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By Markus Georg Walther, Global Head of Business Transformation Services FSI G2M, SAP America

Banks are looking at how technology can help them meet the business imperatives of operating a bank today. In fact, a recent study[1] says the top reasons banks are seeking transformation is to:

  • Face changing regulatory and risk management requirements
  • Take advantage of technology to improve their business model and gain competitive advantage
  • Adapt to variations in customer behavior and preferences

The study indicates that many banks already have plans to increase their IT budgets to focus on cloud computing, Big Data, mobile, and in-memory computing. One U.S. bank executive quoted in the study states, “One of the key imperatives for IT is the alignment of technology initiatives with business priorities.” I concur.

Today a large number of banks have made considerable efforts to provide Web-based functionalities for mobile computers and smartphones. But while some best-practice banks are embracing new technology, others are uncertain where to begin or how to evolve to the next level.

An insider’s perspective

My career in banking, and now in IT, gives me a unique perspective on this topic. I can see how a bank can get stuck putting patches on and trying to maintain complex solution landscapes. In the past, banks differentiated by creating new products or offering unique business processes – and made money by charging fees for these processes. But many processes among banks became similar with regulations dictating many aspects of operations. These processes no longer differentiate, they commoditize.

To be competitive, banks need to shift their business models from process-centric to customer-centric. By maintaining a relationship with customers, banks are better able to predict and present the right products and offerings at the right point in time. Big Data can help make this happen – if it’s available in real  time.

Big Data can help you understand your customer’s history and the history of similar customers. You can see which products they bought,, which services they used, and what phase of life they are experiencing. And you can assess potential needs as well as risk. The ability to identify potential needs and potential risk associated with a single customer or customer group is as critical to profitability as it is to report on the newest and hottest regulatory requirement in shorter periods of time.

Modernizing your infrastructure

To embrace innovative technologies like Big Data, banks need to modernize their solution landscape as well as the underlying infrastructure. But complex software landscapes make change difficult, costly, and risky. What’s needed is a transformation road map that allows banks to rationalize their software landscapes, identify a path to reduce complexity, and enable newer, simplified technology while providing short-term business benefits.

In the study I mentioned above, one interviewee wisely stated that “there is a lot of IT without banking, but there is no banking without IT.” A software services team that has current experience with these technologies – within the banking industry and within the countries where you operate – can help you with this rationalization. Draw on their expertise, business knowledge, and implementation insight to help you design a target solution architecture and road map to make your bank fit for the future.

An executive summary of the study is available to download 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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