companies, becoming digital platforms that leverage data-driven intelligence and deliver banking and non-banking services. related banking institutions to help fulfill this vision. Integrated suite with intelligence built into a scalable digital platform that enables banks to leverage back-office operational data in coordination with customer-facing experience data. SAP is uniquely positioned to help banks use smart technologies to provide seamless connectivity. Leverage data-driven intelligence to improve operational effectiveness. and improve financial literacy and risk control to achieve this.
SAP provides a clear industry roadmap that you can use to achieve your vision and become an intelligent enterprise. Key players are already working with SAP. PayPal has simplified its accounting and reconciliation processes, while improving financial literacy and risk. control through a scalable platform, automation and self-service analytics that link interest rates to customers' financial behavior and use real-time big data analytics. Discovery Bank offers an e2e platform with fully digital customer service and a consistent multi-channel experience with over 14,000 banking customers across 150 countries. SAP is the clear choice. Visit sap.com and search banking industry to conclude our deep dive into the crucial importance of digital transformation in a rapidly evolving Banking Environment.
Thank you very much to all of our guests and thank you for watching.

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