Banking Then and Now:

Simplify to Keep Pace with Customer and Regulator Expectations

By Justin Asher, Director of Financial Services, Strategic Accounts, SAP SE

Technology is changing every aspect of banking, but the greatest impacts will be on customer satisfaction and regulatory compliance. That’s a key finding in a recent research study[1] on banking innovation. This study summarizes extensive research and in-depth interviews with C-level representatives from banks and regulatory authorities. In this two-part blog series, I’ll discuss some of the results of the study, drawing on my nearly 20 years of experience as a technology consultant to some of the largest banks in the
EMEA region.

Banks embrace technology, but not fast enough for regulators

The study uncovered a significant disconnect between regulators’ expectations and the ability of banks to meet compliance and reporting requirements. Regulators expect banks to bring down the time lag for complex reporting from 10 days to just one
day.

Banks fully understand that operating within the new dynamics of the financial services industry requires transformation. The problem is complexity – especially complex legacy systems and the lack of transparency they bring.

In the past, your average banking CIO was more interested in seeing out his tenure with as little disruption as possible. By being risk averse and only doing what was absolutely necessary, the CIO has perpetuated an infrastructure that’s incredibly complex,
opaque, and difficult to run. Think of the IT equivalent of Spaghetti Junction (a massively intertwined highway interchange that resembles a plate of spaghetti).

Over time, many banks have introduced multiple layers into their financial and reporting environment, resulting in complex reconciliation structures that require many thousands of people actively having to reconcile different journals and solutions.

Simplification first is a must

Merely throwing new technologies at complicated legacy systems without transformation won’t by itself yield the long-term results that banks need. Banks need to move away from complex integrations towards a consolidated and dramatically simplified architecture based on open standards. 

That’s where the right services partnership is important.

Having the right services partnership can help you execute the transformation with the right cost model and achieve the benefits in the shortest period of time. At SAP, we’re in a very unique position. Our services organization is focused on a rapid achievement of business value. We want to help you get the results you need as quickly as possible. 

We also deploy highly skilled banking specialists and SAP software specialists with long- term banking expertise.  So, our ability to engage on a project or in a particular area is unparalleled.

Top technology trends in the banking industry

Simplification is also tied into another key topic in the study, which focuses on technology trends in the banking industry. I’ll be publishing a blog on this topic soon.

For a deeper look at the study, download an executive summary of it here: http://www.news-sap.com/banks-embrace-technology-fast-enough-regulators-sap-study-shows/#sthash.XAt5Ucil.dpuf.

To learn more about the banking expertise of SAP Services, visit our banking industry spotlight at  http://www.sapserviceshub.com/h/c/56787-industry-spotlight-banking.

Feel free to share your views with me about this topic in the comments below.


[1] Martin Hellmich, Mike Pinedo, Bjoern Schuck, Sikandar Siddiqui, and
Axel Uhl. The Benefits of Innovative
Information Technology in the Banking Industry in Turbulent Times.
Business
Transformation Academy. July 2014.

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2 Comments

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  1. Nick Illingworth

    The complexity you refer to is really hard for the banks to address – not only because of the cost and risks involved, but also because of the courage needed to take on the political battles without which simplification is impossible.   Banks can take comfort from the fact that SAP core banking implementations are getting steadily less costly and risky due to improvements in methodology and approach, but huge courage and real leadership is still needed on the customer side. 

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    1. Justin Asher Post author

      You are 100% correct, it will take real courage and leadership for Banks to transform. But transform they must…

      …and not just in the core but also in their financial and reporting systems. Key technologies such as in-memory and cloud will prove to be key enablers – but only as part of a strategic move to simplicity.

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