Margin pressure and regulatory complexities are a constant challenge for banks. Legacy systems, mergers and acquisitions, along with changes in technologies, business models, and rising customer expectations require constant adaptation. Banks must be able to respond to increasing customer demands, yet still comply with all regulations and reporting requirements. How does a digital core with a true single source of truth help?
Strategic Priorities in a Digital Economy for the banking industry Traditional banking value chains have been disrupted by new entrants such as PayPal. The always-connected, digitally savvy customer is turning to alternative banking providers. Financial technology providers, known as fintechs, are fueling rapid innovation. To better address the challenge of open banking, disruptive new competitors, and Big Data, leading banks pursue four strategic priorities to move to digital banking and beyond.
Connect seamlessly - Banks must attract, cultivate, and retain customers by enabling an integrated, multichannel environment. They must analyze each customer’s behavior and point of view to succeed in the digital age. This lifestyle view determines what products are created and what services are offered when and where to meet the customer’s needs.
Data-driven intelligence - Banks should be able to process applications centrally, regardless of their source, in a digital, multichannel world. They should be able to respond quickly, thanks to a high degree of automation. Decisions should be based on accurate and complete customer information provided through automated application processing and seamless customer onboarding.
Operational effectiveness - Banks need to deliver customer-centric products and services using a 360-degree customer view enabled by streamlined and automated banking operations and a seamlessly integrated finance, risk, and compliance system across retail and commercial banking businesses.
Financial insight and risk control - Banks are required to keep their systems and processes up to date in real time in a complex regulatory environment. They need to meet regulatory requirements in an easy and flexible way to keep costs down.
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Responding to rapid changes - A digital core is an IT architecture that offers stability and long-term reliability for core enterprise processes, yet also provides the flexibility to adapt quickly to new opportunities, challenges, and regulations. This solid foundation gives you a single source of truth, which in turn enables flexibility for innovation to accommodate things such as new business models, new regulations, and business events such as mergers or acquisitions.
Simulation and analytics - The ability to respond quickly is an essential part of managing a bank. To do this, simulation, prediction, and analytical capabilities are important components. Data is critical for gaining the insight to make decisions. This insight must be at a granular level so decision-makers have the detail they need to understand trends, opportunities, and risks, and quickly carry out what-if analysis using predictive algorithms.
Keeping data under control - Every bank needs the computing capability for carrying out complex algorithms with large data sets to support timely, real-time analysis. Everyone in the bank must have access to data they need, whenever and wherever they need it. This is also true for the rest of the ecosystem so banks can monitor transaction histories in real time to ensure policies and procedures are being followed, and bankers can see client history for credit risk and other client relationship management details that are needed to better serve the client.
Addressing innovative opportunities - Customers are demanding that their banks provide a similar experience to those delivered by their retail and social media interactions. 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. Banks must address end-to-end (E2E) processes across departments and lines of business to deliver improved customer experiences, products, and services.
Enhance and extend next-generation processes with intelligent ERP Bringing SAP S/4HANA and SAP Leonardo technologies together as a digital core results in a more flexible and intelligent enterprise. To achieve next-generation business processes, companies need an intelligent ERP solution that can be continuously enhanced and extended with innovative business services and applications built on emerging technologies, including artificial intelligence, machine learning, blockchain, and data analytics. The most competitive banks have already begun incorporating these technologies into their business processes to transform into intelligent enterprises and better serve their clients.
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