I personally dread the sights and sounds of this insect invasion, but will consider it a badge of honor to have had the fortune to survive yet another ‘geddon’, including Bruce Willis’s one that earned him a Razzie award.

The cicadas will not be the only theme for 2013 as my colleague Start Grant has written about over on Finextra’s website.

Check out what this fellow ginger has to say on the criticality of focusing on transforming and integrating Risk and Finance in 2013.

Bankers today are challenged to reduce operating costs, respond quickly to increased scrutiny and regulatory complexity, improve the customer relationship/experience, and grow the business in the face of an archaic and complex system landscape, new competition (for example, from retail and telecom), and the preferences and requirements of new and future customer segments.

At SAPPHIRE NOW 2013, I had the privilege of participating in a day long workshop with 15 bankers and 2 partners about core banking transformation in the United States. The promise of a core transformational project is that it would address all these challenges.

The group discussed key questions such as

• Why should a bank embark upon this transformation?
• Is it really necessary and what are the potential ramifications?
• Is there a strong business case to support the transformational journey?
• What are the cultural and operational changes needed to support the transformation?

During the workshop, Richard Walker, principal with Deloitte Consulting previewed research on this very topic designed to assist a bank in deciding if and how to make a more educated decision. This research will form the basis of paper that is expected to be released in the next few weeks. Richard suggested that banks should answer these 5 questions before taking on such a project:

• Will the new platform reduce operational cost? By when?
• Is a new core platform required to support growth?
• How will the new core platform contribute to delivering a superior customer experience?
• Will the new core platform improve your ability to respond to today’s emerging risk and regulatory environment?
• How will the new core platform impact your talent strategy?

Nationwide Building Society did just that as part of their project and is now #1 in their market. The transformation changed the game for them in that they are now able to target and attract new customer segments, provide new solutions, and be more nimble and responsive to changing market conditions.

For your business, how would you answer these 5 questions? Is a key question missing from this list?

If you don’t embark upon a transformation, what would the future of your business look like?

During the SAPPHIRE NOW 2013 Financial Services Forum, Banco de Galicia y Buenos Aires S.A. discussed their project to optimize cash operations.

Banco Galicia undertook a two-phase cash management and optimization project that began in December 2010 and ended in August 2012:  phase 1 (December 2010 to December 2011) focused on cash logistics execution and phase 2 (January 2012 to August 2012) focused on cash planning and optimization.  The goal was to achieve significant cost reduction and improve cash management operations, with the scope covering branch network and ATM prevision needs and facilitating the exchange of surplus cash between banks.  The rollout stages included

• Legacy front-end (workflow) and spreadsheet replacement by SAP CMO
• Cash transportation providers integrated with Galicia’s SAP CMO
• Forecast of demand and cash surplus
• Planning proposals for sends and cash withdrawals
• Online information to centralized areas and bank management for improved decision making

At the end of the project, Banco Galicia realized these benefits:

• Improved visibility of cash availability across network (branches, ATM’s, etc.)
• Integrated cash demand planning and cash replenishment processes
• Reduced opportunity costs of keeping immobilized cash flows
• Decreased administrative and transportation costs related to cash handling
• Improved ability to negotiate and control cash transportation and security services
• Improved operating efficiency, customer service level, and ability to adapt to regulations (reduced time to market)

With the implementation of SAP CMO, Banco Galicia recovered nearly $3.5 m AGS due to improved cash transportation billing controls and over $1.7 m AGS due to improved efficiencies. Further identified opportunities are projected to save $17.8 m AGS.

What experience do you have with optimizing cash operations? What were the key challenges and outcomes?

About Banco Galicia

Founded in 1905, Banco de Galicia y Buenos Aires S.A. is one of the largest private sector banks in the Argentine financial system and a leading financial services provider with 6.3 million customers, 2.6 million deposit accounts and 9.8 million of credit cards. Banco Galicia ranked third in terms of assets and deposits and second in terms of its loan portfolio within private-sector banks. Banco Galicia operates one of the most extensive and diversified distribution networks among private-sector banks in Argentina, offering 257 bank branches, +820 ATM’s and other 470 points of contact with clients

At the SAPPHIRE NOW 2013 Financial Services Forum, Interactive Data Corp discussed how they saw the need to make its descriptive and other data assets available on an event-driven basis as a top priority and therefore launched a new set of services called “Apex”.

The increasing pace of globalization in the capital markets is having the effect of demanding timelier and more sophisticated analysis across multiple asset types, their derivatives, and the markets on which they trade. Customers were finding it increasingly difficult to keep up with the data, let alone expand their capabilities. IDC’s customers typically are looking to perform a lookup and verification function such as finding the security information related to a specific holding, who the issuer is and what other instruments and derivatives are associated with it. Next, they typically want to extend that analysis across the whole corporate group and then resolve for relationships – such as correlation and covariance – based on empirical and statistical measures on a real-time basis.

With Apex, the focus has been on developing a comprehensive cross asset, multi-data type logical data model that allows IDC to market content as three separate products in line with their customer’s workflows. Central to this effort has been to define a set of managed primary keys to their content universe that allows them to isolate the data content from the dynamic and volatile world of industry symbology and cross referencing. It also provides the means by which they can easily integrate other sources via either that very same industry symbology or other common criteria such as ratings, alternate names, markets, etc.

Real Time Message Business Environment

Over the past 2 years IDC migrated all its data content – real time streams AND reference data – to a real time message business environment. They also built out the Logical Data Model to normalize and standardize the content into a single, integrated view across asset classes and data types. As a result, IDC created a service delivery framework consisting of

• Data Transfer Services – including file based and message based delivery options
• Hosted application interfaces – in particular, they are investing in web services and other API’s
• Managed Database Services – which they have been working on extensively with SAP

This architecture allows IDC to work with our customers across their existing operations while maintaining semantic integrity – whether it is to populated existing databases and cubes or support turnkey access to high performance query and interrogation infrastructure. When it comes to powering analytics, their Managed Database Service provides customers with a pre-built environment, fully populated and maintained by Interactive Data Corp. They have been working with SAP/Sybase to deploy an architecture built on the RAP platform.

Apex Architecture

In terms of the Apex architecture, firstly, all the interfaces are box-standard, widely used technologies (such as ODBC/JDC) to provide direct connectivity to the user’s desktop. Users can simply log on and use their preferred tools to interrogate the full universe of interactive data content. Secondly, it allows IDC to maintain the data in the environment in real time as it is produced from their data collection and management environment.  RAP in particular provides the management and scalability to add to the environment as and when needed – it also provides a very powerful command and administration interface to control the service. Finally, it is an open environment – the configuration they are working on with SAP allows customers to upload their data to IDC for integration on the server side.

Caught between the need to refresh legacy systems and the increasing demands from customers, partners and regulators to deliver multi-channel services, innovation, risk reduction and agility, the market is ready for change.

Now, more than ever, banks must prepare for their significant & inevitable transformation, from:

• A product- and channel-centric operating model to a customer-centric model

• A batch model to a real-time model

• A preference for bespoke solutions to a much greater leverage of off-the-shelf packages and “best practice”

• A focus on standardization, simplification and industrialization

• An acceptance for different delivery, deployment and consumption models

• And finally, a realization that competition is increasingly less with “typical banks” and more with new entrants from telecoms, retailers and internet service firms (Google, PayPal, Square etc.)

In order to help enable this evolution, CSC and SAP today announced an expanded alliance to accelerate the banking industry’s next phase of transformation to digital banking technology platforms.

The comprehensive portfolio comprises next-generation consulting, software, enterprise services and technology platforms that leverage both companies’ industry expertise, extensive suite of offerings and proven track record.

Working together, CSC and SAP will work closely with banks through their transformation journeys while aiming to reduce the risk, implementation time and cost of streamlining complex business processes and IT environments.

For more information, visit sap.com/banking and csc.com

Last year Chief Marketing Officers are estimated to have spent over USD 148 billion in technology. Going forward, Gartner predicts this spending will continue to increase.

At the same time, we are continuing to witness a huge transformation in the financial services industry. Social networks and technology broadly have played a major role in enabling customers and merchants to be better informed and to leverage services offered by non-financial institutions like PayPal to execute financial transactions. Opinions – both good and bad – by customers spread rapidly and have a major impact on how customers’ expect to be served going forward. While such developments are challenging for the CMO, they also offer significant opportunities. Marketers now have the opportunity to mine the wealth of information being shared by their customers across a diverse set of channels and offer tailored products and services on the most influential communication channels thereby increasing the relevance of the offering to their customers. The CMO in this new role can help visualize and evangelize the future for financial institutions closely attuned to the customers’ needs.

Can technology help?

According to a SAP Performance Benchmarking study, 60% of financial institutions surveyed that believe improving customer centricity is their biggest strategic priority. SAP is working Marketers at leading financial institutions to develop strategies to harness the wealth of information shared by customers to gain a thorough understanding of who their customers are and what they want to buy. This will enable Marketers to identify how, when and where customers want to interact with them.

SAP has integrated solutions that span every aspect of marketing, from sentiment intelligence to loyalty management, marketing resource management to real-time offer management to enable Marketers to improve the customer experience by orchestrating seamless customer interactions across multiple channels.

Banco Internacional De Costa Rica S.A. (BICSA) leveraged SAP to establish a single customer view across channels in six countries in North and Central America, standardized credit procedures with efficient account management leading to a 33% reduction in requests for customer information

Maritima Seguros is one of the major insurance companies in Brazil operating through 50 branches with 1483 employees and 322 third party professionals. The insurer implemented SAP to build a single view of clients to make offers based on customer profile and improve revenue generated by insurance brokers by 29%

A CMO’s Point of View

I am pleased to share with you a point of view articulated in this video by Jonathan Becher, Chief Marketing Officer, SAP where Jonathan highlights the importance of customer experience and how to get it right working collaboratively with financial institutions.

Share Your Experiences

What are your experiences as a Marketer? I would appreciate any insights that you can share and would be happy to engage our experts to jointly explore use cases that are relevant for your business in financial services.

Interesting.

Interesting in that risk is a topic I’ve been dealing with for a long, long time, and it is still not well understood. Sure, we know about the risk of losing money and the risk of investing something that might not payback.

A bank’s job is all about risk in fact, as in an insurer’s role. An insurance company manages the risk of uncertainty, and does this by pooling the funds of the many to cover the losses of the few. A bank’s role is to manage the risk of losses as an intermediary between those who have money and those who need it.

That’s my simplistic view of the world anyway. So how come banks seem to mess this up whilst insurers do not? You may disagree, as there are examples of where insurers have got this massively wrong – Lloyd’s of London in the 1980s being the key case in point – but insurers generally get it right by using the cycle.

The cycle is the known insurance cycle.  As claims go up, premiums go up. As claims go down, premiums go down.  It is a cycle that ebbs and flows every five to seven years, and the
insurance firms know this and manage it accordingly.

Or so they claim.

Banks also know that they have a cycle.  As markets rise, so do profits.  As markets go down, so do profits.  This is also known to be something that occurs every five to seven years. Take Jamie Dimon’s comment: “my daughter asked me when she came home from school ‘what’s the financial crisis’, and I said, ‘well it’s something that happens every five to seven years.”

Banks know the risk cycles, but they don’t manage them as effectively as insurers.  How come? Because insurers deal with known risks but banks deal with unknown risk. Insurers deal with the risks of death by having actuarial tables that model mortality and health, and provide a fairly accurate pooling of risk knowledge across their client base to predict client termination.

The same with automobiles.  We know the risks of accidents per 1,000 vehicles and the likely outcome of those accidents as an average level of claim.

On the converse side, banks create new risks through new products and new markets.  That’s what they continually try to do and the subprime crisis illustrated this well: new risks using new products backed by mortgage based assets.

That is why the financial market exposures from the bank world are far more calamitous than those in the insurance world.

The global banking crisis and wave of financial regulation that followed shined a spotlight on the goal of an integrated enterprise view of risk and this got louder every time news broke of a scandal or crisis in the financial services sector.  The benefits of the goal of integration were, and remain, appealing.

Not only can integration of risk and finance help institutions meet the increasing data demands from their stakeholders, it can also deliver streamlined reporting and compliance.

I believe 2013 is a tipping point that will see the most considered and forward thinking financial institutions move start on the journey to integrating their risk and finance functions, for the following reasons.

Firstly, the pressure to manage and foresee risk has never been greater from within and outside an organisation. In the way that we use Google to search for information and get a response on demand, we need a similar ability with risk and finance data if we are to respond to regulation, meet customer need and beat the competition.

Secondly, we have the ability to meet this need. Implementation capabilities and intellectual property combined with advances in technology, especially in-memory technology and cloud computing, mean that previous IT models predicated on compute intensive, data centre reliant risk modeling are now a thing of the past.

Thirdly, modern methodologies don’t require a rip and replace approach when building an enterprise-wide platform for risk and finance integration. Furthermore, the capability can be developed over a period of time using an agile approach that addresses short and longer term needs.

An invite for you

To help you understand what can be achieved today, share best practice and to get the very latest market context, we are holding the SAP and Deloitte Risk and Finance Forum on 14^th May 2013 at Haberdashers’ Hall, London.

Chartis Research will also present the findings of a global risk study which takes a temperature check of the risk and finance markets and explore the best methods for firms to implement risk and finance integration.

Click here to register your attendance.

Stuart Grant, Capital Markets Solution Manager, Risk Management Global Banking IBU

Top Reasons for Banks to Attend SAPPHIRE NOW:

• Join our Financial Services Forum – We have a full day of sessions dedicated to the topic of Transformation in Financial Services. Come hear how other banks are handling their transformation initiatives, and how SAP can help.

• Hear from Best Run Financial Institutions firms like Zurich, Putnam, Banco Galicia, Nationwide and more!  SAPPHIRE NOW is not only a great opportunity to listen to presentations from your peers, but it’s also a great opportunity to network and meet other folks in your own industry who are tackling similar projects.

• Visit the banking expert table for live demonstrations of our solutions. From Loans and Deposits to Risk and Compliance, we have many new innovations you’ll want to learn more about.

• Interact with all the SAP experts in one place! Whether you have questions about databases, cloud deployments, rapid deployment solutions or analytics, SAP’s best and brightest will be on hand in Orlando to answer all your questions.

• Learn how you can run your business in real real-time. SAP and partner solutions powered by SAP HANA can help you dramatically accelerate analytics, business processes, predictive analysis, and sentiment data processing – all on a single in-memory computing platform.

• Visit Orlando in May. Sunshine, Mickey Mouse and fresh Orange Juice. Need I say more?

Are you going? If so, what are you looking forward to learning about? Can’t join us? Get the latest information on www.sapphirenow.com, Banking View, and Twitter @sapforbanking.

We hope to see you in Orlando for SAPPHIRE NOW for what promises to be an educational and productive 3 days.

In case you can’t join us, be sure to visit keep an eye Banking View for key topics and updates. We’ll keep you informed on the key topics and sessions here and via Twitter @sapforbanking.

The project involved a close collaboration between Sybase 365 (an SAP company) and CIMB Niaga in developing and deploying a groundbreaking mobile application that meets the increasing demand for mobile banking in Indonesia, without users having to worry about the kind and platform of their mobile devices.

“We have come a long way since we started integrating end-to-end mobile banking services for our customers in 2011. This recognition at the Asian Banker Technology Awards underscores both the growing sophistication of mobile banking technologies and its role in helping fuel the economy as it encourages more banking/financial activities; as well as the increasing acceptance of mobile banking in the country,” said Samir Gupta, Head of Consumer Banking, CIMB Niaga. “SAP’s industry leadership, innovative and robust mobile banking solutions, as well as excellent technical support, has helped us grow our mobile banking services tremendously.”

The GoMobile banking solution was developed in response to CIMB’s aim to further extend its market reach to a wider audience, including the hip, young and mobile users in Indonesia while boosting the use of mobile phones as a secure, reliable and personalized delivery channel for banking transactions anytime, anywhere using any mobile device.

“We are honored to receive the Asian Banker Technology Implementation Awards 2013 and recognized for our continuing efforts in implementing cutting-edge mobile technologies that help deliver a better banking experience to everyone – bet it in Indonesia or elsewhere,” said Matthew Talbot, Senior Vice President, Mobile Commerce, SAP. “We are delighted to be a part of CIMB’s success by providing the mobile banking technology and solutions they require to be on top of their game in a very competitive banking environment. Their continuing success in this service segment is a source of inspiration by other banks in Indonesia and other countries around the world to follow suit.”

The Asian Banker Technology Implementation Awards is an annual program designed to recognize and award best practices of technological innovation in banking operations. The program attracts a substantial number of submissions each year, describing a range of innovative solutions that demonstrate how IT can deliver significant benefits to the business of banking. It has received nominations from over 60 banks from 20 countries across the Asia Pacific region. Winners are honored each year during the Asian Banker Summit, the most prestigious gathering of senior bankers in the region. Submissions are made jointly by banks in the Asia Pacific region and their IT partners, and the evaluation criteria is a rigorous and transparent process vetted by leading practitioners, independent advisors and an international panel of industry experts.

We’d like to take this opportunity to applaud CIMB NIAGA on successfully implementing groundbreaking mobile banking innovation and securing “The Outstanding Technology Implementation award”