Unlocking New Values of Digital Banking with Intelligent Technology

New banking era in the new decade

The last few days have seen big headlines on digital banking in this region. Malaysia announced that it will issue up to 5 digital bank licences this year. Meanwhile, Singapore has received 21 applications for digital bank licences. This is a significant development in the banking industry, as the regulators welcome non-bank players, including e-commerce companies, technology and telco firms, and FinTech and financial services companies, with unique value propositions and innovative business models to offer banking services. This sets to permanently change how banking is done in this region. Predictably, banking will be more open, intelligent, and contextualized into consumers’ lives and corporate clients’ business operations. The traditional banking model, focused on products and selling, will soon shift to become more customer-driven, in order to thrive.

Riding the waves of disruption

With the huge opportunities and challenges ahead of us, it is essential for banks (especially the incumbents) to focus on the right priorities to remain competitive. These include:

Improve customer experience (CX) and predict their needs. This is perhaps the most important priority on the innovation agenda. Banks have a multitude of touchpoints with their customers – each generating valuable data. They can harness the data across all these touchpoints – to deliver bespoke customer experiences and anticipate customer needs in real-time.

Reduce operating costs. Banks can reduce time to market, standardize product processes, and personalize customer experiences with an open and agile platform. Automating manual processes with machine learning reduces the need for headcount, resulting in lower operating costs.

Meet regulatory and compliance standards. Banks need one data platform which maintains all relevant financial data at the most granular level. This enables real-time insights and allows banks to respond ‘in-the-moment’ to the latest regulatory reporting requirements.

Enable open banking and platform-based business models. Banks are increasingly collaborating with FinTechs and other tech enterprises to meet customers’ tech-savvy demands. To become more agile, banks need an open and agile platform that will enable quicker implementation of new products, plus radically improve customer experience.

Business process optimization and intelligent automation are key priorities for innovative banks to simplify their business and free up resources to invest in transformative programs.

Banks as Intelligent Enterprises

To address these priorities, banks need to become intelligent enterprises. Our Financial Services team at SAP help banks transform into intelligent enterprises through integrated business applications that use intelligent technologies, which can be extended on Cloud. This enables next-generation business processes to deliver breakthrough business values on a bank’s journey to becoming an intelligent enterprise. We help banks to become intelligent enterprises by harnessing the following enablers:

1.    Intelligent Suite. The set of end-to-end applications provides the business capabilities that banks need to run their business. From digital customer engagement, to talent management, to spend management, and to financial and risk control. Business processes and data must be integrated for automation, fast adoption, and ease of operations.

2.    Intelligent Technologies. This includes IoT, big data, machine learning, AI, blockchain, and data intelligence.

3.    Digital Platform. Powered by SAP HANA, this digital platform extends intelligent, end-to-end processes and connects with data sources across the bank.

Combined, these enable next-generation business processes to deliver breakthrough business values across these 3 areas:

(1) Optimize existing business process for more efficiency and reliability. Key questions to ask: What can be automated using machine learning? How can we make processes aware of the real world by connecting them to the things around them? How do we give people the right analytical tools to make sense of vast amounts of data and to handle exceptions? Examples:

• Enhance customer retention. Typically, there is a lack of insight into root causes of bank customer attrition. The SAP Customer Retention application anticipates customer behavior – such as account closures and credit card cancellations – with instant insights from transactional data and digital interaction points. Customer experience is enhanced. Operating costs are slashed. Profitability improves.
• Predict customer needs. Banks have vast amounts of unharvested customer data. Predictive analytics of structured and unstructured data provide 360-degree customer insight, allowing banks to anticipate the behavior of their customers, respond to their needs, predict the next best step, and rapidly engage customers in real time. Customers are delighted.

(2) Extend current processes to capture new sources of value. To generate new value, begin by challenging the status quo, such as: Are we doing the right things in managing assets or in shaping customer relationships? Examples:

• Quicker and more accurate loan origination. In loan origination, there tends to be unstructured data that cannot be interpreted automatically. Smart loan origination supports the digital origination process for consumer loans – factoring in age, income, guarantor, loan size, and job experience together with additional customer information – to arrive at a loan approval status more quickly and accurately. This enhances customer experience and cuts costs. It also increases accuracy for regulatory compliance.
• Radically enhance boardroom decision-making. The inability to monitor performance against critical success factors results in poor decisions. SAP Digital Boardroom helps banks improve boardroom decision-making with real-time, contextual insights. Intuitive and powerful analytical exploration capabilities, with simple user interface, enable the analysis of root causes to identify business challenges and opportunities on the fly. This means more accurate and informed decision-making.

(3) Transform the banking value chain for new revenue streams. Transforming the business starts with ideas to conquer new markets with current products. Or to deliver new value on your home turf. This requires a renewed mindset of who the ultimate customer is and what kind of value they really need. An example:

• Real-time consuming financing. Bank customers expect instant gratification when interacting with their banks during purchasing decisions that require financing. Customer-centric banks are automating and digitalizing consumer financing in real time. This includes using of real-time data and predictive analytics to guide the buyer on their journey – with competitive offers enabled through geospatial data. SAP’s machine learning and IoT enable a straight-through loan process through a frictionless mobile experience. The result is radically improved efficiency and happy customers that translates into advocates.

Discover new business value

These illustrations aren’t merely scenarios. Leading banks are already putting them in practice.

mBank is one of them. Using SAP Predictive Analytics software, mBank is harnessing its customer data for better customer experience and profitability. The result is successful marketing campaigns with a 10x higher effectiveness rate! The bank’s customers appreciate it as offers are highly targeted and relevant. Marketing spend is also optimized.

Whether you are still exploring new ideas or have defined one in detail, it is time to discover the new business values SAP can bring. With a powerful combination of world-class innovators, industry expertise, and proven use cases, the SAP Financial Services team can help optimize your banking business and drive innovation at scale – faster and with less risk.

Connect with me on LinkedIn or drop me a message. I will be happy to share more.