The rise of smart digital platforms has transformed consumer expectations. Whether it’s planning a vacation, shopping, booking a flight, or even comparing mortgage rates, consumers now expect an easy, instant, and seamless experience.
These digital-first experiences point the way for banks to reimagine their place in their customers’ lives – and to remain relevant and competitive in the coming years. The change will be dramatic, affecting the way banks interact with customers and manage traditional banking products and processes. And while it will enable new products and services, it will require new technology, talent, and a new mindset to succeed.
To get where they need to go and become fully intelligent enterprises, banks should think in terms of the following core imperatives:
Customers are demanding that their banks provide a similar experience to those delivered by their retail and social media interactions in the experience economy. Banks are responding with new products and services that look, act, and feel like those frictionless experiences.
These new products and services impact every facet of business, not just the front office. Thus, to deliver on improved customer experiences, products, and services, banks must deploy end-to-end processes across departments and lines of business (LoBs). Only with an integrated, multichannel environment can they attract, cultivate, and retain customers in today’s competitive environment.
The objective is to analyze customer behavior at the granularity needed to bring into focus each customer’s lifestyle view – to determine which products and services are offered when and where to meet the customer’s needs.
Every bank needs the computing capability to run complex algorithms on large data sets to support timely, real-time analysis. The insights generated from such analysis, in turn, must be made accessible to everyone in the bank, whenever and wherever they need it.
Bankers must be able to see client history to assess credit risk and ensure the performance of client-relationship management tasks, such as addressing a poor customer experience. Compliance officers must be able to monitor transaction histories in real time to ensure that policies and procedures are followed. Ultimately, decisions need to be based on accurate and complete customer information – aided by automated application processes and seamless customer onboarding.
A digital core is an IT architecture that offers stability and long-term reliability for core enterprise processes – while also supporting the flexibility to adapt quickly to new opportunities, challenges, and regulations. It starts with a single source of truth, which in turn enables the innovation needed to accommodate new business models, comply with new regulations, and support business events such as mergers and acquisitions.
Banks today are building out their digital cores, which will enable them to bring operational and experience data together on a single platform where machine learning and AI technologies can be used to help drive better customer experience. A strong digital core can also help banks to automate low-value, human-based activities (such as trade reconciliation, transaction matching, and ledger adjustment). This will help to improve employee efficiency and redirect employee energies toward higher-value, revenue-generating tasks.
Financial insight and risk control
To keep costs down, banks need to meet regulatory requirements in an easy and flexible way. This is why many banks are moving from reactive and manual processes toward universal journals linked through blockchain technology and delivered through the cloud.
Universal journals will allow better access to regulatory and business data, enabling banks to be more agile and responsive to the requirements for financial insight and control. Banks will also use predictive analytics, enhanced with a better view of fraud exposure and management, to improve fraud detection, increase data transparency, and enable greater regulatory compliance. Finally, banks will enable third parties such as fintechs to share data for advanced insight and control through APIs, thus allowing banks to shift headcount to higher-value activities.
The future is bright
Banking provides vital services to society, and our impact is poised to grow. But to fulfill this potential, banks need to become intelligent enterprises to respond to increased customer expectations, leverage data, and take a hard look at their own processes. Banking must have the courage to remake itself – or risk being marginalized.
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