It was my pleasure to participate in the International SAP Conference for Financial Services in London early in July, along with representatives of many of the world’s biggest financial institutions. As I talked with SAP’s global clients and partners, it became clear that, now more than ever, the banking world is varied, with varied needs.
In both mature and emerging markets, the key drivers are the same – risk needs to be managed, costs reduced and growth enabled. However, the difference in emphasis across different banking cultures is significant.
Mature markets – Trust after trials
In mature markets, mainly in the global north, risk and cost are the priority. Under the pressure of new regulations and requirements, compliance can make up 40-60% of the discretionary IT spend of a bank, which must be reduced.
Regulatory compliance and risk management are vital parts of another, broader need. Many customers have lost trust in banks in the aftermath of the financial crisis and subsequent revelations. New ways must be found to serve customers, and to win them back.
Richard Heeley of the UK’s Nationwide Building Society talked about his company’s core transformation at the Conference, and the changes it enabled.
A new core banking system based on SAP’s transactional banking allowed Nationwide to release its first new current account for 25 years in 2012. It has recently launched a further, premium current account, enabled by the same modern, agile banking systems. Being able to determine what customers want, and show a readiness and ability to respond to it, will be vital to keeping and winning the most valuable customers in a saturated market.
Emerging markets – bringing banking to the village
Emerging markets, in contrast, are far from saturated, and growth is the priority. Willie de Villiers Stegmann was at the SAP Conference representing Standard Bank of South Africa. In his native country, 67% of the population remains unbanked. 19% of South Africans, most living in remote rural areas, do not have or use any financial products or services.
Standard Bank has sent out staff equipped with mobile phones running an SAP Sybase-created app. These highly mobile agents can set up rural South Africans with a simple, accessible bank account.
Local stores act as “access agents”, able to manage deposits, withdrawals and money transfers – providing a secure location for saving. However, when the situation demands it account holders can also use ATMs or telephone banking, or travel to a full branch.
Standard Bank is opening 5,000 of these Access accounts every day.
Many markets, many issues – one answer
Despite the very different markets and conditions banks in different parts of the world are facing, they share one key element: the need for technological innovation.
The successful banking journey will be driven by a flexible, modern core and rapid processing at the centre, and by a mix of interfaces at the fringe – whether that means banking on the latest tablets, or delivered from a “branch in a van” driving from village to village.
Are there particular conditions in your region, your country or even your city? Give your perspective in the comments to this blog post, or through our @sapforbanking Twitter channel.
Manfred Joseph, General Manager for Financial Services EMEA, SAP